GMM uncovers large-scale financial fraud scam
Transactions involving suspicious consolidations and consolidation reversal worth more than R23m were conducted by six employees, three of whom have resigned during the course of the investigation.
The Govan Mbeki Municipality has launched a forensic investigation into unauthorised consolidations and consolidation reversals affecting its credit suspense accounts.
These irregular financial transactions resulted in a reported loss of R23.2m. The matter was revealed during a council meeting on December 4.
It followed growing concerns over suspicious account adjustments discovered after a complaint by Sasol, whose credit account balances did not align with municipal records.
How the scam worked
A preliminary internal investigation found that credit balances from certain customer accounts were transferred to unrelated municipal accounts, often without proper authorisation, documentation, or matching ERF numbers.
In some cases, the balances from an occupier’s account were moved into an owner’s account on the same property, which is permitted when adequately supported.
In irregular cases, credit amounts belonging to customer A were transferred into customer B’s account, even though the properties were unrelated and no documentation existed.
These transactions were executed via Munsoft, the municipality’s financial system, which manages billing, metering, and financial operations.
Forensic investigation
The municipality appointed a law firm to do a detailed forensic investigation covering 2022 to 2025.
The probe aims to:
• identify irregular transactions;
• determine accountability;
• quantify losses;
• identify beneficiaries;
• assess control failures and policy violations.
The policies potentially violated include:
• the Unclaimed Deposits Policy;
• the Cash Receipts and Banking Policy;
• the Municipal Supply Chain Management Policy;
• the Municipal Standard Chart of Accounts regulations;
• relevant sections of the Municipal Systems and Municipal Finance Management Acts.
Preliminary findings
The forensic team identified:
• 21 352 transactions linked to 12 operators, valued at more than R30m;
• 5 308 transactions where account holder details were shared between two accounts involved in consolidations;
• 16 044 high-risk transactions, worth more than R23m, conducted by six employees involving suspicious consolidations and consolidation reversals;
• Most of these transactions were processed using previous levy periods, some dating back up to eight years, allegedly to hide unauthorised activity;
• Three of the six implicated employees resigned during the investigation.
Further investigations are underway into three more officials whose roles are yet to be finalised.
Municipality to contact benefiting account holders
The municipality will write to all account holders who may have benefited from the unauthorised consolidations. They will be required to provide proof of payment. If they fail to do so, the affected accounts will be reversed, and the correct account holders will be appropriately credited.
The municipality said the report is currently redacted to protect client information, and officials cannot be named due to legal constraints.
Next steps
The municipality confirmed that the investigation remains ongoing and that final findings will be presented upon completion.
