Major South African city paid R5.5 million and received nothing

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05-03-2025
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Business Tech
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The Mangaung Metropolitan Municipality, which includes Bloemfontein, revealed that it spent R5.5 million and received nothing in return.

This was revealed in the Mangaung Metropolitan Municipality’s consolidated annual report for the 2023/2024 financial year.

The report revealed significant accounting irregularities at the municipality, including large payments related to a new project.

One problem started in March 2020 when the municipality appointed service providers to construct the new Thaba Nchu Community Centre.

The municipality’s accounting officer misaligned the construction periods of the service providers and the contractor.

The service providers were appointed in March 2020. However, the contractor was only appointed in June 2022.

The municipality had to extend the service providers’ appointments twice, once to 8 March 2023 and again to 31 July 2023. 

The municipality said that during these extensions, there were periods when the contractor was unable to access professional services.

The contractor submitted two claims for the delays, totalling R3.6 million, which the municipality paid in May 2023 and June 2024.

The R3.6 million expense did not benefit the municipality and was a wasteful expense caused by the municipality’s mismanagement.

At the reporting date of 30 June 2024, no financial loss was recovered, and no disciplinary action was taken against the responsible parties.

In the same report, the Mangaung Metropolitan Municipality reported another case of wasteful expenditure on constructing a fire station in Botshabelo.

The municipality appointed service providers for the project in January 2020 but only appointed a contractor two years later, in June 2022.

This again caused the municipality to extend the term service providers twice, first to March 2023 and then again to July 2023.

The municipality stated that there were periods when no service providers were appointed to the project, causing delays for the contractor.

The contractor submitted claims for the delays totalling R1.9 million, which the municipality paid.

The R1.9 million did not benefit the municipality or the public and was a clear wasteful expense caused by municipal mismanagement.

The annual report stated that the accounting officer was notified of the material financial irregularity on 5 June 2024.

The annual report further highlighted that the accounting officer did not take appropriate action to resolve the matter.

On the reporting date, no disciplinary action or other steps were taken to address the accounting officer’s failures or identify any misconduct from other individuals.

There were also no steps taken to determine whether these payments to the contractors were fraudulent.

The Mangaung Metropolitan Municipality paid R5.5 million to contractors due to construction delays. This money was wasted, and the residents received nothing in return.