Municipality Looted

Audit reveals litany of financial mismanagement, shoddy accounting

Apr 28, 2011

A leaked Auditor-General's report on a cash-strapped Free State municipality shows an appalling record of financial mismanagement. 

Ngwathe Local Municipality
"The home of growth, prosperity and growth"

The report on the finances of Ngwathe local municipality - which includes the towns Parys, Heilbron, Vredefort, Koppies and Edenville and is part of the Free State's Fezile Dabi district municipality - was presented at a closed council meeting two months ago. Budget Speech

 

Mayor: Cllr M.P Moshodi

 

Members of the Ngwathe ratepayers' association have stopped paying rates to the municipality in protest at its mismanagement. 

PAC Free State provincial secretary, Papi Mafubedu, is in possession of a dossier detailing allegations of mismanagement by the municipality. 

He said: "In Abazimeli informal settlement in Ngwathe, there is no water, no toilets, no streets, no electricity, nothing. When there is a funeral there, it is very painful to watch. The hearse has to park far away from the body." 

An invoice shows that municipal bosses spent R180000 on 200 A5 diaries for top managers at a cost of nearly R1000 each. 

The report, tabled at the council meeting in February, stated that the AG could not verify if assets worth R500-million really existed, because the municipality had no proper asset register. 

The AG could not find any supporting documentation for car allowances of R4.4-million and R2.9-million of "other allowances" given to staff. 

Another R7.5-million of capital expenditure "was not recorded in the accounting records of the municipality". 

The AG said it could not be determined if the municipality had indeed paid R14-million in subsidies to the indigent. 

In the previous year, the municipality had overcharged to the tune of R2.3-million for water and electricity. 

"Management could not provide sufficient appropriate audit evidence that these misstatements had been, and resolved," the AG wrote. 

About R85-million was spent on staff, but the AG could not confirm that this amount was accurate. 

The municipality said it had underspent its budget for providing services by R3.9-million, but the AG said he could not confirm whether this was the actual amount. 

The municipality faces lawsuits of over R31-million had not been factored into its financial statements. 

The AG could not find enough evidence that R8.2-million of VAT reimbursements to the municipality from the SA Revenue Service had been properly recorded by the municipality. 

The municipality tried to claim a further R2.2-million of VAT from SARS. The Revenue Service did not allow this but the municipality never adjusted its books to reflect this. 

Municipal bosses said R353-million of revenue had been generated but the AG could also not find evidence to support R167-million of this amount. 

Seven months ago, a 2009 National Intelligence Agency investigation of petrol-card fraud in Ngwathe municipality found that most of the municipality's cars were not running, but were being "filled", every 15km, at a cost of up to R28000 a month. 

Municipal manager Norman Selai has not responded to questions sent to his office two weeks ago. He promised to do so on several occasions. 

http://www.timeslive.co.za/local/article1041965.ece/Municipality-looted