SIU report fingers 3 municipalities

Noel Petersen

The Special Investigating Unit (SIU) is continuing its probe into three Western Cape municipalities where, in a report on its interim findings, it describes fraud involving millions of rand – and “gross negligence” by top officials.

The findings for the Stellenbosch, George and Oudtshoorn municipalities were given in a report tabled in Parliament last week. The probes covered 2004 to last year, with different periods for each municipality.

At the Oudtshoorn Municipality, the SIU found R1.7 million in duplicate payments had been made to a housing service provider. It found evidence of fraud and corruption that implicated the former municipal manager. The matter has been referred to police.

The unit also found evidence of theft of municipal trust funds and other irregularities by a law firm contracted to collect arrears.

The losses were more than R530 000. These findings have also been referred to police.

The SIU recommended that the municipal manager be suspended. It says the council opted instead to enter into severance agreements with the municipal manager and his suspended predecessor.

“These agreements indemnified these managers from liability for the losses they caused the municipality.”

The then-Oudtshoorn municipal manager Noël Pietersen was given R1.5m in backpay in 2010 following his suspension by the DA.

He was later investigated by the Hawks and sentenced in February to five years in prison for fraud.

It was found he had used R17 500 in municipal funds for a personal defamation lawsuit in 2008.

The Oudtshoorn Municipality would reserve comment on the interim findings, spokesman Ntobeko Mangqwengqwe said.

At the Stellenbosch Municipality, the SIU found evidence of fraud relating to the procurement of R777 550 in services for the Kayamandi “Cultural Day” in 2009.

The then-municipal manager, his brother, the chief financial officer, the then-mayor, deputy mayor, a councillor and a supplier were implicated.

The matter has been reported to police and the loss is being quantified.

Also in Stellenbosch, the SIU’s investigation into seven contracts involving R106m in 2006 found evidence of irregularities, such as conflict of interest.

The municipality has instituted civil action and the matter has been reported to the police.

Stellenbosch municipal manager David Beretti said: “Upon the conclusion of the investigation, the SIU must submit a final report to the president. To our knowledge the president has not yet received a final report.”

In George, the SIU found irregularities in the establishment of the George Housing Association. It found the then-municipal manager and the municipal legal adviser had been “grossly negligent” in taking an incorrect legal position while it was being set up.

The SIU is also investigating allegations of overpayments made to a contractor for the construction of the George Fire Station and the alleged irregular appointment of and payments to a company for professional services.

George municipal manager Trevor Botha said he had not seen the report. He said the previous municipal manager had been suspended in 2010 and resigned last year. An internal disciplinary process was under way.

Botha said the municipality also took legal action against the housing association and recovered about R1.6m that had been paid to it.

At the Stellenbosch Municipality the SIU found:

*Evidence of fraud relating to the Stellenbosch 2010 Fifa World Cup Project and other statutory contraventions involving the then-municipal manager, his brother, the chief financial officer and the then-mayor.

Documents show that at least R1.5 million was paid to the co-ordinator of the project between September 2008 and March 2010.

At the Oudtshoorn Municipality, in its probe into alleged irregularities between January 2004 and February 2011, the SIU found:

* A service provider instituted a civil claim for R2.7m against the municipality. The SIU found that the payment on which the claim was based had been irregular.

* The irregular procurement of services at inflated costs of between R6.5m and R8.4m. The SIU found contraventions of the Municipal Finance Management Act and possible fraud.

The matter was reported to the police.

* The services of consultants, for a combined bill of R1.9m, were procured in an irregular and unlawful manner. The case was referred to the police.

* The irregular procurement of services to carry out an unnecessary survey at a cost of R559 648. -Cape Town

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