FAILING THE PEOPLE, PART TWO
When gold turns to dust in the Free State’s goldfields
A Daily Maverick investigation into the Lejweleputswa District Municipality has uncovered a disregard for legislation, a culture of financial mismanagement and an apparent lack of accountability.
Lejweleputswa, which means “grey rock”, was once synonymous with opportunities since it is rich in gold deposits and lies in the heart of the Free State’s goldfields. But today, half of its population are unemployed, people live in filth, surrounded by rubbish, and huge potholes are the order of the day.
The troubled municipality, say whistle-blowers, is embroiled in a series of ongoing allegations of impropriety and maladministration amounting to millions of rands. They claim it is failing to deliver on its key mandates including strengthening local municipalities and initiating economic development.
In the last financial year the municipality received an unqualified audit outcome, “but struggled to produce quality performance reports and comply with all key legislation”, an Auditor-General report said.
Read more in Daily Maverick: AG slams failing Free State municipalities after no clean audit in 5 years
No action against senior employees
And during the Covid-19 pandemic, according to a Special Investigating Unit (SIU) report, the municipality’s procurement process for hand sanitiser and disinfectant was irregular, prompting the unit to refer three municipal officials for disciplinary action.
Read more in Daily Maverick: SIU probe flags hand sanitiser, disinfectant contracts as irregular at Free State’s Lejweleputswa Municipality
A senior municipal official, who spoke on condition of anonymity, said the municipality failed to take action, despite its top management structure having been implicated. Then acting municipal manager Palesa Kaota, former chief financial officer Pantalo Pitso and supply chain manager Bankitsa Baloyi were implicated in tender irregularities.
“The acting municipal manager is yet to initiate the process of a forensic investigation and is yet to refer the matter to law enforcement,” the official said.
The SIU report found that the trio should be charged for acts of criminal misconduct in that they “deliberately or negligently made or permitted Lejweleputswa Municipality to make irregular and fruitless and wasteful expenditure”.
Of the three officials, it is only Baloyi who was and remains suspended. Daily Maverick understands Pitso was suspended on 8 December 2022, before his contract was due to expire at the end the same month.
Meanwhile, Kaota could not be charged as his contract came to an end in August 2021. Following her departure, Lesley Makhetha was appointed acting municipal manager, a position which he occupied for three months.
In addition to the SIU report, an internal memo dated December 2022, and seen by Daily Maverick, recommended that Kaota, Pitso and Baloyi, as well as another employee, Dewald Kristen, face disciplinary action. While Baloyi remained on suspension, Kristen was also suspended in December and subsequently brought back to work quietly, allegedly by the acting municipal manager, Yolisa Kupe.
The memo also stated that the municipal council had resolved to refer only Pitso’s matter to law enforcement agencies and recommended a forensic investigation.
“There is reasonable suspicion that the company Biomass had an unfair advantage in procuring from the municipality or government, and that there might be an unhealthy relationship between Mr Pitso and Biomass,” the whistle-blower said.
It is understood that Kristen had his suspensions lifted within a period of three moths, without any due process being followed or an explanation to staff. He is said to have returned to work in January, according to the senior municipal worker.
Daily Maverick has seen the employee attendance register for the municipality’s finance department, which shows that Kristen had checked in at work from March 20 and 24.
The senior municipal worker said: “When we inquired about why they had returned, the acting municipal manager said he would get back to us. To date he has not done so.”
Employees getting away with wrongdoing
Daily Maverick also understands that a criminal charge was laid with the SAPS against two other municipal officials – Katlego Pitso and Mannuku Maribe – for unduly benefiting from long-service leave bonuses. Municipal employees only qualify for this benefit after five years in service, but the pair had only worked for the municipality for three.
In addition to facing fraud and corruption charges, they were suspended by the former acting municipal manager, Lesley Makhetha – only for the new acting municipal manager Yolisa Kupe to reinstate them.
“The reinstatement of these officials has set a precedent that employees can get away with wrongdoing,” the official said.
R1.7-billion tender under scrutiny
Daily Maverick has also uncovered the alleged “irregular” appointment of an engineering company to build a power plant at a cost of R1.7-billion.
According to a source, the power plant is supposed to be built on land not yet identified. The Lejweleputswa Municipality Development Agency (LDA) advertised in 2021 for the submission of proposals, saying it was looking for a panel of experts for the project. However, a single company, WASP Consortium, ended up being appointed.
The LDA said it only received proposals from 10 bidders for the plant that would sell electricity to the municipality’s more than 657,000 residents. However, an insider gave Daily Maverick a list of more than 25 bidders that had tendered for the project, which was envisaged to take an estimated 12 to 18 months to complete.
“The company was handpicked because of links with senior officials in the municipality. LDA clearly indicated that it was looking for a panel and not one company,” said another insider.
Derrick Montshwe, the managing director of Kgora Afrika Fund – the transactional advisers to the LDA – insisted that due processes had been followed. He also expressed his discontent with what he called confusion around the project.
“It is so sad that we try to create opportunities the right way and others would come blow them,” Montshwe said.
While officials insist they followed due processes, there are now threats to challenge the appointment of the service provider in court.
One of the losing bidders, Awali Engineering, demanded to be furnished with documents relating to the appointment of the service provider.
In an email addressed to the municipality, on 9 March 2023, the company said it was “very surprising” and “discouraging” that of the 87 bidders only one company had been appointed. “Logic dictates that it cannot be only two bidders that are compliant and meet the minimum threshold of 70% for functionality out of a total of 87 bidders,” the email reads.
The Auditor-General said, a lack of consequences had created a culture of impunity and a complete disregard for the rule of law among municipal officials at all levels.
Should the municipality fail to supply the requested information, the company “reserves (its) our right to seek intervention from the information regulator, High Court, SIU, Hawks, etc”.
A staffer at Awali Engineering has since confirmed that two weeks after its initial email, the company had not been furnished with any of the requested documentation and that it was taking a next step.
Project dead in the water?
WASP Consortium director Minal Soni said his firm had been appointed following a rigorous process in which it had to demonstrate it would be able to come up with the money to fund the project.
Despite being appointed in August 2022, Soni said the project had not taken off, citing the municipality’s failure to identify the land the plant would be built on. He said the municipality also failed to say in writing how much it would buy the power for, among other things.
“On our end, until this point, we don’t know if it’s feasible, we have nothing. As far as we are concerned the project is dead in the water.”
A senior municipal official agreed:
“The reason it has not gotten off the ground is precisely that due process was not followed and it’s all catching up with them. It is only now that land is being identified and communities and the different municipalities are being engaged.
Alleged conflict of interest
Senior staff at the municipality have also raised concerns about councillors doing business with the state. DA councillor Andre Styger, who is an attorney with Neumann van Rooyen Attorneys, has taken on consulting work from the municipality.
On the company’s website Styger appears as a director of conveyancing and wills and estates.
According to the senior managers at Lejweleputswa, Styger’s company is being appointed without tender procedures being followed.
The Auditor-General’s report also refers to two quotations to the value of R220,000 that were awarded to bidders who had not submitted a declaration as to whether they are employed by the state or connected to any person employed by the state; it is unclear whether these are linked to Styger.
Approached for comment, Styger confirmed doing business with the municipality, saying he had declared this during his first time as a councillor. He confirmed he had been asked by the council to serve as a specialist in a fraud matter at the Winnie Mandela Museum.
Read more in Daily Maverick: Hawks arrest six for allegedly embezzling Winnie Madikizela-Mandela Museum funds
Following the 2021 local government elections, when he was elected for a second time, Styger said he submitted an application to be able to do work for the council again, but the matter had not been brought to council.
“Since then we have not done work for the municipality pending its approval. As a matter of fact the previous CFO asked me for a legal opinion, which I said to him I would do on [the] basis that it would be free of charge as I can’t do work until my application has been submitted (to council),” Styger said.
Municipal officials, however, said Styger’s law firm was unlawfully benefiting from the municipality and the matter had been brought to the attention of the Municipal Public Accounts Committee, but it lacked gravitas to investigate issues before it.
Styger said: “I can understand if it looks sinister; as an attorney I was very much aware of the limitations.”
This matter has played out against the backdrop of a finding by the Auditor-General that in the previous financial year, at least nine awards to the value of R1.5-million were procured without inviting at least the minimum prescribed number of written price quotations from prospective suppliers, while the deviation had not been approved by a properly delegated official.
The Auditor-General also found that in some instances the municipality had accepted bids from prospective providers who were not registered on the list of accredited prospective providers or National Treasury’s central supplier database, and did not meet the listing requirements prescribed by the SCM policy.
Further, the Auditor-General said, a lack of consequences had created a culture of impunity and a complete disregard for the rule of law among municipal officials at all levels.
Human Rights Commission
The South African Human Rights Commission’s provincial manager in the province, Thabang Kheswa, said they were aware of issues confronting the province, and the commission planned a provincial investigative inquiry in the first quarter of the year.
“We will call on municipalities to come and testify on problems in their jurisdiction as the commission had over the years produced investigative reports on long-standing issues like the water crisis but nothing had changed.
“The [Mangaung] metro is a mess, the national government has intervened but we don’t see any improvement,” Kheswa said.
Newly elected premier and ANC chairperson the province, Mxolisi Dukwana, acknowledged, during his State of the Province Address, that financial mismanagement was one of the province’s biggest shortcomings.
“We have experienced the painful truth that fraud and corruption are not victimless crimes. The financial management and performance information audit outcomes of the Free State provincial and local government sector, clearly indicate our shortcomings in compliance with good governance principles, systems and processes. Our human resource capacity falls short of expectations and requirements.”
To curb the wrongdoing and corruption, Dukwana said the province would endeavour to establish a new fraud and corruption task team to bring together key stakeholders such as the Auditor-General, Public Protector, the Public Service Commission, the criminal justice system and key provincial departments such as the Office of the Premier, provincial treasury and the Department of Cooperative Governance and Traditional Affairs to drive the government’s anti-corruption programme.
Read more in Daily Maverick: Criminal syndicates operated in the Free State, fleeced the State and collapsed services – ANC political report
Also, a week ago, amaBhungane exposed how two out of three wastewater plants in the Free State did not meet national standards for sewage treatment, with no plans to fix failing plants.
In the past financial year the district municipality incurred irregular expenditure of more than R5.9-million owing to non-compliance with supply chain management (SCM) requirements.
Daily Maverick has seen a letter addressed to Dukwane as the then cooperative governance and traditional affairs MEC to probe a number of concerns:
- The appointment of service providers without following due processes;
- Appointment of staff without qualifications;
- Fraudulent qualifications provided by senior staffers;
- Finance staff being forced to make unlawful payments;
- Council members who submit questionable invoices; and
- Staff threatened with their jobs when they questioned invoices.
Telephonic attempts to reach the newly appointed Free State MEC of cooperative governance and traditional affairs were unsuccessful at the time of publishing.
Municipal manager shoots down allegations
The current acting municipal district manager, Yolisa Kupe, has rejected claims of slow progress in changing the position of the municipality, saying that “recommendations of the [Auditor-General] are being gradually implemented, it is not an overnight or once-off thing”.
He also shot down some of the allegations, saying everything done by the municipality had been approved in line with council resolutions.
Former council speaker Mmathabo Leeto, who has since been appointed health MEC, appeared to be annoyed when probed by Daily Maverick about the shenanigans at the municipality, saying: “Those are old news, all these things that you’re raising were dealt with a long time ago.”
She would not point out the publication or documentation proving issues had been addressed, arguing instead: “I will not comment on issues of common sense, those are administrative issues therefore I will not comment.”
Questions were also sent to the municipal communications manager, Khaya Mqeke, and executive mayor, Veronica Ntakumbana. The former responded: “We are busy with internal investigation regarding the matters raised on the media enquiry. Once finalised, we will issue an official statement.” DM
Read Part One here.