Loyiso Tshetsha, mayor of the unstable Great Kei local municipality, is allegedly at the centre of a scam in which the municipality’s name has been used to gather funds and donations that were channelled into a private company’s bank account.
The Daily Dispatch can today reveal that Tshetsha signed a letter that was sent to potential sponsors to raise funds for an October 2017 mayoral golf day.
Although the municipality’s banking details were on the letter, once a company signalled interest in sponsoring the event, it was supplied with an invoice on the letterhead of a company belonging to Tshetsha’s lifelong friend Morgan Mlungu.
This invoice features the banking details of Mlungu’s company, History Evolutions DVDs, which is based in East London.
According to a check, the company was registered in 2015 with Mlungu as the sole director.
The Dispatch could not verify what the company trades in further than the description on the company invoice which states: “History Evolution Dvds & Sports Wear” (sic).
The fundraiser is now the subject of an investigation by the National Treasury.
Provincial cooperative governance & traditional affairs spokesman Mamkeli Ngam said MEC Fikile Xasa had alerted the National Treasury to the allegations last year after a petition by ratepayers.
The Daily Dispatch has seen the municipal letter, dated August 15, requesting sponsorship for its October 2017 mayoral golf day from a Johannesburg-based company which is also a Great Kei municipality service provider. It is signed by Tshetsha in his position as mayor.
In its initial response, the company – Sebeta Micromega Group – asked the municipality to first pay its R3-million debt.
Numerous attempts to request for comment from both Tshetsha and Sebeta Micromega Group were unsuccessful at the time of writing.
It is unclear why Tshetsha, as the political head of the local authority, was the one requesting funds from service providers as this is the responsibility of the accounting officer, the municipal manager.
A municipal source close to these developments called on law-enforcement agencies to investigate Tshetsha.
“Our understanding is that what they did is a breach of the Municipal Finance Management Act (MFMA) for a mayor to request donations from service providers because the implication is that the mayor is exposing himself to possible fraud and corruption. He will be conflicted in tenders and will always want to please service providers.
“The MFMA is clear that whenever there is a donation, the municipality should open a separate account in the form of a trust for these funds.
“We do not know what happened to those funds,” the source, who works within the municipality, said.
In the letter to Sebeta, Tshetsha indicated that the funds raised would go towards a number of community upliftment programmes.
These included the revival of a community agriculture cooperative, a tertiary education support initiative and sports development.
It also said funding would go towards a spelling bee event.
However, the date of the spelling bee was July 16 – and any funds sent would have been too late for this.
Sebeta then did a turnaround – caused by elbow wrestling with the mayor in the background, the source said – and agreed to fund the October 20 golf event.
An invoice from Mlungu’s History Evolutions DVDs for R147000 was drawn up and sent to the company on October 4.
Mlungu confirmed in an interview with the Dispatch that Sebeta had paid the money into his company’s account. Asked why his company had invoiced Sebeta Micromega Group on behalf of the municipality, Mlungu said that the event had been an initiative of his company.
“My company contributes its time, its resources – including telecommunications, travelling and manpower – in organising and managing the event at no cost to the municipality.
“It is our contribution to the good cause of the event.
“After all expenses are paid, the funds that remained were given to the municipality for their chosen youth activities,” he said.
He did not reveal how much money had been given over to the municipality nor when this was done.
In an e-mail sent to the Daily Dispatch, Mlungu confirmed that he and Tshetsha were long-term friends, having grown up together.
He claimed that even though his company sent out invoices on behalf of the municipality, he never received any income from the event, which he said went ahead on October 20 as planned.
“It is important to categorically state that my company nor myself did not get any revenue/income from the project as the remaining amount was given to the municipality for further youth development initiatives,” Mlungu said.
Questions sent to Great Kei last week were not answered.
The troubled municipality has long been in turmoil, especially since last year, with residents marching on the municipal offices demanding Tshetsha’s removal.
Early this year ANC provincial secretary Lulama Ngcukayitobi described Great Kei as a municipality at war with itself.
The municipality is now bankrupt. It has not paid its 200-odd employees since last month and is currently under administration. —
siphem@dispatch.co.za..