The bankrupt Emfuleni Local Municipality has been found to have procured insurance brokerage contracts linked to a former ANC Gauteng secretary, irregularly.
The Public Protector has substantiated the allegations that Emfuleni irregularly procured Opulentia Financial Services, Fezi Auditors and Consultants.
Her office said the conduct of the Municipality constituted improper conduct as envisaged by section 182(1)(a) of the Constitution, and maladministration as envisaged in section 6(4)(a)(i) of the Public Protector Act.
However, the Public Protector recommended no action against those implicated since the municipality had already taken action.
The investigations came after a municipal whistleblower lodged a complaint with the office in 2020.
The companies were appointed for the provision of insurance brokerage services.
According to reports, former ANC Gauteng secretary Jacob Khawe, also a former Emfuleni mayor, influenced the awarding of an insurance contract to Opulentia, Fezi Auditors and Consultants - headed by his estranged wife, Nthabeleng Khabutlane.
As a result, former municipal manager, Lucky Leseane, was allegedly suspended in order to prevent the contract report and other anti-corruption reports from being discussed openly in the council. Former council speaker Maipato Tsokolibane, Khawe’s key ally, allegedly conspired and plotted his suspension.
In her report, Public Protector Kholeka Gcaleka said the allegations were substantiated, adding that the municipality had already commissioned an internal audit and an investigation through its internal audit department, to investigate them.
She said the municipality’s report found that:
- There was a lack of an appropriate procurement plan
- There was also a lack of monitoring and oversight of the functionality of the bid committees which resulted in non-functional SCM bid committees
- The bid committees had inadequate capacity and skills to evaluate complicated bids and the analysis of financial information
- There was a lack of and/or ineffective communication within the Supply Chain Management (SCM) related structures within the Municipality
- There was no monitoring of the bid validity period; and there was also a continuation of the bidding processes while the tender was no longer valid
- There was wasteful expenditure incurred in terms of the cost attached to normal competitive bidding processes was also identified
- There was non-compliance with SCM Regulation 32 on the processes followed by the municipality regarding the implementation of Regulation 32; and
- The municipality’s approved SCM policy did not make provision for processes and procedures that had to be followed when implementing Regulation 32.
Gcaleka said based on these findings, the conduct of Emfuleni constituted improper conduct as envisaged by section 182(1)(a) of the Constitution, and maladministration as envisaged in section 6(4)(a)(i) of the Public Protector Act.
She had taken cognisance of the fact that following the issuing of Emfuleni’s internal report, the municipality took steps to implement its recommendations including taking disciplinary action against the implicated officials, except those who are no longer working for the municipality.
She added that further cognisance was taken of the fact that some of the officials who were involved in the procurement process, resigned before disciplinary proceedings could be instituted against them.
“The Municipal Council resolved that the Municipality’s policies, including the SCM policy be reviewed; that a workshop be arranged for employees on SCM policy; and that the dismissal of the implicated employees be endorsed as recommended by the chairperson of the hearing.
"In light of the corrective action already taken by the Municipality, the Public Protector is of the view that where a state institution has already taken action or implemented remedial action based on its own internal practice and prescripts, within its sphere of administration, as is clear in this matter, it would not be prudent for the Public Protector to take further remedial action,” said Gcaleka, who added that she had finalised the matter based on the findings of the municipality’s report and would not take any further remedial action.
According to its latest 2022/23 audit report, Emfuleni is essentially broke, owing its creditors close to R9 billion. The biggest creditor is Eskom which is owed R6.8bn. The power utility took the matter to court last year and had the municipality’s accounts attached.