‘Unexplained’ payments of millions made

The OR Tambo district municipality not only paid Amatola Water an “unexplained” advance payment of R28m and an advance of R12.6m for materials they did not deliver, but shelled out millions more for questionable invoices, a forensic investigation report concludes.

These include R91m to the King Sabata Dalindyebo municipality electrical department “for abstraction” in the Mthatha corridor, in which Amatola Water acted as a consultant, and R14m to Amatola Water for another invoice on KSD’s water and sanitation.

The report found that the advance fee to KSD “appear[s] to be overly inflated” and should be interrogated.

The report, tabled at last week’s council meeting, does not state when the R12.6m was paid, but says it pertains to construction of the Signal Hill reservoir in Mthatha.

The probe was instigated by the OR Tambo council and tabled by deputy mayor Robert Nogumla on Wednesday.

The investigation, which began on July 30 and ended on August 25, probed a June council report that OR Tambo had paid East London-based company Ruwacon R12.6m, but the forensic investigation found the money was actually paid to Amatola Water.

Amatola Water was supposed to pay an advance to Ruwacon for materials, but did not. Speaking to the Dispatch on Friday, Amatola Water spokesperson Nosisa Sogayise said the amount would still be paid to Ruwacon.

The firm Apac was tasked with conducting a forensic investigation into payments made from OR Tambo municipal coffers which led to the suspension of municipal manager Owen Hlazo.

The report states that OR Tambo officials did not bother requesting a payment guarantee for the R12.6m advance to Amatola Water. And, while the Amatola Water was paid in advance, it failed to pay an advance to Ruwacon, which had “provided the payment guarantee” to Amatola Water.

Apac concluded that the OR Tambo-Amatola service-level agreement should be reviewed by the municipality and it appeared to be derived from a previous agreement.

“It appears that the advanced payment transactions by OR

Tambo to Amatola Water are a breach to the provisions of the MFMA and are not aligned with the GCC 2015 [general conditions for contract],” the report found.

On the R12.6m finding, Sogayise said: “It is a concerning factor, especially after the guarantee to secure the advance payment by Ruwacon was submitted with unsatisfactory elements which were later rectified after five months.”

Asked why Amatola requested advance payments but ended up not paying the contractor and whether the contractor had now been paid, Sogayise said Amatola Water dealt with all project management responsibilities as well as the projects’ risks as outlined in the GCC.

“In this instance it appoints the contractors and consultants, manages the sites and administers the contract conditions including guarantees and sureties.

The entity then generates invoices to the OR Tambo municipality in order for it to be able to pay the contractors and the consultants as per contract conditions.”

Sogayise said the money would still be paid to Ruwacon but would “no longer serve as an advance payment because they have now paid for goods with their own funds”.

OR Tambo spokesperson Zimkhitha Macingwane said: “The report is a step forward towards finding out the facts around this matter.

“This matter has not been concluded as there are four investigations undertaken by the municipality in relation to the Amatola Water projects.”

The Hawks, the SIU, Cogta and a private investigator were all conducting their own investigations, he added.

Attempts to elicit a comment from Ruwacon on Sunday were unsuccessful.

The municipality shelled out millions more for questionable invoices

It appears that the advanced payment transactions by OR Tambo to Amatola Water are a breach to the provisions