R100m paid out of Mogale City municipality account in a single day

Mogale City municipality has allegedly paid out R100 million in invoices – including more than R2.6 million towards the construction of the contentious Krugersdorp central district taxi rank.

This was allegedly discovered from information gathered from the municipality’s bank account as part of the migration to a new financial management system.

According to a spreadsheet compiled by employees of the financial management system and listing transactions, dates, descriptions and amounts, the payments were made on 29 April.

There were at least 117 transactions on the municipality’s bank account, including funds paid into the account on the same day.

It is not clear why the bulky payments were made on a single day, and on the eve of the previous financial management system going offline due to the expiration of the company’s contract with the municipality.

Mayor Tyrone Gray yesterday said he would first need to have “access to the municipality’s documents to be in a better place to answer your questions”.

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According to the spreadsheet, which The Citizen has seen and was confirmed by an official of the new financial system, the largest amounts paid were R6.8 million, over R2.6 million and R1 million.

Parallel service provider conundrum

An employee of the company tasked with providing the municipality with the financial management system said as part of the data migration, they had to collect records on the municipality’s operating bank account.

“We have to import data from the old system, which is obviously linked to the municipality’s bank account. Each and every transaction has to match up in documents substantiating payments. This is what we are in the process of doing. Without documents to substantiate the payments, then the amounts cannot be accounted for,” he said.

The Citizen has reported how costs for the construction of the taxi rank – one of two of the municipality’s R1.9 billion mega projects – have ballooned from R47.7 million to R98.5 million.

An audit into the projects revealed there was no supporting documentation for invoices or evidence indicating invoices were reviewed prior to payment to ensure compliance to the terms of contract.

There was also no evidence that bids were solicited and evaluated to select the main contractor, or that the contractor had the expertise or resources to complete the project within the timeframe and budget.

Last week, new municipal manager Makhosana Msezana informed chief financial officer Dorothy Diale that all municipality’s financial transactions will be undertaken through the old BIQ System.

BIQ System’s contract with the municipality had come to an end and a new contract had been signed with a service provider.

Msezana explained in a letter to Diale that this was to ensure certainty and credibility of the transactions until the new system stabilised and was dependable enough to allow for independent operational identity.

But Diale raised red flags about the parallel systems, asking how BIQ Systems would be engaged as their contract had expired. “My advice as the CFO is that [the municipality] formally request BIQ vendor to hand over the entire history data since inception to the new system vendor due to the fact that the information is already paid for by the municipality…”

Diale replied in an e-mail. She said with the BIQ System, information had to be captured manually, which made it difficult to balance assets, contracts and supply chain management.

This was a concern [because] budget captured manually resulted in mistakes, changes of data without authorisation and incorrect reporting.

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