File photo: National Director of Public Prosecutions (NDPP) Advocate Shamila Batohi. (Phill Magakoe/Gallo Images/Getty Images)
National Prosecuting Authority (NPA) boss Shamila Batohi has won a judgment freezing nearly R4.2 million paid by the Mangaung municipality to a company for work it did not do.
In the Bloemfontein high court judgment on 19 March, Judge Soma Naidoo found that there was credible evidence of “unlawful activities” after Maine Management and Chartered Accountants Incorporated received R4 186 741.75 from the Free State municipality in two payments in August last year without providing proof that it had done the work it was paid to do. It was contracted to identify disadvantaged residents so they could benefit from a programme for the indigent.
The Hawks have confirmed that they are investigating a criminal case of fraud, alongside the NPA’s civil litigation, although Hawks Free State spokesperson Captain Christopher Singo told the Mail & Guardian he could not divulge more information as the probe was “at a sensitive stage”.
The damning court ruling against Mangaung again highlights its poor financial management. In audit outcomes released in December, the auditor general found that the municipality had racked up more than R1.5 billion in unauthorised, irregular, fruitless and wasteful expenditure.
Maine’s contract ran from March 2022 to the end of August last year. It was mandated to identify and register indigent households, those with a collective monthly income of below R3 200, which were to benefit from a co-operative governance and traditional affairs departmental policy.
The national policy, which began in 2001, subsides qualifying homes with six kilolitres of free water and 50 kilowatt-hours of free electricity, per household per month.
However, Naidoo’s judgment revealed how the signature of Salome Makhooa, the municipality’s customer services manager, was “forged” so that Maine could receive its first payment on 8 August 2023, without submitting proof that it had collected the details of beneficiaries for the programme. Makhooa is the official authorised to sign payment requisitions after establishing whether contractors have completed the job.
“On the same day that [Maine’s] account was credited with [R1 971 657.75], three debit transactions totalling R85 440.24 and 39 transfers into the names of various individuals in the amount of R316 081.33 were made, leaving the account with a positive balance of R2 946 973.06.
“The latter amount included an overdraft facility of R1.4 million,” Naidoo wrote.
She added that Maine had received a further R2 215 084 on 17 August after Makhooa’s name was “struck out” without her knowledge and replaced with BL Moiloa, a data analyst manager who was not authorised to sign for payments in what the judge said proved the “unlawful activities” at Mangaung.
“Makhooa had, a few months earlier, spoken to Moiloa, expressing her concern about invoices being issued by the respondent [Maine] without submitting proof of work being done. Makhooa informed Moiloa that she (Makhooa) will not sign or approve invoices if proof of the work having been done is not submitted.
“Moiloa then informed Makhooa that she (Moiloa) will sign and approve such invoices herself,” reads Naidoo’s judgment.
She added that Batohi’s office, in Maine’s efforts to prevent its account from being seized by the NPA, had received a spreadsheet from the contractor, which showed it had invoiced for the details of 5 048 indigent residents being collected but had supplied a list of 4 530 names.
“[Batohi] elaborates that the invoices … list the number of recommended and rejected applications, without attaching any of the applications and supporting documents, which were specified in the indigent policy, namely the prescribed application form accompanied by the latest municipal account, proof of identity, proof of household income and three months bank statements,” Naidoo stated.
“The respondent also did not furnish proof that these applications were submitted to Makhooa, as it was required to do.”
The judge said that, in defending the freezing orders, Maine had not disputed that it had submitted invoices to Moiloa, who was not authorised to approve payments and did not vet the work supposedly done by the service provider.
“There is prima facie evidence of unlawful activities, which led to the respondents being paid the monies that are the subject of the preservation orders.”
On the criminal matter the Hawks are investigating, Singo said: “No arrests have been made [so] far. The complainants in the matter are kept updated on the progress of the investigation. At this moment, we may not reveal more details in the matter as the investigation is at a sensitive stage.”
The Democratic Alliance’s Mangaung councillor, Dirk Kotze, said in a January statement that the municipality’s poor financial position had been exacerbated by “no effective system of control for revenue management”.
“Mangaung’s failure to meet basic service delivery targets has not only failed its residents but is unlawful and non-compliant with set legislation,” he said.