Mercy Phetla has been accused of, among other things, making multi-million rand payments to the likes of Eskom, Sars and employee pension funds. Image: Supplied
Mercy Phetla – chief financial officer and acting municipal manager at Mamusa Local Municipality in North West province – has received death threats after she uncovered corruption and irregular payments within weeks of taking up the CFO position in April 2021.
And she’s not backing down.
There was an attempt to suspend her in December 2021 on charges of fraud and corruption, but she continues working away at her job – without pay, and having been removed as a signatory to the municipal bank account.
Phetla maintains these charges are designed to deflect from the graft she unearthed, which has become the norm at Mamusa – the administrative centre of which is in Schweizer-Reneke – for the better part of a decade.
“I have received death threats and have been warned numerous times to leave the area, but I am staying right here,” says Phetla. “I have sent my daughter back to my family home in Mpumalanga because of the threats, but I will not be intimidated.
“I have to stay and help clean up this mess.”
A forensic report commissioned by Phetla and completed in January 2022 found direct acts of fraud valued at R40 million, with cumulative irregular expenditure for the current financial year standing at a staggering R564 million.
For a municipality of Mamusa’s modest size, “this is a huge loss and clearly translated into poor service delivery throughout the municipality,” says the report.
The forensic investigators found evidence of cash being collected but not banked, or banked later, and mysterious debit orders draining the municipal bank account over a period of years.
“The council oversight processes are so ineffective to an extent that in many situations conflicted councillors give a blind eye to supply chain maladministration,” reads the report.
That report was commissioned by Phetla, at a cost of close to R2 million.
Phetla’s supposed replacement as municipal manager, Gaboroni Mothibi, says Phetla was suspended over allegations of fraud and corruption – the same accusations she has levelled at councillors and officials within the municipality – specifically relating to the commission of the abovementioned forensic report.
“We uncovered irregular payments she made to the tune of about R2 million, which was for a forensic report – we cannot find the owner of this company that she claims wrote the report,” says Mothibi.
Phetla says the real reason for the attempt to get rid of her is not the commissioning of the forensic report, but for the contents of it and its sweeping indictment of a municipality beset by “deficiencies, dysfunction and ineffective internal controls” as well as “errors, abuse, and fraud of financials due to a lack of oversight, wilful blindness to risks, and a breakdown of transparency and communications”.
Phetla was appointed acting municipal manager on December 7 last year, but that appointment was purportedly overruled by councillors who appointed Mothibi to the position.
Mothibi’s appointment was irregular and without legal authority, according to the non-profit Centre for Good Governance and Social Justice.
Mamusa mayor Mittah Chelechele refused to endorse Mothibi as municipal manager and notified the council that Phetla remained the lawful acting municipal manager.
Mothibi was dismissed from the municipality in 2018 for gross negligence and misconduct and, according to Phetla, is disqualified from holding any position in the municipality.
This is not the first time Phetla has found herself in trouble as a CFO. She was previously CFO at Dr Pixley Ka Isaka Seme Local Municipality in Mpumalanga, but was fired a year ago on allegations that she benefitted from irregular payments over which she had control as CFO.
But what really got her fired, she says, is her discovery that R14 million had been paid irregularly to a company for the refurbishment of the Volksrust Wastewater Treatment Works. The tender for this job had not been advertised, nor did the bid committee adjudicate its award.
She also refused to pay out R8 million for the supply of bakery equipment to a bogus business, after initially being duped to release payments by the municipality’s technical director.
Another accusation against Phetla is that she paid R20 million in 24 hours to a small number of creditors.
“Yes I did. That money was paid over to SA Revenue Services, Eskom, to which we owe more than R100 million, and into the pension funds of workers, because many of them could not retire without their pensions being up-to-date.
“I had to tackle all our biggest creditors so that we could honour our obligations and maintain service delivery. I negotiated terms with all our major creditors and had started to pay down these debts just before I was suspended.
“The real question to ask is why weren’t these creditors paid prior to my arrival?” she says.
“That money was disappearing into a few credit cards and into bogus tenders.”
Protests broke out in Mamusa this week as volunteer workers burned tyres and prevented municipal workers from entering their offices after allegedly failing to pay them for salvaging the local sewage plant, which had been abandoned by regular workers.
Mothibi believes Phetla is behind the protests – something she denies. “These protests are about money that was promised to volunteers and not paid. It has nothing to do with my case,” she says.
The volunteers say they were promised pay for stepping in to run the local sewage plant after regular workers walked off the job, and according to some, sabotaged the plant so that raw sewage ended up running through local houses and into the water system.
One of the protest organisers, Benny Gaberone, says the protests are really about shoddy service delivery.
“The sewage pump station was broken, there was sewage on the street and that was affecting the health of the local children. The regular workers were on a go-slow and municipal councillors didn’t even bother to visit the site. The protests are about service delivery. We have had two CFOs and two municipal managers in a matter of months,” says Gaberone.
“They removed Mercy Phetla because she uncovered corruption, and it’s time that National Treasury started to intervene.”
Mothibi says the wastewater treatment plant is working well, and the volunteers who worked there during the month of March were not qualified for the job.
An investigation is underway to ascertain who hired the volunteers and committed the municipality to pay them.
Mamusa has become the poster child for local government breakdown in SA.
The Centre for Good Governance and Social Justice has asked President Cyril Ramaphosa to intervene in Mamusa to rescue the failing municipality.
“It’s not been six months since we [had] local government elections and the councillors are scrapping over contracts and tenders,” says the centre’s executive director Mandla Mpempe.
“It’s clear that the rot runs deep in Mamusa and the reason the council wants to get rid of Ms Phetla is because she was doing her job and she uncovered corruption.
“These councillors and their cronies fully expected after the election that it was business as usual. They do not want anyone looking under the hood of this corrupt and broken municipality.
“It really is time for the national government to step in.”
Mpempe further says that raw sewerage is also spilling into local streams that eventually end up in the Taung Dam in the Greater Taung Local Municipality. “We raised this matter with the district municipality, the Department of Water and Sanitation, and the South African Human Rights Commission, all to no avail.”
This won’t be the first time the government has been asked to step in to rescue Mamusa. As Moneyweb previously reported, the provincial government dissolved the municipal council in 2019 and placed it under administration after service delivery protests turned violent. This follows years of mismanagement and 13 years of audit disclaimers issued by the Auditor-General.
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