Council ensures heads roll over R2b scandal

The ongoing investigation into the estimated R2b scandal in the City of Ekurhuleni (CoE) has seen the suspension of the man at the helm of the city’s IT department, chief information officer (CIO), Moloko Monyepao.

Monyepao’s suspension comes after a resolution of the Ekurhuleni Council in its ordinary council meeting held late last month.
CoE spokesperson Zweli Dlamini confirmed Monyepao was placed on precautionary suspension following the council resolution.

“This decision arises from serious allegations of mismanagement related to financial losses incurred by the city, primarily because of issues around inaccurate billing systems, interim meter readings, account manipulations, insufficient administrative oversight, and poor management of business systems,” explained Dlamini.

He pointed out the council has authorised the city manager to appoint an independent investigator to examine these allegations within the next 30 days.
“The precautionary suspension of Monyepao is necessary to ensure the integrity of the investigation and to uphold good governance principles, accountability, and transparency within the city administration.”
At this stage, it is unclear whether more officials will face suspensions, and how the city plans to recoup the losses.
Dlamini said the city will communicate further details to the public in due course, upon completion of the investigation.
Heads must roll
The executive mayor, Doctor Xhakaza, previously indicated the vast revenue loss stemmed from manipulating hundreds of electricity accounts.
He stated the city would take the necessary steps and that the council wanted to see more heads roll.

Xhakaza said as part of an effort to rid the city of corruption and hold senior management accountable for their actions, an investigation led by Finance MMC Jongizizwe Dlabathi uncovered wrongdoing to an estimated R2b shortfall in revenue.

He said the vast revenue loss stems from a longstanding manipulation of over 1 600 electricity accounts, where, for example, one night a municipal customer’s accounts would reflect the customer owes the city about R20 000, and in the morning that money is no longer there.
The report was before the council on February 27 to deliberate on how the city can handle the matter, do further investigation to find those responsible and implement corrective measures to prevent further revenue loss in that fashion.

Strengthening internal controls
Dlabathi added the 2022 to 2024 fiscal period had lapses in meter reading, account manipulation, and deletion, undermining the city’s revenue base.

“These issues are being addressed through strengthened internal controls, accountability, and consequence management processes executed by the executive.
“Importantly, we returned the meter reading function to the energy department to ensure single-point accountability, a strategic shift aligned with our Metro Trading Entity reforms.
“This was a necessary and strategic reversal of a prior irrational decision that inappropriately shifted the function from the energy department to ICT, compromising accountability and revenue performance,” explained Dlabathi.
He pointed out independent forensic investigations are underway regarding the allegations of account manipulation and systemic mismanagement.
City’s financial performance
Presenting an update on the city’s financial performance for the third quarter of this financial year, the MMC said: “Despite these challenges, the city remains focused on stabilising revenue collection to enable the sustainable delivery of services.
“Encouragingly, our cash-on-hand improved from 11 days in Quarter 1 to 22 days in Quarter 3, which allowed us to offset reliance on the overdraft facility.”

Takeaway points:
• Electricity revenue under-collection improved from R2b in Quarter 1 to R417 million in Quarter 3, with meter reading accuracy rising to 85.9%.
• Operational expenditure was reduced by 19%, and no overspending was recorded on bulk purchases or consumables, reflecting tighter fiscal controls.
• Over 6 300 residents applied for the Debt Relief and Rehabilitation Incentive Programme, promoting a culture of payment.
• Cash-on-hand increased to 22 days, bulk service invoices totalling R3.1b have been settled, and repayment plans with Eskom and Rand Water are on track.
• During the third quarter, the city achieved a revenue collection rate of 87.5%, slightly short of the 90% target. However, this represents notable progress when compared to previous quarters.
• The city has improved its electricity revenue performance, reducing the negative variance from 24% in Quarter 1 to 10% in Quarter 2, and further down to 8% in Quarter 3.
• The corresponding monetary under-collection has improved from R2b to R417m.

A call to pay for services
The city reiterated its call on users of municipal services, households, businesses and government departments to pay for their accounts.
“Non-payment undermines the city’s ability to deliver quality and sustainable services to its residents.”

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