Free State municipal mafia foiled

A ruling to dismiss the Mangaung municipality’s top two officials last Friday has highlighted how a group of senior councillors and officials ran an “organised corruption syndicate” that allegedly looted tens of millions of rands from the local authority.

The Mangaung Local Municipality, which includes Bloemfontein, Thaba Nchu and Botshabelo, ranks among the country’s top 10 biggest councils, with a budget of R1,5-billion.

The arrests by the Scorpions last July of then-Mangaung mayor Papi Mokoena, his wife Granny, his political adviser Jacob Thithi, city manager Mojalefa Matlole, chief operating officer Mzwandile Silwana and then-speaker Zongezile Zumane shook the Free State political establishment.

In October last year the African National Congress fired Mokoena from all his leadership positions. Municipal spokesperson Lele Mamatu said Thithi was still employed by the municipality as new Mayor Gertrude Mothupi’s adviser, although he was on suspension. Zumane has left the municipality.

They are all due to appear in court again on April 13, but the charges have not been detailed in public.

This week the Mail & Guardian can reveal the extent of the rot, which has come to the surface as a result of the disciplinary proceedings by the municipality against Matlole and Silwana. Both were found guilty last week on a lengthy list of charges by presiding officer Percy Sonn, an advocate and former head of the Scorpions. He recommended dismissal. Durban advocate Roshan Dehal prosecuted.

A council briefing paper obtained by the M&G quotes the Scorpions as claiming the corruption topped R150-million — 10% of the municipal budget.

A Scorpions affidavit last June to motivate warrants to search the Mangaung municipal offices described Matlole, Silwana and their political masters as “mastermind[s] behind [an] organised corruption syndicate operating in the Mangaung municipality”.

According to the affidavit: “Their modus operandi is to allocate tenders to the companies either owned by their spouses, parents, children, relatives, friends or themselves. In many cases the employees create fictitious invoices for services provided to the municipality and issue cheques to third parties, who will in turn pay them back the money after they have cashed the cheques.”

This week several claims were made from within the municipality that the newly elected Mangaung mayor, Gertrude Mothupi, who is the sister of provincial ANC secretary Lobe, had attempted to stifle the council investigation into corruption.

Sources said it was part of an attempt to conceal Lobe’s role in the network of corruption. It was also suggested by council insiders that new mayor Mothupi is in the same “ANC camp” as former mayor Mokoena, his former adviser, Thithi, Matlole and Silwana, and that there was a pact among them to protect each other.

Additional claims were made by insiders that the council tried to bring forward a scheduled debate last Friday ahead of Sonn’s judgement of Matlole and Silwana in an attempt to pass a motion to stop the disciplinary process against them and therefore nullify the prosecution process.

Mothupi did not provide a direct answer to a written question regarding claims that she was protecting her sister, but said: “The council meeting was not a scheduled meeting but a special meeting to consider, amongst others, council annual reports matters. Indeed, the matter of the suspended senior officials was also itemised. As a new council and leadership we are interested in bringing stability to the municipality … Surely if there is a need for council to review certain decisions, processes, costs, et cetera, we are entitled to that? However, no motion was passed, but council mandated me as executive mayor to compile a report about the process relating to the two officials.”

According to Lobe: “Gertrude [Mothupi] is my sister, but I don’t micromanage the affairs of any municipality, I manage the day-to-day affairs of the ANC. It is wrong for anyone to make the assumption that I’m involved in any municipality’s affairs or that my sister [has attempted to protect me].”

The charge sheets against Silwana and Motlale are also revealing:

  • Over the past year Silwana has repeatedly benefited a supplier to the council, Into Marketing, by awarding it contracts in excess of R2-million. Silwana’s wife, Brigitte, is a director of the company.

  • In 2004, Matlole approved payment of a socio-economic project grant to the tune of R969 000 to a private company, Moletsetse Communications, to finance a business venture with Cell C, without the requisite council approval.

Hendra Conradie, an attorney for developers Freddie and Irene Kenney, said: “It is impossible to comment because we have not seen the forensic reports upon which these allegations are based.

“The instruction to me was that there was absolutely nothing wrong with the deal. It went out on tender and was above board.”

Poverty is severe in Mangaung. According to Department of Provincial and Local Government documentation 58% of Mangaung’s households live below the poverty line, measured at between R700 and R1 500 per month per household.

The thwarted R79m scam

One of the worst cases of this duplicity — and a key set of charges against Mojalefa Matlole and Mzwandile Silwana — involved locking the municipality into an unauthorised transaction that would have cost R79-million over 12 years for a property that was independently valued at between R14-million and R25-million.

There was no tender.

The land for the same property was sold by the municipality, also without a tender, to the developer for a pittance after the deal had been struck to buy it back in developed form.

According to a forensic study commissioned by the municipality and obtained by the M&G, on February 9 last year Matlole and Silwana sold the property to the developer — called the Sue Celken Family Trust — for R184 835. This was about 80% below market value. The trustees of the trust are Freddie and Irene Kenney, apparently friends of Matlole, Silwana and other councillors.

On February 7 2005, two days before the sale, the Sue Celken Trust’s attorneys had prepared a purchase/lease agreement between the trust and the municipality, binding the municipality to repurchase the property for R79-million.

According to the agreement, the trust would build a new regional office for the municipality. The municipality would then occupy the property, paying the purchase price over 12 years, in addition to paying rental until the property was fully paid off.

Kenney initially approached the municipality in January 2004 with this development proposal through the head of the planning department, Wilfred Machogo. Machogo Development Associates (MDA), a corporation that Machogo was associated with before his employment with the council, prepared the Kenney’s development application to the municipality.

This week Charlotte Lobe, the ANC secretary in the Free State, confirmed to the M&G that she holds 13% of the MDA shares but denied knowledge of the company’s mention in any forensic documentation.

“I have been a shareholder for four years already, but I am not aware of any forensic report that names the company,” she said.

The purchase/lease agreement was signed on May 31 2005 by Matlole, but only approved by the Executive Council on June 14 2005. Concerns expressed by the finance department about the transaction were squashed by Silwana, who “ordered” the department to issue a favourable comment, according to the forensic study.

“Silwana and Matlole had concluded the transaction and ownership was transferred to the Trust prior to either of them making the required and prescribed disclosures regarding certain aspects of the transactions … Nowhere during the course of the investigation, could evidence be found of provincial approval obtained by the municipality for the purchase, which is necessary, prior to the conclusion of the transaction,” said the forensic documentation relating to the investigation.

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Vicki Robinson
Guest Author

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