Newcastle Municipality loses R10,5 mln to fraud in three months

2010-01-19 00:00

THE Newcastle Municipality lost more than R10 million between September and November to tendered services which were never delivered to it last year.

This revelation was made by Municipal Mayor Afzul Rehman last Tuesday. He warned that whoever is responsible will be brought to book.

A source in the municipality revealed that six cheques, fraudulently signed and totalling R10,5 million, were issued to the tendering companies during the three months.

The loss was discovered early this month when one of the officers alleged to have signed one of the cheques was on leave when the cheque was signed.

Rehman said the official’s signature was precisely forged and that she was almost convinced that she had signed it.

He said all the cheques issued to the companies had fraudulent signatures and that this could have been an inside job.

“We don’t tolerate fraud and at this stage we treat all our staff members as suspects. Our municipal order book has been duplicated, costing the municipality millions in three months … we don’t even know if [the companies] exist,” Rehman said.

Municipal manager Kebone Mas­ange said that although he has been with the municipality for three months now, he can confirm that the municipality has lost R10,5 million to fraud.

He said the cheques issued to the companies were between R1,3 and R2,5 million.

“The amount has been stolen from the municipality by means of forging signatures … We don’t deal with suppliers,” Masange said.

He could not divulge any more information, saying he would be jeopardising the investigation as the matter has been handed over to the police commercial crime unit.

Masange did not rule out the notion that the municipality’s financial systems could have made it easy for the perpetrators to commit the fraud.

He said the municipality is upgrading its systems.

“In fact, even if the system was up to standard, once you have criminal elements in your institution then you have a problem because criminals by-pass anything when they want to commit crime,” he said.

DA Newcastle constituency MP Alf Lees said the municipal manager has to be held accountable for the loss. He said that as “the captain of the ship” the municipal manager should have done something about the system sooner. “This is a huge amount of money and we can’t just accept the system excuse,” Lees said.

























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