The “catastrophic” management of Msunduzi’s plantations has led to rampant plundering of timber and the loss of millions of rands in revenue for the cash-strapped municipality.
This is in spite of the more than R12 million annual fee that the City is apparently paying an accounting and auditing firm, Ngubane and Company, to manage the 1 400-hectare plantations.
An internal audit recently made 14 damning findings on the control deficiencies in the management of the plantations, 12 of which were labelled as high and the other two were said to be catastrophic. These included inadequate controls relating to the security and safeguarding of the municipal forests, poor maintenance, unregulated use by third parties which was a public risk, and budget overruns.
Chief audit executive Petrus Mahlaba said: “The audit findings are reflective of financial losses caused by fire, theft and bad management of the forestry.”
It was also found that the appointment of Ngubane and Company was irregular, “hence all expenditure in relation to their payments should be declared irregular”.
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Mahlaba said the company was appointed to the panel of firms to solely provide co-sourced internal audit services to the municipality.
“Security expenditure incurred for the period commencing July 1, 2019 for which there is no approved service level agreement should be reported as irregular expenditure.”
When the report came to council last week, ACDP’s Councillor Rienus Niemand said it described an absolute disaster and a recipe for corruption.
“It is shocking. It is almost unbelievable. In audit terms when something is described as catastrophic, it is an apocalypse.”
He said the culprits must be found and charged criminally. “This asset ... has become a liability to this City.”
Councillor Sandile Ngubane of the ANC proposed that the report be referred to the portfolio committee sustainable development and city entities for deeper scrutiny for recommendations on the disciplinary action that should be taken against those who should be held accountable.
His colleague, Councillor Jabu Ngubo, concurred with him.
She said the company that previously managed the plantations did not do a good job either.
“The predecessors only gave us R11 million and that only came when there was a move towards terminating the relationship with them.
“The whole time we were getting nothing out of the forest.”
DA councillor Bill Lambert said while the audit findings were disturbing, they came as no surprise considering how poorly managed the plantations were.
“We are totally unable to run our City let alone try to run business as well and I hate to have to say that I told you so.
“This is an absolute disaster and has been from the moment it was handed over,” said Lambert.
He said at one stage the issue of management of the plantations was a standing item on the agenda for the portfolio committee for sustainable development and city entities but was “sadly” removed after last year’s council reshuffle. He said that should have given the councillors an indication that a “disaster was looming”.
“The theft is just appalling. We get calls all the time from the citizens saying that the trees are being plundered but it still didn’t come to our portfolio,” said Lambert, who also supported Ngubane’s proposal.
Councillor Mohamed Salim Goga of the Al Jama-ah political party said about 15 years ago he was the finance representative on the forestry board and it was making a profit for the municipality. He said it saddened him that this asset had deteriorated to a level where the City could not even say how much it was making.
“We’ve got a massive asset that we could use to create hundreds of jobs for our people and I think we must seriously look at that.”
City administrator Scelo Duma suggested that the matter be also referred to the council watchdog, the municipal public accounts committee, for its consideration. He said due diligence needed to be done on the matter so that council could decide whether it should dispose of the plantations.
“If you are not making money from an asset there’s no reason why you should keep it even if it’s got sentimental value.”
Mahlaba said council was not providing proper oversight on the forest. He said currently there was a contractor that was harvesting but no one could tell him if council was benefiting or the terms of the agreement.
“They are harvesting but we don’t know if we are getting any revenue. I think that needs to be looked at. I asked the senior manager responsible for the forestry to give me the plan of harvesting and what revenue is coming to the municipality. I haven’t received it. Maybe if it’s demanded by council you may be able to play oversight and you might find that you are losing a lot of revenue.”
Councillor Mehmood Oumar of the ANC said council needed to consider putting a board together to oversee the management of the plantations so that they could be profitable.
Mahlaba recommended that the City appoint suitably qualified senior management and personnel to run and manage the forestry operations. Their responsibilities would also include the revenue component, the collection of rental income by people who use the facility for other activities. He said that team would also devise a clear harvesting plan which should be aligned to the maturity of the timber.