SIU finds no corruption in City of Joburg but Auditor-General has concerns

Parliament has heard detailed accounts of financial performance and issues such as corruption in the City of Joburg.

On Wednesday, the Standing Committee on Public Accounts (Scopa) received briefings from the Auditor-General regarding the Johannesburg metro’s annual reports and financial statements.

The Special Investigating Unit (SIU) also updated Members of Parliament (MPs) on its investigations into the municipality.

Auditor-General details City of Joburg’s financial challenges

In the eight-hour-long meeting, Dumisani Cebekhulu, business unit leader for the Auditor-General’s office in Gauteng, expressed concern about the City of Joburg’s lack of progress in improving its audit processes.

“The City of Joburg is made up of a number of entities, some [of which] are seized with very key responsibilities insofar as dealing with the issues of service delivery,” said Cebekhulu.

“For a number of years, we have been auditing this particular metro and its related entities, and we have seen the metro go through times when the audit outcomes were on an upward trajectory.

“We have also gone through a phase where the audit outcomes are regressing. Currently, the audit outcomes of the City of Joburg are stagnant in a sense that we are not seeing lots of improvement as it relates to the audit process,” he said.

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Cebekhulu highlighted the metro’s persistent financial struggles.

“We have noted for a number of years that the city has had challenges related to financial health.

“This talks to how the City of Joburg as a metro has for a number of years struggled with issues of collection of debt, revenue and dealing with compliance-related matters.”

He also raised concerns about insufficient investment in infrastructure, noting that the lack of funding for maintenance and new infrastructure projects has hindered service delivery.

“There we talk about issues of how there are not enough funds going into maintaining the infrastructure that is already on the ground and also there’s not enough investment that goes into the procurement of new infrastructure. This then creates challenges when it comes to actual service delivery.”

Watch the meeting below:

City of Joburg audit outcomes

Only two entities, Joburg Market and Joburg Theatre, achieved clean audit outcomes in the 2022/2023 financial year.

The metro itself and other entities, such as Joburg Water and City Power, Pikitup and Johannesburg Roads Agency (JRA) received unqualified audit opinions with findings.

“We noted challenges due to poor collection as it relates to some of the key entities, the Joburg Water and Joburg City Power, which are revenue-generating entities. This affected the overall financial health status of the city.”

The Auditor-General’s office recommended strengthening internal control processes and re-evaluating the metro’s service delivery model to improve operational effectiveness.

“We don’t have a specific view on how the city should be structured, but we have said to management as it relates to the operational effectiveness of the city, the metro must be seized with looking at whether the model that it currently has is ultimately positioning the city well to achieve to its primary mandate.”

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Cebekhulu also flagged irregular expenditure, which rose from R8.8 billion in 2019/2020 to R11.1 billion in 2022/2023.

Of this R11.1 billion, at least R4.2 billion was written off, while R7.7 billion remains unsolved.

No money lost due to the irregular expenditure has been recovered or condoned.

“[Joburg] is city that has huge irregular expenditure and non-compliance issues. It is a city that is having serious challenges with regards to infrastructure.

“What it then does is that it limits or affects the city negatively as it relates to fulfilment of its mandate to provide services to the residents.”

SIU investigations into City of Joburg

The SIU, led by Gauteng head Sagren Reddy, presented its findings on various procurement processes in the City of Joburg.

The investigation covered the procurement of vehicles and maintenance services, repairs at fire stations, installation of CCTV equipment, and the purchase of uniforms for the Johannesburg Metropolitan Police Department (JMPD).

Reddy reported irregularities in a R9.1 million contract awarded to Fire Raiders for the procurement of 29 fire engines.

However, the SIU found no irregularities in a R3 million contract for maintenance at the Midrand Fire Station.

“There were no payments made to that particular company on the same day as alleged, so we found that there was nothing irregular there,” Reddy said.

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Regarding the R10.6 million CCTV installation project for the City of Joburg’s emergency management services (EMS) and JMPD, the SIU uncovered duplicate payments amounting to nearly R600 000, which must be recovered.

Despite this, Reddy stated that no irregularities were found in the overall procurement process.

“We concluded site inspections at all the facilities, and the equipment was installed and was in good working condition, so we found there were no irregularities regarding the procurement.”

Reddy added that while no corruption allegations were confirmed, the SIU had tracked the flow of funds during the procurement process.

“There were no findings. We couldn’t find any corruption there.”