/ 15 March 2023

Umgeni Water board fired again

ANC campaigns chairperson Senzo Mchunu wants the party to heed the 'Thuma Mina' call.
Former members of the Umgeni Water Amanzi board have gone to court to challenge their removal by Water and Sanitation Minister Senzo Mchunu

Water and Sanitation Minister Senzo Mchunu is considering pursuing criminal charges against the outgoing Umgeni Water Amanzi board over millions of rands it blew on the unsuccessful search for a chief executive late last year.

Mchunu also intends to recover the money allegedly squandered by the board in attempting to employ a new chief executive without following proper appointment procedures — and after being instructed to halt all new appointments. 

The board had shortlisted a candidate who was not qualified, and then undertook an unnecessary, protracted and costly arbitration process, a “self-created” situation that had cost Umgeni millions of rands.

Mchunu axed the board — which was removed by his predecessor, Lindiwe Sisulu, in 2020 and reinstated through a high court order — on Friday after serving them notice of his intention to do so on 28 February.

The minister, who exercises oversight on Umgeni and all other water boards, appointed a seven-member interim board, chaired by Mzimkulu Msiwa, on the same day.

Now board members have served Mchunu, who is in the process of amalgamating Umgeni with Mhlathuze Water to create a single provincial water entity, with notice that they will challenge their removal in court.

Their lawyer, Sanjay Lorick, wrote to Mchunu on Tuesday saying the board would challenge the “unfair” termination, in the high court, along with a forensic report into the chief executive saga.

“Our clients intend challenging the termination and reviewing and setting aside of the report. The right of the minister to appoint board members and terminate their appointment cannot be an absolute right without any recourse,” Lorick wrote. 

He said the minister had terminated the board on the basis of a report with “material deficiencies” and had acted on it without inviting the board members to comment on its contents and findings.

“The report is not balanced, as it failed to take into account all the views of each board member, as well as written input.”

Lorick also challenged whether Mchunu had appointed the new board procedurally and requested documentation and “precise details” on “exactly how the minister appointed the interim board.”

The board’s tenure at Umgeni has been particularly controversial, with the Special Investigating Unit looking into corruption involving technology services company EOH and rampant abuse of procurement during the Covid-19 lockdown.

The previous chief executive, Thami Hlongwa, resigned days before he was about to be fired over his relationship with companies owned by Siboneleo Shinga, a tenderpreneur who was assassinated in Durban in January 2021.

Historic irregular expenditure racked up by the entity stood at R2 billion last year, with about R500 000 of it taking place during the 2021-22 financial year.

The several million rand blown by the entity on the search for a chief executive — and on appointments made by the board in defiance of an instruction to stop doing so ahead of the merger with Mhlathuze Water — is understood to have spurred Mchunu into action.

Auditing firm Gobodo was commissioned to investigate the chief executive debacle and delivered a report in early February on the basis of which he then acted.

In a letter to board members on 28 February, Mchunu asked them to provide him with reasons “I should not refer this matter for criminal investigation in accordance with section 86 (2) of the Public Finance Management Act [PFMA]”. 

He also asked the board members to make representations as to “why I should not require you to repay the wasted money occasioned by unnecessary arbitration embarked upon [and] sanctioned by the board”.

The minister gave the board members seven days to give him reasons he should not terminate their board membership. 

In the letter, Mchunu said the board had “self-created” the situation regarding the search for a chief executive by failing to adhere to the minimum requirements for the post when they shortlisted candidates.

They had also appointed a service provider to run the process “because of the prompt response in responding to the request for recruitment” and not on the basis of supply chain management procedures.

The board had then undertaken a “grossly negligent” process by entering into arbitration  with a candidate who they had shortlisted, knowing the person did not have the necessary qualification for the post.

Mchunu said the costs incurred in the arbitration were “exhorbitant” and “unnecessary.”

“Litigation costs would have been lesser, considering that the individual never had a case against the board,” he wrote.

The board had then refused to accept the arbitration award and had entered into a costly and irrational appeal process, which “makes it difficult to understand and accept the view that the board were merely acting on legal advice”.

Mchunu said he viewed their actions as unlawful and negligent and violated the PFMA.

“This may require me to refer the matter to the relevant law enforcement authority for criminal investigation,” he said.

In her response to Mchunu on behalf of the board, former chairperson Ziphozethu Mathenjwa said the forensic report by Gobodo contained “material errors” and “impugns the character and the bona fides of the members of the board”.

Mathenjwa said the board “vehemently denies that it has committed any irregular expenditure” and that it had acted “within the law” and Umgeni’s policies.

“The board is not clear on the mentioned criminal offences it may have committed and the basis of such conclusion,” she said. 

Mathenjwa said that even if investigators did uncover irregular expenditure, processes needed to be followed, which Mchunu had not allowed to happen before taking action against her and the rest of the board.

Mchunu’s spokesperson, Kamogelo Mokgotsi said that Mchunu had not referred the matter to law enforcement “at this stage”.

Mokgotsi did not provide details as to how much irregular expenditure had been incurred by the board. “The matter is sub-judice and we are unable to share such information at this point.” 

The department would “monitor the situation” with regard to potential court action by the outgoing board.