Eastern Cape Local Government MEC, Mlibo Qoboshiyane, says he has given the Ngqushwa Municipality in Peddie 30 days to respond to the damning findings of a forensic investigation.
Qoboshiyane says the report was tabled at a special council meeting yesterday.
He says the report provided evidence of administrative wrongdoing and the collapse of procedural procurement in the municipality.
The MEC said the report confirmed numerous violations as a result of these acts of maladministration:
These included violating the Municipality's own Supply Chain Management Policy, the Preferential Procurement Policy Framework Act and the violation of the Municipal Finance Management Act, among others.
The following below are the remaining extracts from the MEC's statement.
The period under review happens to be the same period where instability in this municipality was at a high. As the Department, we have a permanent commitment to encourage clean governance and credible administration.
The Ngqushwa municipality is fraught by constant affinity with maladministration, characterised by irregular deviation from procedures.
Having presented the report to the Municipal Council, we have given them 30 days to write to us indicating how they will implement the recommendations of this report and attend to its revelations.
Any form of impropriety can never be tolerated nor condoned as such shall make all of us, tasked with the responsibility of government, accessories to these acts.
Corruption and impropriety has to be shunned and its perpetrators ostracised as outcast in our midst as they are belittling and undermining the hard-earned gains that were made in our country.
We cannot afford to be dragged down by characters whose main aim is to suck dry the taxpayer of this country and the ratepayer of this municipality.
Any form of mismanagement and maladministration is a step backwards in the realisation of our goal of creating a better life for all, and this Department, and certainly this government, shall not relent on this.
The department is very much committed to the 2014 target of clean audit, and any deviation from that goal can never be condoned. The Auditor-General expects all municipalities to commit to a clean audit, and the department wants nothing less.
The report confirms the following violations as a result of these acts of maladministration:
The violation of the Municipality's own Supply Chain Management Policy.
Violation of the Preferential Procurement Policy Framework Act (PPFA).
Violation of the Municipal Finance Management Act, No.56 of 2003 and Regulations.
Weak or ineffective management controls, including reporting, and such unsavoury characters (both outside and within the institution) are taking advantage of the gaps in management.
Weak or lack of proper project management and monitoring mechanisms.
Lack of reporting and accountability.
Poor records management.
Neglect of duty and/or negligent conduct prejudicing the efficient administration of the Municipality; and conduct that prejudiced the effective administration of justice.
The team of Investigators accentuated their forensic audit probe on the following areas:
1. Travel & Accommodation Expenditure
Establish advances paid to Concorde Travel agency and compare with actual usage.
Establish what must still be paid to or recovered from the agency.
Establish contracts entered into with the agency and determine if all transactions were correct.
Establish the correctness of the travel expenditure and verify that the trips actually took place.
Establish further details of the costs incurred, if the purpose thereof was for official purposes and the person who used the facilities.
Conduct of the acting Municipal Manager in relation to the above. An article in the local newspaper (Daily Dispatch) alleges that he hired a Mercedes Benz for personal use.
2. Project Expenditure for the period 2010 to 2011
Establish if valid Supply Chain Management Processes were applied in the appointment of successful contractors.
Establish all projects not completed or subjected to a change of contractor.
Establish if the prescribed project conditions were in any way contravened and if donor consent was obtained to authorise such departures.
Establish amounts budgeted for and if VAT was claimed.
Establish the frequency with which particular Contractors were granted Projects.
Establish if any over expenditure or under expenditure occurred.
Establish who authorized Variation Orders and if such orders were budgeted for.
Establish if the project actually exists on the ground and if value for money was created. ·
Establish if any of the contractors are related to the Councillors or officials by conducting Cipro and Company Searches.
3. Project Expenditure for the period for the period 2010 2011
Establish whether the general expenditure for the 2010 to 2011 Financial Years can be accounted for and substantiated as required by legislation or treasury instruction.
Establish if the general expenditure incurred may have been subjected to any for m of irregular, Fruitless or Wasteful Expenditure.
Establish, where applicable, if Supply Chain Management procedures were applied for all expenditure.
Here are the recommendations of the report:
Recommendations of the forensic report
The significant findings highlighted in this report are indicative of the vulnerability of any system of internal control to human override and manipulation.
It is recommended that, for reasons discussed above, the Accounting Officer address the following:
Determine the total cost of the contract with Concorde and establish if the usage was for official purposes before taking the necessary action to deal with the matter.
Taking into account the provisions of 171(4) of the MFMA, consider whether the conduct of any of the officials in relation to the Concorde contract constitutes financial misconduct and taking appropriate action in response thereto.
That an effective contract management system is introduced and sound contract management principles are applied within the Municipality to ensure that contracts concluded are signed by both parties and the implementation thereof is monitored.
Ensures that where agreed on contract dates or values are exceeded; addendums to the contract or new contracts are signed to regularise any further payments thereto.
Ensures that an action plan is developed and implemented for the completion of infrastructure projects that are behind schedule or abandoned by the contractor.
Obtain legal advice to pursue civil action against Mr Badi for the numerous matters mentioned above.
Obtain legal advice to pursue the contractors for breach of contract.
Take action in terms of section 32 (4) of the MFMA, by informing the Mayor, MEC for Local Government and Traditional Affairs and the Auditor General, in writing, of the irregular expenditure incurred by the Municipality, indicating whether any person is responsible or under investigation for such irregular expenditure; and mention the steps that have to be taken to recover or rectify such expenditure and prevent a recurrence of such expenditure.
Strengthen the effectiveness of the Municipality by ensuring that internal control measures are implemented and effectively monitored.
With the assistance of Council's legal advisors, consider appropriate course of action to be taken on the claim lodged against the Municipality by Concorde.
Ensures that the Municipality develops and implements a Virement Policy to control the shifting of funds within votes.
Ensures that effective internal controls are implemented to ensure that basic principles of expenditure management are exercised when effecting payments.
Ensures that the segregation of duties and isolation of responsibility is implemented for the recommendation and approval of payments.
Take appropriate steps to ensure that effective records management is addressed by the Municipality.
The municipality should consider taking appropriate action against all the implicated officials of the municipality for contravening the SCM policies and prescripts.
Provide training for all.
