Drain-cleaning probe raises more funding questions

Drain cleaning was the big issue at the municipal public accounts committee meeting on Tuesday, with Nelson Mandela Bay mayor Mongameli Bobani asked to explain to councillors why more than 40 SMMEs had not been paid.

During a special Mpac meeting, councillors spent more than an hour discussing the item brought forward by ACDP councillor Lance Grootboom.

He said there were a number of issues relating to the drains project, which had been passed in the December council meeting.

The project saw more than 600 SMMEs awarded a R21m contract to clean city drains.

“Where was the project manager?” Grootboom asked.

He said 40 companies had not been paid and 44 companies who were paid had failed to produce a portfolio of evidence “which begs the question of how they were paid in the first place”?

Grootboom said according to a leaked audit report compiled by JK Structures and Finecorp, work on the drains started on December 13 but companies had already submitted invoices by December 19.

“It’s shocking to pay service providers so quickly. The level of service of the work is very suspicious,” Grootboom said.

JK Structures and Finecorp found that more than R4m of the money meant for SMMEs was unaccounted for, while some of the funds covered a sub-contractor’s overdraft and a donation to a small firm.

The probe revealed that a letter – contained in the report – had been sent to sub-contractors Mbumba Projects and Sholden Lukwe Construction, which were handling the payments to about 900 SMMEs by the Black Business Caucus leadership, instructing them to deduct R500 from each business, to formalise the structure.

DA councillor Retief Odendaal said both Bobani and acting city manager Peter Neilson had flouted fiduciary duties and when the audit report had come out, they should have taken action.

“To date, we have absolutely no idea if the municipality has established whether the R4.6m was lost or can be recovered.”

Odendaal asked that the municipality institute a forensic report for the sake of clarity.

He said the South African Police Service had linked recent deaths to the drains project.

Bobani said the city had followed necessary processes and everything was above board.

“To councillor Grootboom, I want the names of the 46 companies that have not been paid by the end of business tomorrow [Wednesday] and the report that links deaths to the project,” Bobani said.

Bobani said they were unapologetic about providing 3,000 jobs through the R21m project and the fact that they had provided opportunities to 900 companies.