‘Suspicious’ flooding damages key documents needed for audit in Nelson Mandela Bay

Foul play is suspected in a flooding incident that damaged crucial financial records needed by officials from the office of the Auditor-General, who are auditing Nelson Mandela Bay’s financials for the 2024/25 fiscal year.

The flooding — which took place last Tuesday on the first floor of the metro’s scientific services offices before leaking into the basement records facility — affected payment documents that are central to the audit.

The matter was reported at the Humewood police station two days later (Friday) by Mayor Babalwa Lobishe, accompanied by the acting city manager, Lonwabo Ngoqo, and her deputy, Gary van Niekerk.

Videos of the flooding show water seeping through the ceiling from the floor above into the records facility, damaging cardboard files stacked with piles of paperwork that are placed on the floor, while others in filing cabinets are undamaged.

Suspicions have been voiced that the flood was caused by a tap that was deliberately left running after the end of business on 18 November.

The incident was announced via the metro’s media WhatsApp group on Sunday afternoon by the city’s communications staff.

“Recently, [the municipality] formally opened a case following the recent incident at the Budget and Treasury Office. This action stems from the November 18 flooding of the office, the very place where your city’s most important financial and service delivery records are kept and at a time when an official audit was under way.

“Such an event has serious implications for how the municipality safeguards public information and upholds transparent governance,” reads the alert.

Police spokesperson Captain Sandra van Rensburg said an inquiry had been opened for investigation following an interview with Lobishe on Friday.

“No criminal case was opened,” said Van Rensburg.

Officials from the office of the Auditor-General have been in the city since the end of August to conduct a full audit on the metro’s financial statements and other relevant documents for the previous financial year.

The damaged files contain records of all contract payments in the city.

Contrary to the norm, the files that were damaged in the flooding were placed on the floor after being asked for by the auditors.

Normally, files are stored in cabinets with reference numbers to track them.

Without the payment documents, no investigating body can successfully probe any contracts in the city if a matter arises for the year under review.

‘Very suspicious’

On Sunday, the metro’s chief financial officer, Jackson Ngcelwane, said he had learned about the incident on Wednesday morning.

“All the affected documents are payment-related and have to do with all the contracts of the municipality, which are kept in one central place. These very important documents are required by the Auditor-General to be able to finalise the auditing process, as expenditure is a big part of an audit.

“The incident is very suspicious because it happens at such a critical time, and we can’t tell the Auditor-General that our files are affected by flood without raising suspicion,” said Ngcelwane.

Asked why only the documents required for the full audit were affected, Ngcelwane said they were placed on the floor for easy access by the auditors.

“For the documents to be kept on the floor, it’s because there was already an inquiry to access them by whoever requires them. At times, the documents would be on the floor if they are newly finalised payments that still need to be allocated space in the archival system,” said Ngcelwane.

“In this instance, the affected documents are mainly the ones that were on the floor. I know for a fact that they are documents that were sourced for the auditors, and they were on the floor waiting for them.”

Asked whether the municipality would not be further burdened with another huge expenditure that can’t be accounted for and therefore classified under “limitation of scope”, Ngcelwane said these were two different cases.

Limitation of scope is a finding by the Auditor-General that arises when auditors cannot obtain sufficient evidence — due to missing documents, system restrictions or other barriers — to form a full opinion on a government entity’s financial statements.

“In this case, it’s payment documents that were centralised; wet as the documents are, we will know what they were for because there’s a reference number somewhere,” said Ngcelwane.

The city is faced with R30-billion in unauthorised, irregular, fruitless and wasteful expenditure (UIFWE) that accumulated over two decades.

Read more: Missing documents hamper Nelson Mandela Bay’s bid to write off R350m in disputed expenditure

Of the total UIFWE, R2.6-billion is classified under limitation of scope, as the city can’t provide evidence of how the money was spent due to documents that went missing after a system was updated.

Ngcelwane said the metro still filed hard copies with no electronic backup, but was gearing up to start the process of scanning the payment vouchers.

Disappointed

Lobishe said she was disappointed by the delay in reporting the incident to the police.

“We heard about it on Wednesday. Unfortunately, we concluded the mayoral committee quite late that day, and the acting city manager was not immediately available to open the case.”

Lobishe said she took it upon herself to report the matter to the police because no one had done so two days after the incident.

“It’s quite abnormal that water would flood and only the files required by the Auditor-General are affected. Normally, our floors are insulated to prevent any liquid leakages.

“There are many assumptions as to what actually happened, hence we decided to go to the police so that the relevant investigating unit and the metro internally can institute a probe.

“It’s a very shocking incident that it’s the payment documents that are affected.

“I strongly believe it’s suspicious and it’s too convenient that it happens at this time and only on that floor and affecting those specific documents,” said Lobishe.

The political head of the budget and treasury department, Khanya Ngqisha, said, “The incident is suspicious, but that’s all there is to it, a mere suspicion, hence the mayor has opened a case with the police for the law to take its course.

“What I know is that the flooding is as a result of someone leaving the tap open on the floor above.

“Whether it was done in error or deliberately remains to be seen, but we are concerned about how this hinders the work of the Auditor-General.”

Long-standing problem

Freedom Front Plus councillor Bill Harington said any damage to the documents places the city’s financial integrity, ongoing investigations, and public trust at risk.

“This department is the custodian of the city’s most sensitive financial records. We believe that only a fully independent and transparent investigation will provide the clarity residents deserve.”

Harington said the incident exposed a long-standing problem the party had repeatedly warned about.

“The municipality and its directorates continue to rely on outdated bookkeeping systems that do not make full use of modern electronic processes. In a city that manages billions of rands, it’s unacceptable that essential records can be lost to flooding or fires.

“Had the municipality invested in proper digital infrastructure, all data would have been securely stored on protected servers where no physical event could destroy it,” said Harington.

The Democratic Alliance’s Brendon Pegram said, “I don’t think we’ve heard the full story yet. Why would the mayor lay charges at the police station if no internal investigation was done? I would have expected an internal investigation to be done first, and then the police, if any form of sabotage is suspected.

“It is also coming across to me that there is more to this story than meets the eye. To lay criminal charges without any due diligence being done by the municipality makes absolutely no sense, unless the municipality is deliberately trying to shift the focus away from the problem. But we don’t know. It is a very peculiar situation and very suspicious.”

ACDP councillor Lance Grootboom added his party’s concerns, saying, “The ACDP notes with serious concern the flooding at the municipality’s Budget and Treasury Office.

“It is especially worrying that the flooding occurred in the area where key documents were stored. With the audit under way, it is reasonable to suspect that some of these records may have been needed to complete the process. The timing and circumstances raise questions that must be properly examined.

“While we welcome the opening of a case, we call for a thorough and transparent investigation into all possible causes. Our city cannot afford anything that undermines accountability or the integrity of its institutions.” DM