The executive mayor, Kgotso Khumalo, approved a special Local Economic Development project in Ventersdorp. The funding for this project was made available through money held in trust by an attorney of the municipality.

According to documentation that the Herald has seen Khumalo undertook to refund the R100 000 to the fund but no refund has yet been made. According to various sources within the municipality who spoke on condition of anonymity, fearing for their safety, the money was paid into the mayor’s personal bank account.

According to Mayoral spokesperson Victor Boqo, the mayor’s office can not comment on the allegations as the matter of the trust fund is under investigation by the Hawks.

The Herald had posed several questions to the mayor’s office. Which include whether the mayor had indeed received the amount into his personal bank account, whether he had since refunded the amount, exactly what the project in Ventersdorp was that the money was used for and whether the city council was aware of the expense and or the existence of the trust fund.

“It is sub judice. It is, for this reason, I cannot comment further,” Boqo said.

According to the documentation, the money held in trust comes from a rental agreement where a piece of the Eleazer farm owned by the municipality was rented out to be utilized for mining. The agreement between the municipality and the company is for R1 million per year, escalating at 8% per year since July 2017.
The company that obtained the mining rights was placed under business administration in November 2017, but by way of a business rescue practitioner made a few payments on the arrears rental to the municipality.

According to Dr. Len Mortimer from the School of Public Leadership at Stellenbosch University, the management of these funds by the attorney in trust could be justified, because of the debt collection but the release of the funds should flow to the municipalities’ main banking account.

“Thereafter all expenditure incurred still needs to comply with the broad legal framework for SCM, more specifically the MFMA and its regulations, if not it will result in irregular expenditure. The income generated from the mining rights should still be accounted for in the income statements and balance sheet of the municipality as well as how it was expended in terms of the prescribed law dictating competitive processes as per S217 of the Constitution,” said Mortimer.

In a previous statement Lebu Ralekgetho, the municipal manager, noted that the funds are being held in trust as the municipality’s lawyer is in the process of collecting the outstanding amounts due to the council by the mining right holder.
“The attorney reports to council on a monthly basis on the progress of the matter. Their trust funds are also subject to trust audits on a quarterly basis as part of governing laws applicable to trust accounts. All municipal finances are also audited on an annual basis as legislated,” he said.

Money from the trust fund was also used earlier this year to fund an expensive trip to Durban, where municipal officials attended the Durban July. Although Ralekgetho previously noted that the money is ringfenced for LED projects, at least three of the delegates who attended the Durban July did not work at the LED sub-unit of the municipality. Ralekgetho also previously stated that a full report of the expense would be served before the council which still has not happened.