Billions lost – as officials make illegal millions

Water and electricity losses cost Gauteng municipalities R3.6 billion in just one year. Joburg is responsible for more than half of this. The auditor-general’s report on municipalities lists material losses due to water and electricity for the 11 Gauteng municipalities and their entities. The auditor-general’s reports for 2010/11 were released this week. The worst losses were in the City of Joburg, with City Power recording R1.2bn in electricity losses and Joburg Water logging R827 million in water losses, a total of 56 percent of the province’s total losses. The Gauteng report misstates the City Power numbers, but the details of this are in the auditor-general’s report on Joburg and confirmed in City Power’s annual report for 2010/11.

The auditor-general also noted the City of Johannesburg’s material losses of R6m due to criminal conduct. Dozens of Gauteng municipal officials had made illegitimate millions out of their own employers, according to the reports. The auditor-general’s reports on the Gauteng municipalities for 2010/11 note that 75 municipal officials had got contracts worth nearly R65m. Nearly half failed to tell their employers about their interests in the contracts. Procurement regulations prohibit municipal staff and councillors from benefiting like this. The businesses involving the City of Joburg’s 27 badly behaved officials netted contracts worth a total of R45m. The auditor-general noted that one of those Joburg officials was involved in processing the award of the contract from which they benefited.

At Tshwane Metro, 41 officials got contracts worth R20m. Gauteng municipalities also wrongly awarded R67m in contracts to officials employed by other municipalities. The City of Joburg handed out 13 contracts worth R48m without bothering to go through competitive tender processes. The Joburg Fresh Produce Market had handed out 50 such contracts, together worth R50m. The Joburg Metrobus Services extended five contracts, worth R6.5m, “to circumvent competitive bidding process”, said the auditor-general. The contracts were not identified.

The auditor-general also found that six Gauteng municipalities – Joburg, Tshwane, Ekurhuleni, Sedibeng District Municipality, Emfuleni Local Municipality and the former Kungwini Municipality, had a greater number of their employees doing business with their institutions. On Tuesday Paul Serote, a senior official in the auditor-general’s office, said 71 percent of municipalities had unqualified audits with some questions, while 24 percent had qualified audit reports specifically on their assets management. He lauded several municipalities that had established municipal public accounts committees in their efforts to fight against the non-compliance of chain supply management and the establishment of fiscal discipline in the municipalities.

Premier Nomvula Mokonyane said her government was planning to put systems in place to ensure that all municipalities achieved clean audits by 2014. A premier co-ordinating forum would be convened to discuss with the municipalities all issues raised by the A-G. The forum is expected to be held within six weeks. Mokonyane also said the problems with billings in the City of Joburg would be brought to the forum’s attention. “We can do better… we have capable men and women to do the job.”