Death threats against municipal CFO who uncovered shady dealings

Mercy Phetla, chief financial officer and acting municipal manager at Mamusa local municipality in North West – has received death threats after she uncovered corruption and irregular payments within weeks of taking up the CFO position in April last year.

And she’s not backing down. There was an attempt to suspend her last December on charges of fraud and corruption, but she continues working – without pay, and having been removed as a signatory to the municipal bank account.

Phetla maintains these charges are designed to deflect from the graft she unearthed, which has become the norm at Mamusa – the administrative centre of which is in Schweizer-Reneke – for the better part of a decade.

“I have received death threats and have been warned numerous times to leave the area, but I am staying right here ... I will not be intimidated.

“I have to stay and help clean up this mess.”

A forensic report commissioned by Phetla and completed in January found direct acts of fraud valued at R40 million, with cumulative irregular expenditure for the current financial year standing at a staggering R564 million.

For a municipality of Mamusa’s modest size, “this is a huge loss and clearly translated into poor service delivery”, says the report.

Forensic investigators found evidence of cash being collected but not banked or banked later. And mysterious debit orders drained the municipal bank account over a period of years.

“The council oversight processes are so ineffective to an extent that in many situations, conflicted councillors give a blind eye to supply chain maladministration,” reads the report.

That report was commissioned by Phetla at a cost of close to R2 million.

Her supposed replacement as municipal manager, Gaboroni Mothibi, says Phetla was suspended over allegations of fraud and corruption specifically relating to the commission of the forensic report.

“We uncovered irregular payments she made to the tune of about R2 million, which was for a forensic report – we cannot find the owner of this company that she claims wrote the report,” says Mothibi.

Phetla says the real reason for the attempt to get rid of her is not the commissioning of the forensic report, but for the contents of it and its sweeping indictment of a municipality beset by “deficiencies, dysfunction and ineffective internal controls”, as well as “errors, abuse and fraud of financials due to a lack of oversight, wilful blindness to risks, and a breakdown of transparency and communications”.

Phetla was appointed acting municipal manager on 7 December, but that appointment was purportedly overruled by councillors, who appointed Mothibi.

His appointment was irregular and without legal authority, according to nonprofit Centre for Good Governance and Social Justice. Mamusa mayor Mittah Chelechele refused to endorse him and notified the council that Phetla remained the lawful acting municipal manager.

Mothibi was dismissed from the municipality in 2018 for gross negligence and misconduct and, according to Phetla, is disqualified from holding any position in the municipality.

This is not the first time Phetla has found herself in trouble. Previously CFO at Dr Pixley Ka Isaka Seme local municipality in Mpumalanga, she was fired a year ago on allegations she benefitted from irregular payments over which she had control.

But what really got her fired, she says, is her discovery that R14 million had been paid irregularly to a company for the refurbishment of the Volksrust Wastewater Treatment Works. The tender for this job had not been advertised, nor did the bid committee adjudicate its award.

She also refused to pay out R8 million for the supply of bakery equipment to a bogus business, after initially being duped to release payments by the municipality’s technical director.

Another accusation against Phetla is that she paid R20 million in 24 hours to a small number of creditors.

“Yes I did. That money was paid over to SA Revenue Services, Eskom, to which we owe more than R100 million, and into the pension funds of workers...

“I had to tackle all our biggest creditors so we could honour our obligations and maintain service delivery.

“The real question to ask is why weren’t these creditors paid prior to my arrival?”