The Merafong City Local Municipality this week denied allegations that it was not up to date with paying over employees’ pension funds.

The Greater Fochville Water Crisis Committee shared a letter sent in December to the municipality. In the letter, addressed to the municipal manager, Dumisani Mabuza, the Director-General of the National Treasury, Duncan Pieterse, issued a notice to the municipality that it intends to invoke Section 216 (2) of the Constitution due to the municipality’s non-compliance with the Local Government: Municipal Financial Act (MFMA) (2003).

According to this legislation, the National Treasury can enforce compliance with financial management standards by stopping the transfer of funds to any state organ, including municipalities, that commits a serious or persistent material breach of measures designed to ensure transparency, accountability, and expenditure control.

The letter states that this step is necessitated by the municipality’s failure to adopt a funded budget, persistent failure to address unauthorised, irregular, fruitless, and wasteful expenditure, failure to pay pension fund contributions, and failure to pay audit fees. At the time of the letter, the municipality had not paid R23m in outstanding pension fund contributions for its employees and also owed the Auditor-General outstanding audit fees of R3m. The municipality also had not implemented consequence management as is required by the MFMA.

The National Treasury did acknowledge the municipality’s progress with issues such as the establishment of a Disciplinary Board. The Greater Fochville Water Crisis Committee expressed its concern with the situation.

“This breach endangers the livelihood of current employees who may soon face resignation, retirement, or worse – passing on without the benefits that they have diligently earned. This reckless neglect leaves their families vulnerable and their futures uncertain,” the GFWCC stated.

They also noted that a landmark 2025 ruling by the Free State High Court held officials from Mafube Local Municipality personally liable for failing to pay over R14m in pension contributions. The court’s judgment explicitly states that municipal officials cannot hide behind financial distress or bureaucratic excuses.

Their failure to remit employee deductions constitutes both civil and criminal liability. The court ordered those responsible—the municipal manager and the CFO—to pay the arrears, including interest.

The former Kheis Local Municipality in the Northern Cape’s manager, Joseph Floyd Leeuw, was also arrested for failing to pay R8.5m in pension contributions. The Auditor-General previously issued a Certificate of Debt against Ngaka Modiri Molema Municipality in North West’s accounting officer, Allan Losaba, for R4.6m in losses due to similar failures.

The Herald asked the municipality about the issue on Monday, and Merafong’s Council spokesperson, Thabo Moloja, responded to the allegations the next day.

“The municipality categorically refutes these allegations,” he said, adding that the municipality is fully up to date with its pension fund payments.

“The municipality has strengthened its financial oversight and compliance systems. In line with Treasury directives, monthly reports are submitted to the Gauteng Provincial Government on pension fund and medical aid payments. These reports form part of ongoing monitoring to ensure continued compliance and financial stability. Management wishes to place on record that employee pension contributions are treated with the utmost priority and are processed in accordance with applicable legislation, financial regulations, and established internal control measures.”

“At no point has the municipality deliberately withheld or misappropriated pension funds belonging to its employees. Where administrative or reconciliation matters arise, such issues are addressed promptly through the appropriate internal financial management processes and in consultation with the relevant pension fund administrators. These processes are governed by strict compliance requirements to ensure transparency, accountability, and the protection of employees’ benefits,” Moloja added.