Tshwane managers sued for R160 million over failed tender

Five managers of the Tshwane Metropolitan Council have been sued by their employer for about R160 million over a tender that went wrong in 2018, leading to massive unauthorised expenses.

Others are under scrutiny for a music festival that then-mayor Kgosientsho Ramokgopa, now the minister of energy and electricity, intended to boost the city’s economy – for which the council spent R60 million in 2014. The festival never took place, and all the money was wasted.

Audit firm KPMG completed an investigation into the debacle in 2017, and the council is finally acting against the culprits.

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This is part of the work for which the municipal association Salga recently honoured the Tshwane Metropolitan Council.

The council received three awards:

• Award for the most improved revenue collection and debt management, which was at 92%;
• First runner-up for utilising municipal grants and service delivery at 84%; and
• First runner-up for reducing unauthorised, irregular, fruitless and wasteful expenditure by 21%.

Cilliers Brink, the DA mayor, is especially proud of the council’s progress in addressing the mountain of spending issues accumulated over the years.

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By law, municipalities must investigate such expenses and recover the money from those responsible. The money can only be written off if the council certifies, after a thorough investigation, that it is irrecoverable.

However, this rarely happens, and the amounts simply accumulate. By June 2022, they totalled R257 billion across municipalities nationwide.

‘Getting the Tshwane system right’

Brink says that in Tshwane, due to political instability in prior years and the council being under administration, little was done about the issue.

The amount rose to over R10 billion, including historic figures related to the PEU smart meter scandal and the music festival. The investigations were done, but the reports “hung in the air” and never reached the council.

“What we have now achieved is to restore the flow of reports to the public accounts committee and the mayoral committee,” says Brink.

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From there, they go to the council, and there are consequences for the manipulations that cost the city’s residents so dearly.

“We have not yet substantially recovered money,” he adds.

Besides the claims against those involved, which the court must decide on, the council is also initiating disciplinary actions, but this all takes time. The important thing is that “we are getting the system right”.

Debt collection

Although the recognition of better debt collection from consumers is welcome, Brink is far from satisfied with the 92% collection rate. The National Treasury’s benchmark is 95% of current debt.

“You actually need to collect 108% because you must also collect old debt,” says Brink.

The council has implemented plans to improve its collection further. Where the process was previously fragmented “and captured without proper control” there is now “a project management office on the first floor of Tshwane House where everyone in the collection chain sits together”.

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“We can now see in which areas we are losing money and which staff are not doing their part.”

One area that still troubles Brink is that of payment disputes with consumers.

“The evidence we have of what people owe us is not good enough. This is a major focus area.”

The metro council wants to automate everything so that consumers can upload their disputes electronically and competent people can quickly assess and resolve them.

Tshwane spending

The council was also praised regarding spending, but in Brink’s words: “We are not yet where we should be.”

The habit of spending most of the funds near the end of the financial year needs to change, especially. “Because then you often do not get value for money.”

He says that with better planning, most of the spending should take place in the second quarter.

Overall, he feels much more reassured that turning the big ship of Tshwane around is indeed possible, “especially because we are getting good people in key positions”.

He says the council’s new chief financial officer, Gareth Mnisi, and his team know what needs to be done and are willing to take hard decisions.

Eskom debt

The biggest risk for Tshwane is its debt to Eskom, accordng to Brink. The power supplier took the metro council to court, and the court instructed energy regulator Nersa to facilitate mediation between them.

“Tshwane is serious about the mediation process. We want to present a payment plan that becomes a court order, but Eskom rejects it outright,” says Brink. And National Treasury did not allow the metro council into its debt relief programme.

“We will only get a credit upgrade if we no longer have arrears with Eskom, and we need an upgrade because it will enable us to once again access credit.”

This article was republished from Moneyweb. Read the original here