President Cyril Ramaphosa has demanded a full report from four Eastern Cape municipalities where the special investigating unit probed how almost half a billion rand was paid to hire yellow fleet plant equipment from a company which did not even own the equipment.
The Presidency signed off the proclamation in 2016, and the SIU hit the ground running in February last year, launching its investigation at Alfred Nzo’s municipality, where R218m was paid in two tranches for plant machinery intended for road construction.
Others were:
Mbashe in Dutywa, where R72.9m was paid;
Raymond Mhlaba municipality in Alice, where a yellow fleet worth R41.3m was hired by an “incorrect application of the MFMA” (Municipal Finance Management Act).
At the troubled Amahlathi municipality in Stutterheim taxpayers bought a yellow fleet for R107m in 2014.
Ramaphosa’s spokeswoman Khusela Diko confirmed to the Dispatch on Monday that the “president wrote a letter at the end of last year to all the implicated municipalities”, including Amahlathi.
“He wants an update on what action has been taken now that the SIU investigations have been concluded. There are recommendations in those reports and so municipal councils have to deal with this,” added Diko.
The modus operandi of Laman financial services, under its director Mcebisi Mlonzi, was to hire the machinery and then enter into an agreement with a municipality under the false pretence that it would own the equipment.
Each contract stated that the deal was rent-to-buy. This was under an incorrect application of Section 32 of the MFMA [Municipal Finance Management Act] and a fraud by the supplier, said the SIU.
The Dispatch has seen a copy of the SIU report for the Amahlathi local municipality.
It states that the SIU had already served summons against Laman financial services, and Mlonzi. The unit also advises Amahlathi council to request national Treasury to “blacklist” Lamana and its directors on the database.
The report singles out former municipal manager King Socikwa and finds him liable for all the mismanagement of the funds.
Contacted for comment on Monday, Socikwa – whose contract was not renewed in 2017 – said all he had been trying to do was speed up service delivery “by ensuring that the fleet is in-house. We managed to resurface many rural roads to save costs.”
He confirmed that the municipality entered into a 36-month contract which saw Amahlathi pay R2.8m a month to settle the debt.
“We paid for 29 months but we were advised to stop seven months before completion of the contract and had to give back that fleet. I did not get a single cent from this. I was only doing my job. It’s unfortunate that when someone conducted this investigation which implicates me, I was not afforded time to see a copy of the report and respond to the final report,” said Socikwa.
Co-operative governance and traditional affairs MEC Fikile Xasa confirmed receiving a copy of the letter from the Presidency to Amahlathi. “We are waiting for the municipal manager to call a council meeting, with the blessings of the speaker, so that these recommendations can be discussed and owned up [to by] the council for a way forward,” said Xasa.
Amahlathi municipal manager Ivy Sikhulu-Nqwena could not be reached for comment on Monday to explain when the item would make it on to the council’s agenda.
She had not respond to text messages by print deadline...