“This highlights the seriousness of how the government’s policy of cadre deployment has resulted in unskilled and ill-equipped financial officers being appointed to run municipal finances in many of these municipalities.” — Dacre Haddon
TWENTY-ONE Eastern Cape municipalities together racked up a whopping R59.1million in wasteful and fruitless expenditure in the 2009/2010 financial year.
A further nine municipalities reported more than R22.2m lost in fraudulent activities, including a R72 000 bill from a cellphone SIM card used by a former Ingquza Hill Municipality manager, in the same period.
“According to information submitted by municipalities and information gleaned from 2009/2010 audit reports, 21 municipalities incurred fruitless and wasteful expenditure whilst 13 reported occurrence or attempts of fraud,” Local Government MEC Mlibo Qoboshiyane said in a written response to a parliamentary question posed by the DA’s Dacre Haddon.
The councils’ wasteful expenditure includes legal costs, services that were never rendered, interest on late payments of creditors, electricity and water distribution losses, among others.
The report states that Nelson Mandela Metro paid R1.4m for a function which never took place and Amathole District Municipality incurred R423 709 in legal costs when it appointed a municipal manager who did not score the highest points during interviews.
Buffalo City wasted R9.5m due to the escalation of prices in the Quenera wastewater treatment tender that was not finalised on time, and also paid R800 000 to an IT company for work which was never done.
Great Kei Municipality paid R200 000 for private properties destroyed by “controlled” fire caused by a municipal official, while Ngqushwa Municipality forked out R417 134 in a defamation claim.
The Nelson Mandela Metro was hardest hit by fraud when R19.9m was electronically transferred to irregular bank accounts, while municipal cashiers helped themselves from the council’s cash in Koukamma, Gariep and Maletswai.
A breakdown of the notable expenditures by some of the municipalities shows: Nelson Mandela Metro R3.7m; Makana Municipality R2.7m; ADM R1.3m; BCM R9.6m; Mbhashe R1.8m; Joe Gqabi R2m; Maletswai R3.6m; and OR Tambo R23m. Qoboshiyane said municipalities had taken steps to recover the amounts and put systems in place to prevent a recurrence of wasteful expenditure and fraud.
With regard to Makana’s R2.7m in electricity and water losses, Qoboshiyane blamed aging infrastructure, illegal connections and faulty meters.
“The municipality plans to have a dedicated unit to monitor losses,” he said.
Qoboshiyane also said the R423 709 in legal costs incurred by ADM were deemed irrecoverable, and that BCM has instituted disciplinary proceedings against employees responsible for the Quenera tender. An investigation is also under way into roads that were not constructed according to BCM standards in Mdantsane, he added.
Haddon said it was shocking that out of 45 councils, 35 (75 percent) were implicated in wasteful expenditure.
“This issue highlights the seriousness of how the government’s policy of cadre deployment has resulted in unskilled and ill-equipped financial officers being appointed to run municipal finances in many of these municipalities,” he said.
He also said that to his dismay, out of the R59m fruitless expenditure, some R35m was wasted on late payment of interest to creditors, including Sars.
“This state of affairs is a serious indictment on the lack of prudent financial oversight by municipal managers and is leading to a crisis situation in the province.” — firstname.lastname@example.org