The executive mayor, Kgotso Khumalo, recently approved a special Local Economic Development (LED) project in Ventersdorp. The funding was made available through money held in trust by an attorney of the municipality.
According to the documentation the Herald has seen, Khumalo undertook to refund the R100,000, but no such payment has yet been made. According to various sources within the municipality, who spoke on condition of anonymity for fear for their safety, the money was paid into the mayor’s personal bank account.
According to the mayoral spokesperson, Victor Boqo, the mayor’s office cannot comment on the allegations as the Hawks are investigating the matter.
The Herald posed several questions to the mayor’s office, including whether he had, indeed, received the amount into his personal bank account, whether he had since refunded the amount, precisely what the project in Ventersdorp was and whether the city council was aware of the expense or the existence of the trust fund.
“It is sub judice and, therefore, I cannot comment further,” Boqo said.
According to the documentation, the money held in trust comes from a rental agreement where a piece of the Eleazer farm, owned by the municipality, was rented out for mining. The agreement between J.B. Marks and the company is for R1 million per year, escalating at eight per cent per year since July 2017.
The company that obtained the mining rights was placed under business administration in November 2017 but, by way of a business rescue practitioner, made a few payments on the arrears rental to the municipality.
According to Dr Len Mortimer from the School of Public Leadership at Stellenbosch University, the attorney managing these funds in trust could be justified because of the debt collection. However, the release of the funds should flow through the main municipal bank account.
“After that, all expenditure incurred still needs to comply with the broad legal framework for supply chain management (SCM), more specifically, the Municipal Financial Management Act and its regulations. If not, it would result in irregular expenditure. The income generated from the mining rights should still be accounted for in the income statements and balance sheet of the municipality. So, too, how it was spent in terms of the prescribed law dictating competitive processes as per S217 of the Constitution,” said Mortimer.
In a previous statement, Lebu Ralekgetho, the municipal manager, noted that the funds are being held in trust as the municipality’s lawyer is busy collecting the outstanding amounts owed to the council by the holder of the mining rights.
“The attorney reports the progress to the council monthly. The trust funds are also subject to trust audits every quarter, as part of the laws governing trust accounts. All municipal finances are also audited on an annual basis, as legislated,” he said.
Earlier this year, money from the trust fund was also used to fund an expensive trip to Durban, where municipal officials attended the Durban July. Although Ralekgetho previously noted that the money is ring-fenced for LED projects, at least three of the delegates who attended the Durban July did not work at the LED sub-unit of the municipality. Ralekgetho previously assured that a full report of the expense would be served before the council, which still has not happened.
