Scopa Chairperson Songezo Zibi expressed concern that “the circumstances appeared inconsistent” and indicated the municipality must provide clarity when it appears before the Committee.
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THE Special Investigating Unit (SIU) presented detailed evidence of fraud, maladministration, and obstruction at two Eastern Cape municipalities during a Scopa meeting this week, revealing a R54 million hole in the OR Tambo District Municipality's finances and disciplinary processes halted by a court interdict at Buffalo City.
The SIU’s investigation into BCMM under Proclamation R23 of 2020 found that the head of supply chain management shared tender specifications with selected service providers before advertisements. Three tenders for mobile prefabricated structures were advertised in May 2020. Twenty-two bids were received.
The investigation found that senior officials processed and approved fraudulent claims. Some structures constructed were poorly built and “did not provide value for money”. Six criminal referrals were made to the Directorate for Priority Crime Investigation (DPCI, aka Hawks) and the National Prosecuting Authority (NPA). Ten disciplinary referrals were made to the municipality. Civil litigation was initiated for the Special Tribunal.
However, the Committee noted with concern that internal disciplinary proceedings were subsequently halted following the granting of an urgent interdict.
The Committee interrogated how an interdict was granted without a formally launched review. Masixole Koya, SIU head of investigations, confirmed a review had not been launched, though officials intended to institute proceedings. The SIU received no formal correspondence from the officials’ legal representatives.
Committee Chairperson Songezo Zibi expressed concern that “the circumstances appeared inconsistent” and indicated the municipality must provide clarity when it appears before the Committee. He remarked that it appeared “unusual for disciplinary processes to be interdicted when a review of the report had not yet been formally initiated” and expressed concern that “the court may have been misled”.
Only two officials obtained the urgent interdict in January. Koya undertook to determine whether BCMM would proceed against the remaining eight implicated officials.
In the Mdantsane swimming pool matter, the municipality failed to provide a final Ernst & Young forensic report despite repeated requests. After the executive mayor stated at a portfolio committee that the report had been handed over, the SIU wrote again requesting it, but “never received a response”.
For the Water World Fun Park and Beach Front projects, the SIU awaits an Auditor-General performance audit. Following delays in obtaining documentation, the SIU requested a material irregularity. However, the Buffalo City Metropolitan Development Agency “challenged the referral” on the basis that it was not responsible.
In the Kayser’s Beach water trucks matter, requested documents were not provided despite follow-ups, preventing further assessment. Koya explained allegations that individuals were deliberately damaging water infrastructure to create a need for water trucks. For the Beach Front project, the SIU is closer to securing a proclamation. The Premier's Office provided supporting letters, and the matter is with the Department of Justice.
Under Proclamation R80 of 2022, the SIU investigated payments to Ayavelisa Consortium. The Unit is preparing evidence for civil litigation to recover approximately R54m. Eleven disciplinary referrals and 14 criminal referrals were made.
Regarding Lazola Media, Koya explained that this formed part of criminal referrals with the Hawks. The SIU is pursuing civil recovery of R54m through a separate company that channelled funds to Lazola Media.
Under Proclamation R172 of 2024, the SIU is investigating water infrastructure projects.
In the Signal Hill Reservoir project, “invoices were processed before work was done”, and payments exceeding R12m were made without proper documentation. GIBB, a private Durban company appointed as project manager, had its recommendation ignored. Disciplinary referrals are being prepared, and fraud cases are being investigated.
In the Mhlontlo Cluster pump project, invoices were submitted and paid before work was completed. The Unit is considering civil recovery of over R3m. Criminal cases are before the court.
Other projects, including the Mqanduli Bulk Water Scheme, remain under investigation.
Members raised serious concerns about the lack of cooperation, particularly in OR Tambo. Koya informed the Committee that the SIU attempted to arrange a meeting with the ORTDM Mayor to escalate concerns about the Municipal Manager’s conduct, but the Mayor was “reportedly unavailable”.
The Committee requested copies of correspondence to assess the matter. The Unit confirmed written communication had been issued.
Leonard Lekgetho, the acting head of the SIU, indicated the SIU intends to write formally to the Mayor, highlighting concerns. He noted non-cooperation is a recurring challenge, particularly without a proclamation.
The SIU has requested powers to conduct pre-proclamation investigations through legislative amendments. Until enacted, the SIU will escalate matters to the Premier and, if necessary, the Minister of Cooperative Governance and Traditional Affairs.
The Chairperson requested that correspondence be forwarded to the Committee.
The ANC’s Helen Neale-May asked whether the SIU investigated any link between the assassination of the BCMM Director for Infrastructure and tender contracts, specifically the Zwelitsha water works project.
Koya stated those contracts “do not fall within the scope of the SIU’s current investigations”. The only completed investigations relate to Covid-19 PPE contracts. The SIU has not received a formal request to investigate those contracts.
Neale-May also asked whether the SIU investigated allegations that contractors in ORTDM were being required to pay extortion fees. The meeting report records no specific response.
Lekgetho indicated the SIU anticipates most investigations will be finalised by June. The SIU is tracking consequence management steps implemented by municipalities. The SIU engages with the Department of Planning, Monitoring and Evaluation on a system to track implementation of SIU referrals. A pilot system currently tracks criminal referrals.
Zibi expressed concern that the circumstances surrounding the Buffalo City interdict appeared inconsistent and indicated that the municipality must provide clarity. He expressed concern that "the court may have been misled."
The Committee requested copies of SIU correspondence with municipalities.