Eastern Cape municipality pays R67 million upfront for vehicles but only formalises deal whopping 8 years later

An Eastern Cape municipality paid R67 million to a fleet services company in 2015 without a formal agreement and only signed a contract this year – eight years after the deposit of the millions.

Furthermore, the municipal trucks and cars acquired through the deal only amount to R34 million.

These are the revelations of the Public Service Commission (PSC) in Pretoria, who is investigating Alfred Nzo District Municipality.

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Municipal Public Accounts Committee

The alleged wrongdoings were flagged by the Municipal Public Accounts Committee (MPAC) in its audit report of 30 June 2022.  

The MPAC report, which The Citizen has seen, found that:

• The principles captured in regulation 32 of the Municipal Supply Chain Management Regulations 2005 (SCM Regulations) were not adhered to in the execution of this contract.

• Further noted that the total assets for this transaction which reflect on the asset register amount to R34 605 449.39.

“This effectively means that R33 352 456.42 of municipal funds were used irregularly under the guise of this contract,” the MPAC noted.  

• The council approved a write-off for the irregular expenditure incurred due to this transaction.

Audit findings at Eastern Cape municipality

Simthembile Madikizela, EFF member in the Eastern Cape Provincial Legislature, who also sits on the Portfolio Committee on cooperative governance and traditional affairs, brought the MPAC report to the commission’s attention.

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The Kwane Fleet Services contract was valued at R67 957 905.81.  

The audit found that there was a disregard of laws that govern contracts in the execution of this deal by the Eastern Cape municipality. This is mainly because the deposit was paid on 15 January 2015, while the agreement was only signed on 5 May 2023 – more than eight years later, the report said.

In a letter addressed to PSC director general Advocate Pinkie Dube on 24 July 2023, Madikizela said the report was deeply concerning and it was his belief this matter was deserving of the attention of PSC Chapter to implement consequence management towards those implicated.

Special Investigating Unit

The Citizen understands that Special Investigations Unit (SIU) is already in the process of litigating this matter and has also made recommendations to the implicated municipalities.

“The need for the intervention of the Public Service Commission is brought about by the need for individuals who were implicated in this matter to be held accountable,” added Madikizela.

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He further said these municipalities were run by individuals, and the transactions that cost the district municipality millions were processed and approved by individuals.

Accountability

Madikizela said, “These individuals must be brought to account. It is my hope that this matter will be taken with the seriousness it deserves, and feedback from your office is reflective of said seriousness.”

Alfred Nzo District Municipality spokesperson Lixolile Petela acknowledged The Citizen’s questions and promised to take them to the municipal manager for a response.

While the response will be added once received, Petela vehemently denied wrongdoing in the deal.

The PSC was also asked for its views on the matter. Its statement will be added once received.    

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