Ugu council staff accused of fraud
R300m taken from account, contractors implicated, ghost employees
SENIOR officials, the municipal manager and firms formerly contracted to Ugu Municipality on the KwaZuluNatal South Coast have been implicated in allegations of tender fraud, financial misconduct and the payment of ghost employees.
This is according to a damning forensic report which revealed that the allegations have resulted in fruitless and wasteful expenditure amounting to millions of rand. Investigators were tipped off during their investigation that R300m had been siphoned from the municipality’s bank account.
Among the allegations investigators probed were the irregular appointment of senior officials, one who apparently does not have a matric certificate yet was earning a salary of more than R600 000 a year, contracts awarded to relatives of municipal manager Dhanpalan Devraj Naidoo, and the flouting of the Municipal Finance Management Act and Supply Chain Management rules.
Tender fraud and tender irregularities, inadequate record keeping, including grossly inflated invoices, no quotations obtained for work done, and cases where contractors had been paid in full for a raft of incomplete water projects, were some of the damning findings contained in the report.
Investigators also found that the municipality had paid R1 628 870.47 to ghost employees and its staff complement bloated by 21 employees.
The 236-page report was tabled for discussion at a full council meeting yesterday. It calls for cases of fraud to be opened with the police relating to some of the allegations and for disciplinary action to be taken against the municipal manager and other senior officials.
According to the report, one senior manager, had allegedly been hired but the municipality, did not have evidence of his matric certificate. He told investigators that he had misplaced it and he considered his statement of results, which reflected just four subjects – two which were failed on standard grade and two which had been passed on higher grade – to be his matric certificate reflecting a pass. He earns a monthly salary of more than R55 000.
Several housing and water projects were investigated for tender irregularities where investigators made findings of irregular expenditure.
When investigators compared the employee Masterfile with the monthly payment report, it found 16 ghost employees who had been paid amounts ranging from R17 303 to R337 307 between June and last November.
“The employee Masterfile is thus ineffective as it is not compared to the monthly payments report … consequently, this disconnect has resulted in the municipality incurring wasteful expenditure in the amount of R1 628 870.47,” the report found.
The report highlighted dozens of invoices paid to a particular building and plumbing firm, which had been paid more than R10m for jobs without quotes being done for the work.
The same firm had also allegedly been awarded an IT contract to install surveillance cameras to the tune of R122 000 despite it having no IT experience, and another IT firm having quoted just R18 000 for the job.
According to the report, Naidoo allegedly had a relationship with the owners of two firms which had obtained contracts inflated by R117 943 to supply tyres, batteries and shock absorbers for the municipal fleet.
Investigators alleged that Naidoo had also previously lived next door to one of the business owners who was also associated with one of his relatives.
“The MM (municipal manager) and his family enjoy social gatherings and the like with the owners of these companies,” the report said.
The report also highlighted the alleged theft of R300m from the municipality’s bank account.
“During the course of our investigation, an envelope was placed on the windscreen of a vehicle which belongs to one of our investigators.
“This envelope contained details of allegations which fall outside the scope of our investigation,” the report said.
“However, upon initial perusal of the bank records of the municipality, we were able to find that approximately R300m was siphoned from the municipality’s bank account by an official whose details are contained in the document which was inside the envelope,” the report added.
Naidoo said he had not seen the report and believed he would be given a copy after the council meeting yesterday.
He said there were accusations made against him personally and the others made against him because he was the accounting officer of the municipality.
“On the issues of irregularities in the municipality, the municipal manager is held accountable and rightly so because I am the accounting officer. We will see whether the allegations in the report are that I was complicit or whether the staff were acting on their own,” he said.
“On the personal level, I was accused of fraud and corruption. The first accusation is that I have a son-in-law that owns a tyre company that gets all the municipal business, but I don’t have a son-in-law and I have no interest in a tyre business.”
Co- operative Governance and Traditional Affairs spokesperson Senzo Mzila said the department was waiting for the council to report back to the municipality.
“Currently, the contents of the report are before the council and it has been given 21 days to table the report before the full council and for them to inform the MEC Sipho Hlomuka of the steps they will be taking to implement the recommendations,” he said.
John Williams, a businessman and a member of the ratepayers association in Umtentweni, said people were aware of the allegations of corruption that were being thrashed out during the council meeting yesterday.
“We are happy there is finally something being done. We have been pushing for something to be done for the last five years of raising the issue,” he said.