The KwaZulu-Natal Cooperative Governance ministry has failed to act for nearly three years on a damning forensic report, which recommended fraud and corruption charges against a former Pietermaritzburg mayor and municipal manager, relating to over R290-million in tender fraud.
The forensic report by Morar Incorporated recommending criminal charges against former Msunduzi Municipality mayor Chris Ndelela and municipal manager Mxolisi Nkosi over the scam was submitted to then Cogta MEC Nomusa Dube-Ncube in August 2016.
The company was appointed to investigate the appointment of TNT Technology Solutions as an implementing agent for the Independent Development Trust (IDT), which the municipality engaged at the end of 2011 for infrastructure and electrification projects. However, the municipality cancelled the project, valued at around R450-million, over a lack of progress, despite R290-million being paid to the IDT. Only around R200 million was paid back to the municipality, with the report finding that the balance, around R82 million, was misappropriated by TNT.
Nkosi, a key figure in the KwaZulu-Natal campaign to elect Cyril Ramaphosa as ANC president in 2017 and a former Kokstad municipal manager, was subsequently suspended by Cogta and fired. Nkosi was also a former advisor to another key Ramaphosa ally in the province, ANC deputy provincial chairperson Mike Mabuyakhulu, when he was economic development MEC.
Nkosi was appointed as Msunduzi municipal manager as part of a bid to turn around the municipality, which had earlier been placed under administration by Cogta over administrative collapse and political infighting in the ANC.
The report found that both Ndlela and Nkosi had received cash payments of more than R1.5 million into their accounts during a period when companies which received payments as part of the scam made a series of large cash withdrawals. Ndlela was replaced as Msunduzi mayor in 2016 by Themba Njilo.
It found that they had illegally appointed Misizwe Zulu as an implementing agent for the infrastructure and electricity upgrade project. Nkosi had made payments to the Independent Development Trust (IDT) for disbursement to Zulu without council authorisation and had illegally extended the project.
The report found that Nkosi continued to sign off on payments to the IDT despite receiving complaints from council staff that work was not being done on the projects.
It said that a “corrupt relationship” had existed between Nkosi and Zulu, who, with Ndlela, had “planned” to appoint the IDT and allow the municipality to be defrauded.
The report recommended that fraud and corruption charges be laid against the three, and two other council officials. It also said disciplinary action should be taken against several other officials.
Mahlaba, the report said, had excluded unlawful payments by Nkosi from his audit report.
The council should, it said, institute a civil action to recover the money defrauded by the syndicate.
The IDT and TNT were retained “solely” on the basis of an introduction to a council emergency committee the day before New Year’s Eve, 2011, committee meeting by Ndlela and a presentation by Zulu.
The report described Zulu as the “key person” in the syndicate as he controlled the bank accounts of the entities which were used to defraud the municipality through the IDT.
The money was channeled to a number of individuals and companies, including the Desroches Hotel in Margate, to which R641 000 was paid. According to the report, payments of R39.3-million were made to Matrisolve, a Pietermaritzburg property company, which bought a golf estate and several beach properties on the KwaZulu-Natal south coast with the money. Zulu was a signatory of the Matrisolve bank account, the report said.
TNT, it said, spent just over R8 million in payments for goods and services that had nothing to do with the Pietermaritzburg infrastructure project.
The report said there was evidence that both Ndlela and Nkosi had “benefited financially” from their relationship with TNT and Zulu.
After being paid, various companies involved in the syndicate had withdrawn large amounts of cash.
“Due to the nature of cash transactions, we could not establish who received the cash after the withdrawals. However, we established that large amounts of cash and other deposits were made into the bank account of Mr Ndlela during the period, the total of which is R1.5 million, which excludes his salary and other payments from the municipality,” the report said.
During the same period, Nkosi allegedly benefited to the tune of R1.6 million. This included a R300 000 cash deposit into his bank account, R150 000 to a finance company for a car he bought and a R200 000 deposit towards his bond.
Zulu denied any wrongdoing, saying he had been an employee of TNT and that he had lost his job when the company was liquidated as a result of being unable to pay subcontractors on the project.
“The municipality cancelled the project with the IDT. The IDT requested a close out report and we delivered that,” he said. “I have never been interviewed by any forensic auditor. I would welcome it if they would. I am available. There is nothing I would like to hide when it comes to my involvement with the municipality.”
Zulu said the municipality had cancelled the project because of “political interference” in the council due to infighting between factions in the governing party in the council and in the province.
He said TNT was still owed R24-million by the IDT, which had resulted in it being unable to pay contractors, and the eventual liquidation.
Nkosi said he had done nothing wrong and was still waiting for the forensic auditors to “engage me”.
“No-one has bothered to interview me,” he said. “I have not seen the report, but not a single cent was paid into my account. It would be interesting to have a look at that report.”
He added that: “The IDT is an organ of state. There are procedures which are followed in making payments to an organ of state.”
Ndlela said he was not privy to the contents of the report. “I have no comment to make, but thanks for bringing it to my attention.”
Cogta spokesperson Lennox Mabaso undertook to comment on Wednesday but had not done so at the time of writing.
DA Msunduzi executive committee member Sibongensi Majola said they were still waiting for Cogta to table three reports into the municipality — which is currently under administration. “We want them to be tabled as soon as possible so that those who looted the city can face the consequences.”
He said that: “The challenge here is that investigations are instituted by nothing ever comes of them. There is a serious problem as there is no consequence management. Cogta is meant to exercise oversight, but from what we see it is at the centre of the problem by holding back these reports.”