Meter tampering costs millions

ONE in every seven households in Nelson Mandela Bay is believed to have tampered with its prepaid electricity meter in the last financial year, costing the municipality millions of rands in lost revenue.

In addition, tens of thousands of water and electricity meters were either broken or faulty and did not give correct readings.

This, along with technical losses and leaks, accounted for the combined R461-million in water and power losses for the 2015-16 year.

The details are contained in the latest audit report by the auditorgeneral for the 2015-16 financial year, which highlighted serious concerns with the department that handles tenders – supply chain management.

The tender records were in such a shambles that the AG was not even able to measure the full extent of the irregular expenditure for the year, which ran from July 1 2015 to June 30 last year.

The municipality has, for the fifth consecutive year, received a qualified audit opinion.

It is a blow for the metro, which is trying to shed its image as a dysfunctional administration.

It also does not bode well for potential investors keen to pour money into the Bay.

The metro’s political head of infrastructure, engineering and energy, Annette Lovemore, did not respond to requests for comment on how the metro plans to deal with the water and electricity meter crisis in this financial year.

The AG said in the report that fruitless and wasteful expenditure amounted to R49.6-million for the year.

This was mainly related to the Integrated Public Transport System operating costs, even though the buses did not run the entire year.

“Due to lack of systems, and non-availability of sufficient appropriate audit evidence for all [tender] awards, it was impracticable to determine the full extent of the understatement of irregular expenditure,” he wrote.

“Consequently, I was unable to determine whether any further adjustments were necessary to the closing balance of irregular expenditure disclosed at R3.37-billion.” According to the report:

Revenue lost from not billing consumers for water and electricity amounted to R130-million;

The municipality is a defendant in lawsuits totalling R122-million;

Contracts were awarded to providers working for the municipality or whose directors are employed by the metro;

Allegations of financial misconduct by municipal officials were not investigated; and

There was inadequate documentation and records to ensure that sufficient, appropriate audit evidence existed in supply chain.

The AG raised concerns about leadership at the municipality and the high vacancy rate in the year.

“[The] leadership did not set the appropriate tone at the top throughout the year to lead by example, and this is evident from the numerous allegations against senior management officials and subsequent suspensions and resignations of top officials,” he wrote.

Despite the concerns raised by the AG, it was not all bad news for the municipality, with significant improvements in the last financial year to its budget, which reflected a R42-million surplus.

Also, the cash holdings increased by R600-million to more than R2-billion.

During the audit period, former city manager Mpilo Mbambisa was at the helm for the first few months before current administration head Johann Mettler took over.

Former mayor Danny Jordaan was the political head in charge for the entire period.

Responding to the concerns raised by the AG, former finance political head, councillor Rory Riordan, said the supply chain department was always a thorny issue.

“You will recall a year ago there was an enormous amount of irregular

expenditure that could not be quantified because the documentation was in absolute chaos,” he said.

“We went a tremendously long way and we actually got that right, and we sorted that out.

“The qualification on irregular expenditure went away last year.”

Riordan said the problem then returned in the year under review, which was a cause for concern.

“It was a great concern to me to what was actually going on here,” he said.

“I went to [chief financial officer] Trevor Harper at the time and asked what the problem was.

“He said there was a problem with one to six files they could not find.”

Riordan believes the situation will improve once the new online system for tenders is up and running.