Forensic audit of Sutcliffe, Mlaba et al

http://www.citypress.co.za/SouthAfrica/News/KZN-launches-probe-into-city-administration-20110317

KZN launches probe into city administration
2011-03-17 11:50

Paddy Harper

A wide-ranging forensic investigation into the embattled eThekwini Municipality after months of allegations of corruption and maladministration levelled against city manager Mike Sutcliffe, his administrative team and councillors, has been launched by KwaZulu-Natal’s Local Government Ministry.

The probe comes in the wake of a city appointed audit being suppressed by city officials and a damning auditor general’s report nailing Sutcliffe’s team for using emergency funding regulations to pay out more than R500 million in irregular expenditure for sub-standard low cost housing projects around the city.

Local government MEC Nomusa Dube said yesterday the earlier audits had provided prima facie evidence of maladministration and failure to abide by regulations around supply chain management and tender procedures and that her ministry had decided to step in and get to the bottom of the matter.

The new probe, which will be carried out by an experienced company of independent forensic auditors and would dovetail with separate investigations by the Special Investigation Unit (SIU) and other state agencies, would cover:

» Irregular expenditure caused by poor budget controls;

» Failure by city officials to follow supply chain management procedures around key infrastructure and housing projects;

» The failure of city official and councillors – including mayor Obed Mlaba – to disclose their financial interests;

Irregular tender procedures and awards;

» The illegal rental and sale of RDP houses;

» Irregularities in staff appointments and abuse of travel and other allowances;

» Fraudulent practices in the Durban Metropolitan Police; and

» Irregularities in the city’s development and planning department.

Dube said the probe would also take in any other information which came to light from the public and officials and said “serious steps’’ would be taken against any city official or councillor who refused to cooperate.

Earlier probes have been hampered by the refusal of key city officials to both cooperate and hand over documentation to investigators.

Dube said that while the city was “not collapsing’’ it was clear that “something wrong is taking place in the city’’.

She said when the probe was completed the city would be forced to take “decisive action and corrective measures’’.

Criminal charges would be laid against any official or councillor found guilty of corruption, fraud or maladministration, while civil action would be taken to recover city funds paid out illegally.She was unable to provide an exact timeframe for the probe to be completed, saying it would be retrospective and would “go as deep as it needs to go.”

– City Press

http://www.timeslive.co.za/local/article973466.ece/Mayor-and-city-boss-to-be-probed

Mayor and city boss to be probed
Mar 17, 2011 10:11 PM | By NIVASHNI NAIR

Durban mayor Obed Mlaba and city manager Mike Sutcliffe are to be investigated as part of a wider probe into alleged fraud and corruption in the eThekwini Municipality.

KwaZulu-Natal co-operative governance MEC Nomusa Dube said yesterday: “There is something wrong in this municipality and we believe that we need to investigate.

“We have been monitoring the latest developments in the municipality with keen interest and utmost concern.”

The ANC called on Dube to order a forensic investigation after the auditor-general found that the city had irregularly spent R535-million and the Ngubane audit implicated Sutcliffe and three officials in irregular housing contracts of R3.5-billion over the past 10 years.

Mlaba allegedly had shares in a company that nearly landed a R3-billion tender to convert the city’s waste to energy.

Dube said yesterday the investigation would cover:

*Irregular expenditure resulting from inadequate controls over the budget and payment processes;

*Non-disclosure of interests by councillors and officials;

*Irregularities in the awarding of contracts, payments and performance management of telecommunications;

*The alleged illegal rental and sale of RDP houses;

*Irregularities in travel and overtime allowances and appointment of staff; and

*Alleged fraudulent practices in the metro police.

The outcome of the investigation would compel the municipality to take decisive action and corrective measures and would lead to criminal and civil prosecutions if unlawful activities were unearthed, Dube said.

The forensic probe would begin immediately.

http://www.sowetanlive.co.za/news/2011/03/18/leave-no-stone-unturned

‘Leave no stone unturned’
18 Mar 2011 | Mhlaba Memela

KWAZULU-Natal MEC for cooperative governance and traditional affairs Nomusa Dube has appointed a forensic auditing firm to probe fraud, corruption and maladministration allegations in the eThekwini metro

Manase and Associates will lead an investigation into the affairs of the ANC-led municipality. This latest investigation will supersede all previous probes that were conducted into the affairs of the municipality.

The audit firm is tasked with unearthing any irregularities and maladministration concerning the awarding of tenders.

The municipality has hogged the headlines in the past few months following auditor-general Terrence Nombembe’s report indicating that R532million had been spent irregularly by the council.

Recently it also surfaced that mayor Obed Mlaba is part of a company that nearly landed a R3billion deal with the city to convert waste to energy.

The MEC said she had received representations and reports concerning allegations of maladministration, fraud and corruption.

“The documents include reports on an investigation requested by the accounting officer of the municipality undertaken by Ngubane and Company, the management letter of the auditor-general and an internal audit report,” Dube said.

She said it would appear from the findings of these reports that there is prima facie evidence of maladministration and a failure to comply with procedures and legislation.

“There is currently no evidence of any fraud and corruption,” Dube said. “The scope of these reports was, however, limited and it appeared to be additional areas of concern and further allegations, which have not been investigated.”

The forensic firm’s scope of investigation comprises allegations of illegal rentals and sale of RDP houses, non-disclosure of interests by councillors and officials, irregularities in the supply chain management in the awarding of tenders, payments and performance management in respect of telecommunications, human resource irregularities when recruiting, selecting and appointing staff.

Other allegations are the abuse of travel claims, overtime, allowances, development and planning offices, and non-compliance with street traders’ by-laws.

Dube said any other consequential matters that may arise will form part of the investigation.

“The eThekwini municipality still has a healthy balance,” she said.

Cosatu applauded Dube’s decision to institute a comprehensive forensic investigation into the affairs of the eThekwini municipality.

Secretary Zet Luzipho said the move is long overdue and appealed to Dube to “leave no stone unturned”.

http://www.iol.co.za/news/south-africa/kwazulu-natal/firm-to-probe-ethekwini-1.1043484

Firm to probe eThekwini

March 17 2011 at 09:38pm

A forensic auditing firm has been appointed to probe fraud, corruption and maladministration allegations in the eThekwini municipality, KwaZulu-Natal’s co-operative governance MEC said on Thursday.

“There is something wrong in the municipality and we believe there is a need to investigate,” Nomusa Dube told reporters in Durban.

The allegations relate to the awarding of tenders.

Auditor General Terrence Nombembe’s 2009/10 report indicated R532-million had been spent irregularly in the municipality, which runs the city of Durban.

The Mercury newspaper recently reported that mayor Obed Mlaba was part of a company that nearly landed a R3-billion deal with the city to convert waste to energy.

Dube said she had received representation and reports on claims of corruption, fraud and maladministration. Documents she received included a report following a probe by accountants Ngubane & Co, an eThekwini municipality internal report and the AG’s report.

“It would appear from the findings of these reports that there is prima facie evidence of maladministration and failure to comply with procedures and legislative provisions.

“In view of the seriousness of the allegations, we have deemed it appropriate to institute a forensic investigation.”

Dube however said the municipality would not be put under administration because it was not falling apart. “The municipality is not collapsing. It’s finances are okay.”

She invited whistle blowers to help the department get to the bottom of the problems. Dube said auditing firm Manase and Associates had been appointed to conduct the investigation, which would cover:

– Irregular expenditure resulting from inadequate budgetary controls, controls over payment processes and weak checks and balances.

– Non compliance with supply chain management policies for infrastructure and housing projects.

– Non disclosure of interests by councillors and officials.

– Irregularities in the awarding of contracts, payments and performance management of telecommunications.

– The illegal rental and sale of RDP houses.

– Abuse of overtime and travel allowances.

– Alleged fraudulent practices at the Durban metro police.- Sapa