Paul Mashatile.
The Ekurhuleni metro municipality is in financial trouble, with a company asking the Gauteng government to investigate allegations of fraud, money laundering and corruption through the municipality’s investment account and others having had to fight to be paid.
A January 4 letter addressed to Paul Mashatile, MEC for co-operative governance and traditional affairs, from construction company African Moon, which claims it is owed more than R20-million, outlines why it believes there should be a forensic investigation into the municipality’s finances.
The legal wrangling between the municipality and African Moon – one of more than a dozen companies involved in an tender for Ekurhuleni road upgrades – has been going on since 2014.
The tender was originally for R800-million (in 2012) and by 2014 had escalated to R1.2-billion.
The company has been back and forth in court, trying to get the council to pay the money it is owed.
A Johannesburg high court judgment in April ordered the municipality to pay, but Ekurhuleni is seeking to overturn this ruling in the Supreme Court of Appeal.
Ekurhuleni spokesperson Themba Radebe said the payment had not been made because the municipality had discovered that the tender process had not been properly followed for Africa Moon and other companies involved in the roads upgrade job.
Mpho Mogorosi, one of Africa Moon’s directors, confirmed that the company had not been paid. He accused the municipality’s lawyer, Bongani Khoza, of delaying the process to receive kickbacks, which Khoza has denied.
Mogorosi said: “Everyone was happy with our work, with the former municipal manager handing over the certificate that we had completed the work for the municipality. All of a sudden the municipality won’t pay us.”
The April judgment included an attachment order against the municipality’s investment account. By November, R26‑million was attached by the sheriff from this account, but the money is being held in a trust aaccount and cannot be paid to African Moon because of the pending appeal.
Mogorosi claims that during this time, his partner was called into a clandestine meeting with Khoza and an official from Ekurhuleni municipality where it was mentioned that if African Moon wanted to get the money it was owed, a portion of it would have to be paid to the individuals present.
“Khoza said that if we didn’t give him a percentage of the interest, he would take the matter all the way to the Constitutional Court. He said: ‘Sizolamba’ [you will go hungry],” said Mogorosi.
Khoza has denied any wrongdoing.
“I did ask that the money in Samuels’s [Paul Samuels, African Moon’s attorney] trust account be transferred to the Khoza and Associates trust account because we were in the process of appealing this,” said Khoza.
He denied asking for a bribe, claiming instead to have been offered one by African Moon.
He added that the only discussion he had had with the company’s representatives was to tell them that the money should have never been attached in the first place.
But African Moon is incensed that the municipality continues to fight it instead of paying it. In the letter to Mashatile, Samuels, on behalf of African Moon, states that they have tried all avenues and have been frustrated at every turn.
“Having exhausted all internal avenues, including the courts, we have decided to escalate this matter to your office as we suspect that fraud, money laundering and corruption is at the heart of the failure, refusal and/or neglect by [the Ekurhuleni metro] to comply with the court order and instead bring spurious challenges to the courts amounting to fruitless and wasteful expenditure and incurring unnecessary costs which can be avoided.
“We believe that your office should implement a forensic investigation into this matter,” reads the letter.
Mashatile’s spokesperson, Mogomotsi Mogodiri, said they have had discussions with the municipality since the issue was flagged.
“We are a government that is opposed to corruption and should it be confirmed that someone solicited a bribe or any type of undue benefit, we will initiate corrective measures,” he said.
Mogodiri added that the MEC is keen to get to the root of what happened between the two parties. “But the companies have to be paid and the policy of government is that companies should be paid in 30 days from the date of submission of a valid invoice.”
As the only ANC-run metro in Gauteng, the new mayor, Mzwandile Masina, and his team are on a corruption-busting spree.
The municipality has received clean audits in the past two financial years, but the Democratic Alliance is accusing the previous ANC-led council of financial mismanagement to the tune of R7‑billion, involving 285 irregular tenders, and has asked the Hawks to investigate.