Msunduzi Municipality will investigate circumstances that led to the instance(s) of non-compliance in the payment of R82 million for non-existent goods and services.

The municipality revealed this during its presentation to Cogta’s portfolio committee on an audit action plan following various issues flagged by the auditor-general in her 2020/2021 financial year audit report.

Among the issues flagged by the AG, was the payment of R82m for goods and services that were not delivered. Msunduzi management acknowledged the finding.

The money, according to the presentation, was paid into a conveyancing trust account for the acquisition of identified properties through a service provider.

The presentation read:

“[The service provider] has started the process of refunding the municipality with interest. Management will revisit the processes of acquiring the properties. Further investigations into the circumstances around this transaction will be carried out. The [municipal] management does not believe that there were instances of non-compliance. The funds are transferred into the conveyancer’s account and in this case, funds were transferred into a conveyancing trust account.”

According to the presentation, R82 943 802.20 is part of the Business Plan 2020 land acquisition programme and should not be viewed as a stand-alone purchase, but is a continuation of the BP2020 land acquisition programme.

“The steps that will be taken to rectify the matter in future include: The review of the payment and certification processes relating to the acquisition of land and properties; whether the non-compliance resulted in or is likely to result in a financial loss for the auditee or any other public sector institution. There is no financial loss as the monies were transferred into an interest-bearing trust account that was monitored by the municipality and the processes of refunding the municipality with interest is in process.”

The Msunduzi management has reviewed the instances around the transaction, and a decision was taken to recall the funds transferred to the conveyancer, with interest, with the capital amount having been returned on January 27.

The management acknowledged that the payment was not fully in line with the intention of the transaction and practical steps will be taken to ensure that the matter of certification of land purchases and transfer transactions are adequately accommodated in the internal controls of the municipality to limit or eliminate the risk in future.

IFP responds

IFP councillor in Msunduzi Thinasonke Ntombela said municipal manager Lulamile Mapholoba was on the right track by dealing with non-compliance and the investigations, some of which were ‘long overdue’. Ntombela said there has to be an explanation why millions were paid without ensuring that the goods and services were delivered.

“The issue of reports and non-compliance is a serious concern. Sometimes you’ll find that some reports don’t make it to Exco and council so we don’t know the scale of these dodgy transactions. It’s important that Mapholoba, in the process of executing his duty, ensures that there is consequence management for every irregularity,” said Ntombela.

DA responds

The DA in Msunduzi concurred with the IFP on the delays in finalising the investigations and lack of consequence management in the municipality.

Party caucus chief whip Bongumusa Nhlabathi said it was also concerning that these investigations were dragging on in the presence of ministerial representatives deployed by Cogta since the city was put under administration.

Nhlabathi said:

“We are happy when there are talks of investigating these transgressions, but we feel that Cogta nationally should be monitoring the provincial Cogta as we feel that certain individuals are shielded, hence the delays. There are many of these cases but the lack of urgency in wrapping up investigations is depriving the citizens of knowing the extent of the rot in the city.”

Msunduzi spokesperson Ntobeko Mkhize said the funds that had been paid to the conveyancer for the property acquisition have been returned to the city’s purse.