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Forensic report results


Andries van der Heyde   l   Views: 240

The Bela-Bela Municipality released the long-awaited KPMG forensic report on Wednesday, 11 April. The report was the result of an investigation into alleged maladministration and corruption in the municipality.

The investigation took place at the beginning of 2016 with the aim of investigating alleged irregularities that took place between January 2013 and May 2016.

From the report, of which The BEAT has procured a copy, it appears that the town’s former mayor, Lucas Nhlapo, blamed the municipal manager, Morris Maluleka, for the way in which some of the municipality’s contracts were handled.

The report, which was handed over to the municipality in May 2016, did uncover certain irregularities at the municipality.

These include:

Fawcett Security contract:

Maluleka cancelled this contract in 2016 when it appeared that the security company was not fulfilling its obligations. The contract was due to expire this year (2017).

According to the report, the municipality was displeased that members of the South African Municipal Workers Union (SAMWU) were able to gain access to the municipal buildings in March 2014, and also that ten vehicle batteries were stolen from the Department of Public Works premises and the sewerage works in December 2013. Fawcett was in charge of security at these premises.

The contract was cancelled in January 2016 and the case went to the High Court.

According to the report, Maluleka was acting in the best interests of the municipality when he cancelled the contract, and the proper procedures were indeed followed.

The case is still pending.

The municipal fleet contract:

Dikala Plant Hire was appointed in July 2014 with the goal of providing a new fleet of municipal vehicles on a comprehensive maintenance scheme for three years.

The budget initially called for 40 vehicles, but the municipality needed 50. The total cost of the contract was R36 550 998.

A partnership was struck between Balimi Barui Trading (BBT), Dikala Plant Hire, and the municipality to manage the fleet.

The municipality requested additional vehicles in December 2014, but was in a financial tight spot at the time. Dikala Plant Hire was informed that the municipality would not be able to honour their financial obligations.

Cost saving measures were implemented, with the goal of replacing the fleet with older vehicles at a lower cost.

According to the report BBT initially agreed to the arrangement, but Dikala Plant Hire’s representatives did not. This led to a rift between the parties involved, and the municipality cancelled the contract.

During his interview with the KPMG representatives, Maluleka said that he had received legal advice before cancelling the contract. Dikala Plant Hire took the matter to the High Court, however, and the municipality lost the case. The municipality was ordered to pay all outstanding debts plus interest.

Payments to a private account:

The fleet management contract with ABSA Bank ended between February and March 2015, and Dikala Plant Hire agreed to replace some municipal vehicles.

At that point, the agreement between BBT, Dikala, and the municipality was still in effect.

Payments for the vehicles were to be paid into a Nedbank account but according to the report Hendrick Kganyago, a director in BBT, requisted the municipality to pay the money into an ABSA account.

The municipality approved a payment of R366 298, which was paid into this account. The report states that this was a personal account of Kganyago’s and that he was attempting to act on behalf of Dikala Plant Hire, KPMG determined. KPMG also determined that the account did not belong to Dikala Plant Hire.

An internal investigation was launched  after Ben Poto, Dikala plant hire’s manager, began asking questions, and the municipality stopped payments.

KPMG determined that there had been no agreement between the parties to use a different account. KPMG recommended that criminal charges be pursued.

The municipal access control contract:

The company Bertrobite was appointed in April 2015 to install access control systems at the municipal premises. The budget for the project was initially R921 000 and the contract was due to end in 2018.

According to the report the contract was adjusted when the municipality ordered more of the systems.

The KPMG report determined that the contract was actually worth more than R9 million, and that the town’s budget was adjusted in 2016 to make R4,5 million more available for this contract. KPMG found that R3 083 433 was paid to Bertrobite between July 2015 and February 2016.

KPMG said that the municipality violated’its own management directives by allowing public participation only after the contract had been signed. Payments were also approved before the proper procedures had been followed.

KPMG recommended that steps be taken against Maluleka and the acting chief financial officer, Khathu Maposa, regarding the handling of this contract.

Traffic Management:

BBT was appointed in October 2014 to provide traffic management systems, fine collecting systems, and traffic cameras to the municipality.

The municipality expressed concerns about the appointment of this service provider in September 2015, since by October of that year no trade of a traffic camera had yet been found, and very little money had been raised from fines.

The municipality budgeted R12 289 000 for this contract in 2015/2016 and 2014/2015, but only received 3% of the budgeted income, KPMG said.

By December, R1 782 961 had been paid to BBT, and the municipality received only R320 405 from traffic fines. KPMG also found that BBT was charging the municipality R115.14 per fine issued and had issued 11 115 fines altogether — of which only 1 280 were actually paid — over this time period.

KPMG determined that no irregular payments had been made to BBT, but recommended that steps be taken against the members of the tender committees, since no thorough cost-comparisons had been done regarding the other service providers that had bid for the contract.

Steps, the KPMG recommended, should also be taken against the head of Corporate Services Lionel Mashishi, supply chain manager Ludwick Matwalana,  as well as TJ Mothapo from the Department of Social Development, since they did not ensure that the costs of the contract matched was set out by the tender committee.

It was also found that steps should be taken against Maluleka, since he had not checked the accuracy of the contract’s contents before approving it.

Corrective measures have since been instituted against the individuals on their performance in these matters.

14 months ago       20 April 2017