Municipality to be investigated following allegations of over R5-million of fruitless expenditure
Disturbingly, R24,2-million had been withdrawn from the municipality's investment accounts – from October to the end of November – with two withdrawals of R5-million each on November 30.
Endumeni’s precarious financial position was in the spotlight at Monday’s Council meeting with a resolution passed to probe over R5,1-million of ‘irregular and fruitless’ expenditure.
Most of the expenditure, as a result of ‘deviations’ from the municipality’s supply chain management processes, occurred from July to November 2018. Anthon Raubenheimer (DA) said it was ‘very concerning’ and cited that over R2,9-million was spent on VIP protection, presumably for Councillors.
Legal fees, accounting for around R500 000 during this period, were also deemed to be irregular.
“This expenditure has nothing to do with service delivery and I suggest that the Municipal Public Accounts Committee, MPAC, completes their investigation within the next three weeks,” he said.
Speaker Lucky Khumalo agreed to this and the resolution was passed. Councillor Nathi Khanyile, EFF, is the chairman of MPAC. He told Council that another probe into irregular expenditure has already been completed. Council also passed the adjustment budget although the alarming decline in Council’s investments was also brought into the spotlight. Councillor Raubenheimer commented that over R24,2-million had been withdrawn from the municipality’s investment accounts – from October to the end of November – with two withdrawals of R5-million each on November 30. An explanation from the Finance Department was that ‘money received from the State was invested and then withdrawn as needed’.
Endumeni Municipality owed R60-million in service charges …
However, it was admitted that the bulk of the money was withdrawn to cover operating costs in October and November.
A suggestion that this was to cover declining revenue generation did not hold water for Councillors when it was learned that in November, 100% of rates money was collected.
However, service charge revenue was down by -200% with the rampant theft of electricity continuing to impact on finances.
Councillor Raubenheimer said the matter was very disconcerting and using investments to cover operation costs ‘is the first sign of cash flow problems’.
Councillors Mahaye and Acting Mayor Mdluli, both ANC, agreed with the sentiment saying that ‘we need to know how much the municipality still has in investments’.
Acting Mayor Mdluli said ‘everyone must join hands to prevent Endumeni from drowning’. Acting Municipal Manager, Lwazi Cindi, said a financial recovery plan was in place in terms of COGTA putting the municipality under partial administration and he was hopeful that the turn around will yield results.
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