It is the municipality from hell.
Yet it commissioned an outside investigation with the aim of turning itself “into a model city in the Free State province”.
Forensic auditors Ramathe Fivaz have shown just how far the Matjhabeng municipality, which includes Welkom and Odendaalsrus, has to go to meet this laudable aim.
Shortcomings highlighted in the auditors’ report, which the Mail & Guardian has seen, include R680 000 in transactions in which amounts were written off without payment being received, or where deposit slips were “manipulated”.
The municipality has written off more than R1-billion in bad debts in the past two years.
“It is evident that goods were not obtained at the best possible rates and that excessive quantities were procured and/or delivered, or incorrect goods were ordered. Payments of about R12-million were made without the required processes and documentation being complied with and obtained,” the report says.
About R8-million was paid to a company for machinery and equipment, again without following supply chain procedures.
A further nine contracts were issued without going to tender, including one for R55-million for the construction of a radio network and another worth R16-million for the repair of streetlights.
The report finds that “stores staff” were maintained on the payroll for four years, even though the stores department did not function during that time.
It reveals that the employee in charge of bad debt write-offs deposited a R60 000 cheque in favour of the municipality into the account of a property that she was busy purchasing.
Other shortcomings include the theft of official stamps, the placing of debit orders without the necessary contracts and the forging of municipal manager Thabo Petersen’s signature.
Matjhabeng is not new to the media spotlight, following reports of raw sewage running through its streets and the refusal of many local business people to tender for supply contracts because of its reputation for non-payment.
When a sewerage line became blocked in 2008, it took the council more than a month to appoint a company to repair it. It finally appointed one on an emergency basis and then overpaid it by millions of rands.
Earlier this year Matjhabeng mayor Mathabo Leeto was fired, amid threats the council could face crimi- nal charges over the sewage crisis.
The Ramathe Fivaz report says that “it is our view that the municipal manager was under political duress at times to accede to and/or effect certain decisions. We were often informed that [ANC] councillors threatened that they were in a position to effect the removal of the municipal manager.”
The investigators found that the municipality had issued forged clearance certificates and identified an employee who was “irregularly in possession of a municipal stamp and stationery” used to issue such certificates.
The report adds: “We identified instances where credits were effected on the service accounts of residents without funds reflecting on the banking account of the municipality.”
Deposit slips were “fraudulently amended” for this purpose.
In another finding “an instance was identified in which an employee was rolling receipts by balancing the cash receipts with his personal cheques, which were dishonoured by his bankers”.
The auditors also uncovered debit orders for cellphones and 3G memory cards for which no contracts were obtainable.
On one debit order instruction, municipal manager Petersen’s signature was forged.
His signature was also forged on a contract with a company to supply access control systems.
In another case in which a company was contracted without following tender procedures, the reason given for deviating from normal supply chain management practices was “that other service providers were unwilling to transact with the municipality as a result of non-payment”.
The report could be interpreted as implying that only wholesale sackings can save the municipality and help it become “a model city in the Free State province”.
It concludes that the council has been hampered by incompetence in supply chain management, contract management and legal frameworks.
Modise Mahlatsane, spokesperson for the municipality, said: “This report was presented at council as a draft … It has never been engaged with by either council or its administration”.
This article was produced by amaBhungane, investigators of the M&G Centre for Investigative Journalism, a nonprofit initiative to enhance capacity for investigative journalism in the public interest. www.amabhungane.co.za.