R200m written off as another Gauteng municipality’s finances collapse

2018-11-29 12:28

Another municipality in Gauteng is allegedly battling to pay third parties and creditors this financial year following more than R200 million irregular expenditure written off two years ago.

The amounts are contained in a municipal public accounts committee report tabled to Rand West City council in June this year.

Rand West City is an amalgamation of the former Randfontein and Westonaria municipalities, and was created after the 2016 local government elections.

It is among three local municipalities that fall under West Rand District Municipality, which had been hit by marathon protests by staff over non-payment of third parties and benefits in recent months.

The other municipalities under the West Rand District include Mogale City and Merafong City.

The municipal public accounts committee made a recommendation to the Rand West City council to write off about R262 million in irregular expenditure incurred during the 2016/17 financial year. It also recommended that the council investigate more than R12.5 million and recover more than R427 000 from the responsible officials.

City Press has learnt that the municipality has allegedly not investigated or recovered the said amounts from officials and had not opened criminal cases or instituted disciplinary charges against implicated officials.

The public accounts committee had recommended that the council:

  • Open a criminal case against former Westonaria municipal manager Thabo Ndlovu “for his involvement in the Sakhingomso Transaction”. Sakhingomso had scored a contract of close to R500 000;
  • Open a criminal case against former chief financial officer Vincent Mkhefa “for not disclosing that he was a director of Sakhingomso”; and
  • Institute disciplinary action against former Randfontein supply chain manager Geoffrey Matjiu “on the basis of misrepresentation of information, as he had indicated to the committee that all these transactions were concluded before the time he was employed in the former Randfontein local municipality”.

All roads lead to the financial red

Three sources close to the council told City Press that the municipality has also been struggling to pay medical aid and retirement benefits for its employees.

A source said the municipality currently had R28 million in its coffers but its monthly expenses amount to R120 million.

In a good month, a source said, they collect close to R80 million from ratepayers.

“That’s not enough to cover our needs. Money has been transferred from one programme to another. Money reflects on employees payslips that they have been paid for medical and retirement funds but that’s not the case. There are delays in payments because of transfers that are being made to different programmes because we are in the red.”

A second source said the municipality was also struggling to maintain facilities and pay creditors.

“There is a likelihood that workers will resort to holding the executive hostage like what happened in the West Rand district,” said the second source.

A third source said the merger between the former Randfontein and Westonaria municipalities after the 2016 local government elections had made matters worse and the municipality was struggling to pay for services.

An internal memorandum, signed by municipal manager Themba Goba dated August 8 2018 about the suspension of existing road maintenance projects, revealed that the municipality was in trouble.

In it, Goba states that the municipality “is under pressure to pay outstanding invoices of the service providers Mthembu/Mvelase and Roadmac Surfacing. Both have been sending either delegations or letters from lawyers to force us to pay them. The municipality has a cash flow problem and contractors expect to be paid monthly, which is not possible – not only due to cash flow – but also due to the fact that they are not the only service provider owed.”

Eskom still owed millions

Eskom was among those the municipality owed.

In a statement, the power utility confirmed it was owed R133 million by the municipality.

The power utility said the municipality had defaulted for September and October but had been honouring its debt and have a repayment agreement in place.

“We have agreed with them to make additional payments on their monthly current account until end of January 2019. This will enable them to catch up with their existing payment arrangement which expires in February 2023. We have received a payment of R35.9 million between the 8th and 14th November 2018,” Eskom said in its statement.

Rand West City municipal spokesperson Tshidiso Tlharipe did not respond to a list of 10 specific questions sent to him, saying instead that the municipality has noted the report and “instituted internal process to implement the recommendations”.

Tlharipe said third parties were paid in accordance with the municipality’s policies and legislative guidance.

“Accordingly, there is a budget and projections fluctuate on a month-to-month basis. Considerations for adjustments take place when the need arises. Internally funded projects are implemented depending on the availability of funds,” Tlharipe said.

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April 21 2019