City in big overpay scandal

2016-04-04 13:54
Kwenza Khumalo, process manager for risk management in Msunduzi Municipality.

Kwenza Khumalo, process manager for risk management in Msunduzi Municipality. (File )

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Pietermaritzburg - Acting Msunduzi municipal manager Boniwe Zulu and other high-ranking municipal officials have been fingered as being responsible for allegedly overpaying almost R8,5 million to a local security company.

The council elected Zulu as acting municipal manager last month, although the report was compiled in January this year, when the allegations are believed to have been known by some members of the council.

The confidential report by the city’s internal audit unit, which The Witness has in its possession, makes a number of recommendations to the council.

These include that Zulu and Kwenza Khumalo, the process manager for risk management, and “others in chain of command in signing payment documentation”, should face disciplinary action.

In addition it, says the matter should be reported to the police and the special investigating unit (SIU) — the same unit that was recently authorised by President Jacob Zuma to begin investigations into Msunduzi Municipality.

However, according to the report, the SIU had already requested documents relating to the contract after the matter had been reported to them by a whistleblower.

The report, dated January 22, 2016, refers to a tender for security given by the municipality to Khuselani Security Risk Management (KSA), which says it provides security at all municipal buildings and land.

According to the report, Msunduzi’s “total losses” resulting from KSA “overcharging using incorrect rates” in the period September 2014 to August 2015, and relevant managers authorising these payments, amount to R8 489 041,21.

It is understood KSA invoiced the municipality on rates agreed to from their previous contract. The report states that when the new contract was awarded in 2013, KSA continued to invoice the municipality at the previous rates, which were higher than the rates used in their bid document for the renewed contract.

Suspended municipal manager Mxolisi Nkosi told KSA in a letter dated December 18, 2014, which The Witness has its possession, that he authorised payment pending a report from the internal audit unit. He stated that whatever money was overpaid would be deducted from the next payment to KSA.

However, it is believed that this agreement was not followed through, as the internal audit unit revealed that more than R8 million was overpaid, and the money was not recovered.

The audit report states that Zulu and Khumalo were responsible for continuing to effect payment to KSA, without attempting to ensure that invoices received complied with the signed contracts.

It states that the pair were given a platform to “explain their transgressions”, but opted to “plead ignorance” of events prior to their employment, and “forgot to note that they had at some stage signed some of the payments prior to the award of August 2014 [the second contract]”.

The report does not recommend any action against Nkosi, but states that he was made aware of the overpayment.

“Since the matter was brought to the attention of the municipal manager, there has been little attempt to rectify the situation, which supports the conclusion that officials who are responsible for the administration of this contract, and certify and approve payments, had ulterior motives,” the auditors say.

The internal audit committee further reported that the amount be declared irregular and should be disclosed to the relevant committees, including the city’s executive committee and the full council.

The audit committee’s recommendations were submitted for consideration by the executive committee in a separate document on March 14.

However, three executive committee meetings and one full council sitting have passed since the report was submitted, but the report has still not been tabled.

In addition, questions have been raised as to why Zulu was not suspended, but was instead appointed acting municipal manager after Nkosi was suspended.

DA mayoral candidate Mergan Chetty called on Mayor Chris Ndlela to provide answers.

“The mayor must answer to the city. If there is anything irregular, he must address it and if there are recommendations for action to be taken, he must ensure it is taken,” Chetty told The Witness.

He questioned whether Ndlela had the document in his possession and if so, why it was not brought to the attention of the councillors.

“If he [Ndlela] had the report and knew that senior officials were implicated, why did he not take the council into his confidence before Zulu was given the acting municipal manager’s position? Why was he silent during her appointment?” Chetty asked.

Attempts to contact Ndlela yesterday were unsuccessful.

Nkosi, Zulu and Khumalo referred The Witness to acting municipal spokesperson Nqobile Madonda for comment on the matter.

Madonda said she was “not aware of the said report” as it had not gone to a structure of the council.

“I will respond when I’m in receipt of the report. The public, including the media, will be informed of the outcomes once all processes have been exhausted,” she said.

• kailene.pillay@witness.co.za

Read more on:    msunduzi municipality  |  pietermaritzburg

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