First published in the Daily Maverick 168 weekly newspaper.

EThekwini municipality’s audit committee presented a damning report at an executive council meeting on Thursday, flagging rampant irregular spending, poor record-keeping and planning, and more than R1-billion spent on overtime in the past year.

The report focused on the city’s fourth- quarter performance, which ended in June 2020.

Audit committee chairperson Nalo Mhlongo told Exco that serious questions needed to be asked about plans and initiatives to halt poor audit outcomes.

A key concern raised by Mhlongo was that almost every municipal unit saw sharp increases in irregular expenditure, totalling R328.1-million, up from R314.3-million a year earlier.

The bulk of this cost was carried by the city’s water and sanitation unit, with irregular expenditure of R153.5-million, a position the unit held a year earlier, with irregular expenditure topping R146.7-million. The report also found that the same department had incurred R92.2-million in unauthorised expenditure.

As previously reported by Daily Maverick, officials in the water and sanitation department are being investigated by the Hawks’ anti-corruption task team for widespread fraud and corruption, estimated to the value of R700-million. In September, the homes of several employees were raided by the Hawks, who seized documents and electronic equipment pertaining to the case. Arrests are yet to be effected.

Mhlongo told Exco: “A bigger portion of the [overall] irregular expenditure was due to poor planning. According to management there is a turnaround plan in place to address the challenges around supply chain management and it was presented to the audit committee but no time lines for the execution of activities were incorporated into the plan and key project champions are not clear on the plan.”

The audit report found that in the 11 months ending on 31 May 2020, the city spent R1.2-billion on overtime payments, a 9% increase on the previous year.

“It was noted that for May 2020, some employees claimed overtime pay above their basic salaries by up to 345%, with overtime hours ranging between 144 and 394 hours per employee.

“The City formed an overtime task team in February 2019 and it has only met thrice since then. The results do not display any effectiveness on the part of the task team and the internal auditors could not find any evidence that there are action plans in place to address the overtime challenges and no corrective actions had been implemented,” said Mhlongo.

He said an audit review was conducted on Section 36 awards, which allow for a deviation from normal tender processes in the case of emergencies or when it is not practical to go out to tender, for the period between October 2019 and January 2020.

That process found the reports submitted to the bid adjudication committee (BAC) did not contain detailed and comprehensive reasons or motivations for the deviations and that the BAC’s decision-making process was “compromised”.

“It was noted that in many instances that Section 36 was used for cases where the deviations were due to lack of adequate planning or contract management. The city has also not developed a strategy to deal with interferences from the business forums and community protests which result in additional contract costs and delays in completion of projects and thereby requiring the use of Section 36.”

There were several other issues flagged by the audit committee, such as that the development and sustainable initiatives for the Programme Management Office, which forms part of a cluster within the strategy office and focuses on city regeneration, only “exists on paper with no practical execution”.

Mhlongo also said that the city’s purchase of 1,600 Microsoft licences amounting to R19.1-million on a three-year licence agreement sat idle for about 24 months before they were finally used.

Findings included control weaknesses in supply chain management regarding monitoring of supplier performance, financial evaluation of suppliers, performance guarantees and sureties, and delays in the bidding process and issuing letters of awards.

Mhlongo said the city had also failed to hold an auction of its fleet, with some of the stock having stayed in storage for more than five years. It was subjected to theft and vandalism at the depot. DM168

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