Mbombela council wants SIU to probe ‘irregular’ R200 million construction tenders

Councillors in the ANC-run Mbombela local municipality in Mpumalanga will ask the Special Investigating Unit (SIU) to probe eight major infrastructure contracts totalling more than R200 million which were awarded irregularly.

Costs on the projects — which include the extension of a bridge in KaNyamazane and a road upgrade in the Nelspruit central business district — have ballooned, and the city’s municipal public accounts committee (MPAC) wants the SIU to probe how variations in excess of the stipulated 20% were approved.

This after the auditor general (AG) turned down a request from MPAC to probe the contracts, which it says were irregularly awarded and have been inflated unlawfully.

At the same time, councillors and officials have expressed concern over the alleged outing of a whistleblower who informed city manager Wiseman Khumalo that the municipality had paid a contractor R3 million to move an electrical substation when the work had been carried out by council staff. The city, Mpumalanga’s capital, was flagged by the AG last year as one of the province’s municipalities over which there had been “ongoing concern” over financial performance over the past five years.

In a letter to the AG in October, MPAC chairperson Kenneth Mkhonto said that a special council meeting had resolved that reports into the eight contracts by MPAC be referred to the agency for investigation.

Mkhonto said the reports dealt with requests from the city’s technical services division for variations in excess of 20% on the contracts awarded and required “urgent attention” as they had “significant financial implications on the projects involved”. 

According to the reports, which the Mail & Guardian has seen, the eight projects were awarded using Section 32 emergency powers, and had subsequently been declared irregular by the city’s audit committee. Variations which had been requested on the projects had ballooned — in some cases more than doubling the initial contract costs.

For example, R3 million quoted for professional fees on the KaNyamazane bridge project had ballooned from R3 million to R3.96 million — more than the stipulated 20% — while the R12.6 million budgeted for a single phase of construction had been increased by R6.69 million.

According to the MPAC reports, a R45 million road at Mjindi was now costing the city R68 million, while a second had required a variation of R6 million on a R22 million initial cost. 

MPAC recommended that the contacts between the city and the contractors involved in the projects be terminated as they were “irregular”; that the officials involved in awarding the contracts be investigated and censured and that the AG conduct a “thorough” investigation into all eight.

A senior council official, who asked not to be named, said that they had been battling to get to the bottom of how the contracts were awarded — and varied — and to ensure that those who were involved in the awards were dealt with.

“Contracts were awarded in an irregular fashion, variations were done irregularly and nobody is being held accountable,” the official said. “We cannot allow this municipality to continue to be run like this. There is a lot that has gone wrong here,” the official said.

According to documentation seen by M&G, the irregular expenditure was first flagged by the city’s internal audit unit last year after it found inaccuracies in reports submitted, along with the request for variations over 20%.

An initial investigation found that the awards had been irregular and a report stating this was tabled with the municipality’s audit committee. It, in turn, approached executive mayor Sibongile Makushe, Mkhonto and Khumalo, submitting a report in July expressing “concern” that the eight contracts had been awarded using Section 32 emergency powers.

Audit committee chairperson Phazamisa Mbatha wrote that the committee had only been made aware of the contracts after the city’s MPAC had requested an investigation by Mbombela’s internal audit unit.

Mbatha said this indicated that there was an “oversight deficiency” in terms of what was reported to the audit committee and MPAC. Mbatha said the committee recommended a further forensic investigation into the contracts to determine if the city had undergone financial losses and, if so, how this could be rectified. 

There was already prima facie evidence of irregular expenditure and the audit needed to look at the role of city officials in awarding the contracts, the report said.

AG spokesperson Africa Boso confirmed that the AGSA “has received a request from the Mbombela MPAC requesting the AGSA to investigate eight projects where variation orders exceeded the 20% threshold”. 

“The national audit office has considered the request in line with its standing procedures and has communicated its decision to the MPAC. The MPAC will therefore be best suited to give you an update on this matter,” Boso said.

Mkhonto referred M&G to city spokesperson Joseph Ngala. Ngala said he was not aware of  the details of MPAC’s investigations. 

“We might not be aware of how many projects the MPAC has subjected to an investigation but it is within their mandate to do so. The auditor general is privileged to subject any irregular expenditure if, in their assessment, they feel there are matters of material irregularity that need further investigation beyond the reasons given for such,” he said.

Ngala said that it was the responsibility of the municipality to disclose any irregular or unlawful expenditure to the AG ahead of the audit process.

“We will await the findings of the committee as well as the AG. We are duty-bound to implement any consequence management in case there’s any finding of wrongdoing,” he said.

DA Mbombela chief whip Sanley van der Merwe said they wanted the SIU to step in as the AG had refused to investigate and the matter was now “basically nowhere.”

“The AG said they are not going to investigate. The initial recommendations from MPAC stated that only two projects’ variation orders were to be approved, but that the AG, together with an independent engineer, to determine the exact value required to finish both projects but also referred them for investigation,” Van Der Merwe said.

“All the other variation orders were not approved but also referred for investigation.” Van Der Merwe said that a meeting of the MPAC on Monday had discussed approaching the SIU to investigate the projects as the agency had the capacity to do so. However, any SIU probe would require a proclamation from the presidency for it to move into the unicipality.

Despite the municipality’s commitment to clean governance, correspondence seen by M&G indicates that Khumalo was given evidence of corruption by a whistleblower last March, but has failed to act on it.

In a letter to the city manager last November, which M&G has seen, a whistleblower within staff expressed concern that Khumalo had failed to act on information regarding unauthorised variations on electrical contracts issued in 2020 and 2021.

These included the payment of R3.3 million to a contractor to move the Kamagugu electricity switching station when the work had been done by council staff, and the manipulation of a second tender to triple the cost, landing the city with a bill of R20 million.

The whistleblower said he had first provided Khumalo with the evidence — including invoices and proof of payments — in person in March 2022,  but no action had been taken.

“I made a follow-up with you on 22 March 2022 and your answer was that you would look into it and you are not even sure if you will be appointed as the new municipal manager,” the whistleblower said.

“I made a number of follow-ups thereafter with no clear action. At this stage it is clear that this matter was discussed with the other parties to the stage whereby union members were instigated against me at different levels,” they added.

“As a whistleblower, I was not adequately protected and supported by your office. I trusted that as accounting officers you would have acted on it in line with the fraud and prevention policy.”

The whistleblower said that in terms of the policy that variations over R100 000 with no council resolution were illegal, Khumalo was meant to have reported the matter to the SAPS, but failed to do so.

“These documents will now be submitted to the executive mayor, speaker, internal audit and other relevant authorities in order to investigate this [long] overdue case,” the whistleblower said.

A senior official, who asked not to be named, said that the evidence given to Khumalo had now been given to law enforcement agencies for investigation. “We are hoping that there will be progress now,” the official said. The whistleblower declined to discuss the matter with M&G but confirmed the correspondence.

Ngala denied that the whistleblower was being harassed, saying that there were “counter allegations” against the city official. “We are not aware of any whistleblower that has since been harassed for alerting the municipal manager of any corruption,” he said. 

“We are however aware of a whistleblower who was advised by the office to continue forwarding allegations at the energy department to the SIU so as to promote fairness and enhanced independence on the matter as there were counter allegations against the same whistleblower,” Ngala said.

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