/ 17 October 2019

Municipal corruption remains rampant

More than two-thirds of this amount relates to a 2016 investigation into irregular expenditure and maladministration at the ​Msunduzi local municipality in KwaZulu-Natal.
The MTBPS tabled by the finance minister in the National Assembly on 26 October confirms that the treasury’s fiscal framework only works if municipalities deliberately entrench poverty. (Paul Botes/M&G)



Since 2002, 239 cases involving R1.4-billion in dodgy spending by municipalities have been referred to criminal prosecution by the Special Investigating Unit (SIU).

This was according to the unit’s presentation — which outlines the progress made on 49 investigations into municipalities — to Parliament’s public accounts committee on Wednesday.

The presentation gave a bleak view of the capacity of South Africa’s municipalities to root out maladministration and corruption. The presentation said that the unit has made 239 criminal referrals over the past 17 years.

The amount at stake related to these referrals — calculated by adding the value of the irregular contracts set aside, the amount of cash recovered, the amount still to be recovered through civil proceedings, and debt repayments — comes to R1 473 639 887.

More than two-thirds of this amount relates to a 2016 investigation into irregular expenditure and maladministration at the Msunduzi local municipality in KwaZulu-Natal, where the SIU identified potential losses of more than R1-billion.

Only nine criminal referrals arose from this investigation. The municipality was placed under administration earlier this year.

According to the presentation, the most criminal referrals (67) emanated from a 2010 investigation into irregular appointments, kickbacks and irregular expenditure at the Tshwane metro municipality in Gauteng.

The SIU, tasked by then-president Jacob Zuma with investigating allegations of corruption and mismanagement, found that 65 Tshwane officials had business interests in 66 companies with which the metro was doing business.

The SIU’s presentation to Parliament identifies a number of reasons why corruption thrives in municipalities. These include inadequate skills, poor governance, high staff turnover and the failure to investigate unauthorised, wasteful and irregular expenditure.

At the release of the municipal audit for 2017-2018 in June, auditor-general Kimi Makwetu called on municipal leaders to take an active role in the financial behaviour of municipalities, and start holding errant employees to account.

According to the audit, 74% of the 257 municipalities audited did not adequately follow up on allegations of financial and supply chain misconduct and fraud. Nearly half (45%) did not even have all the required mechanisms for reporting and investigating transgressions.

The audit found that irregular expenditure in municipalities came to R21.2-billion, an improvement from the previous financial year, when irregular expenditure was R27.7-billion. But the percentage of clean audits in municipalities declined from 14% to 8%.

In its presentation, the SIU said that investigations into alleged wrongdoing in the VBS bank scandal are at an advanced stage. Municipalities lost more than R1.2-billion by investing in the now defunct bank, despite being expressly forbidden to do so by the national treasury.

SIU head Andy Mothibi said he has seconded investigators to the department of co-operative governance and traditional affairs to uncover exactly how much money has been lost — and who approved the deposits.

The SIU’s presentation points to the establishment of a Local Government Anti-Corruption Forum as a means of strengthening municipalities’ ability to fight maladministration. It will co-ordinate efforts of law enforcement agencies to ensure that criminal prosecutions and civil recoveries are “well-synthesised”, the presentation reads.