FROM: MINISTRY
OF LOCAL GOVERNMENT HOUSING & TRADITIONAL AFFAIRS - KWAZULU - NATAL
TO: THE CHAIRPERSON OF NATIONAL COUNCIL OF PROVINCE, PARLIAMENT
SECTION 106(3) STATEMENT ABOUT HIBISCUS COAST MUNICIPALITY
Date : 05 August 2004
Arising from allegations of fraud and corruption levelled at the Hibiscus Coast Municipality by the Black Business Development Association and members of the public, my Department was requested to launch a forensic investigation within the Municipality. As a result of preliminary enquiries and follow up of this matter, a Strategic Plan has been prepared to address the issues as deemed requiring investigation.
In terms of the Plan, the following allegations will be investigated -
- that monies were extorted by a former Fleet Manager from a supplier (currently under investigation by Port Shepstone CID)
- that proper tender procedures were not followed when receiving the tenders pertaining to the awarding of the contract for the upgrading and construction of Clinics and Community Hails; and that, after the irregularities were pointed out, threats of violence were levelled at the aggrieved parties
- that a former Technical Manager was afforded a severance package whilst allegations of corruption in respect of the supply of protective clothing were not investigated; that proper tender procedures were not followed when determining whether a certain tenderer was supplying the items per specification; and that misrepresentations were made in so far as their PDI profile is concerned - although the tender was not awarded after the irregularities had been pointed out, the orders were split into smaller orders (presumably of less than R50 000,00) and awarded to the tenderer suspected of irregularity in the tender process
- that orders relating to the supply of pumps for sewerage tanks were deliberately split to circumvent tender procedures; that the procurement process was not completed and goods were paid for prior to delivery and prior to the suppliers invoice being received; and that a certain pump was paid for but not delivered (matter purportedly investigated by the Municipality, but despite recommendations, no action or resolutions taken by the municipal EXCO)
- that proper tender procedures were not followed in the awarding of the fleet management tender worth approximately R6,1 m to the successful tenderer (an aggrieved party has handed the matter over to his attorney and a civil case is pending)
- that the proper tender procedures were not followed in the awarding of the verge maintenance tender; and that the successful tenderer is not invoicing the Municipality in accordance with the tender rates, but with higher rates
- that the municipality distributes the bulk of its legal work to a certain firm to which a senior Councillor is allegedly a consultant; that the firm receives special treatment as their invoices are paid immediately; and that the municipality is being invoiced for work not done
- that the recruitment programme is flawed and that only applicants who are affiliated to a major political party are successful and receive the position applied for - investigation of the last twenty appointments, it is claimed, will reveal blatant corruption and nepotism
- that the Mayor's Honda was traded in below book value and the difference added to the price of a Mercedes as "extras" - the Honda was then purchased by a councillor at the reduced trade-in price
- that expenditure was incurred on two "parties'" held in 2003 for which no legislative provision exists for such payments nor were the amounts budgeted for - it is said that the second cost R40 000,00 of which RIO 000,00 was for beer
- that certain officials are guilty of receiving "kick-backs" for Town Planning and passing of building plans in contravention of building regulations and by-laws
- that lawn mowers and cutting equipment are regularly purchased and replaced - the suspicion is that the new 'items are misappropriated and replaced with old equipment, which in turn gets replaced with new equipment at the expense of the Municipality.
I have therefore, in my capacity as the MEC responsible for Local Government in the Province of Kwazulu-Natal, initiated an investigation at the Hibiscus Coast Municipality in terms of section 106(1)(b) of the Local Government Municipal Systems Act No. 32 of 2000.
Once the recommendations of the Service Provider appointed in the above regard have been received, my Department-will then monitor that whatever actions are deemed necessary are taken by the Municipality to restore to normality the situation that is now prevailing within the Hibiscus Coast Municipality.
, as Minister, and my Department will continue to make every effort to ensure that the Municipality implements effective, efficient, transparent and accountable financial management and internal control systems in the interests of sustainable and affordable service delivery to all Hibiscus Coast residents.
Yours sincerely
Mr. D H Makhaye (MEC)
Minster of Local Government, Housing And Traditional Affairs: KwaZulu-Natal