Former Newcastle municipal manager Bhekani Errol Mswane and chief financial officer Bhekisisa Hlongwane were granted R20 000 bail each after their appearance at the Durban Specialised Commercial Crimes court on Thursday.
The duo appeared on charges of fraud, money laundering, and infringement of the Municipal Financial Management Act, which cost the municipality R7.8 million.
They appeared alongside Velenkosini Lindokuhle Mtshali, sole director of Bonakude Consulting.
KwaZulu-Natal National Prosecuting Authority spokesperson Natasha Ramkisson-Kara said Mswane and Hlongwane allegedly unduly extended an expired contract for Bonakude to provide consulting services while incurring wasteful and irregular expenditure.
As a result, Mtshali and his company fraudulently benefitted from the non-existent contract.
Ramkisson-Kara said the charges were from 2018 and 2019 during Mswane and Hlongwane's employment at the municipality.
As part of their bail conditions, the men surrendered their passports.
They are also not allowed to apply for travel documents, enter the municipality or contact State witnesses until the trial was finalised.
The court also barred Mtshali and his company from rendering services to the municipality.