Corruption: Obed Mlaba & Mike Sutcliffe

http://www.iol.co.za/news/south-africa/kwazulu-natal/ethekweni-mayor-fingered-in-probe-1.1229228

eThekweni mayor fingered in probe

Former eThekwini Municipality mayor Obed Mlaba has been fingered in a forensic report on corruption in the municipality, it was announced on Tuesday.

The probe, commissioned by the provincial co-operative governance department, had uncovered maladministration and fraud, MEC Nomusa Dube told reporters in Durban.

The report found that the former mayor unlawfully influenced the supply of a waste volume reduction plant for a landfill site, she said, but did not elaborate.

It recommended that the process be started afresh as its integrity had been “grossly compromised”.

It also contained accusations against a number of senior officials, including former municipal manager Mike Sutcliffe.

Dube said the former municipal manager was found to have contravened the Prevention and Combating of Corrupt Activities Act by not reporting fraudulent and corrupt activities.

The investigation found that 10 councillors had business interests with entities which conducted business with the eThekwini Municipality.

The department has asked the municipality to urgently institute disciplinary action against all the officials and councillors implicated in the report.

The probe was instituted after Auditor General Terence Nombembe said in his 2009/10 that R532 million had been irregularly spent by the municipality.

Dube said irregular expenditure in the past three years amounted to R2.188 billion.

The investigation also found that the municipality had failed to comply with supply chain management processes for infrastructure and housing projects.

It identified excessive and inappropriate use of a section of the supply chain management policy which allowed municipalities to deviate from the normal tender process.

This was intended for use only emergencies, but the eThekwini Municipality had used it extensively for, among other things, housing developments.

It was found that some contractors given tenders in terms of this section received letters of appointment even before submitting tender documents.

Some contractors awarded tenders were not even registered with the National Home Builders Registration Council. Their work was so poor, the houses had to be demolished.

A lack of supervision during housing construction had also led to a waste of taxpayers’ money.

Dube said there was substance to allegations that 30 trainee metro police constables had been referred to illegal driving schools by Metro Police College instructors.

The matter was being investigated by the Hawks, she said.

Fourteen metro police officers were found to be running taxis.

“These police officers were identified because they had outstanding fines ranging from R5100 to R117 250,” she said.

The municipality has been given 21 days to respond to the report. It was expected to brief the media on Wednesday on the outcome of the investigation. – Sapa

http://www.thenewage.co.za/42769-1007-53-Mlaba_Sutcliffe_corrupt

Mlaba, Sutcliffe ‘corrupt’

Chris Makhaye

Former Ethekwini mayor Obed Mlaba and former city manager Michael Sutcliffe were among the top officials fingered for wrongdoing, corruption and maladministration in a damning forensic report released on Tuesday.

The two are now officially unemployed after their terms of office ended last year.

Last year, the audit firm Manase & Associates was commissioned by the MEC for cooperative governance to investigate allegations of massive tender rigging, fraud and corruption involving senior municipal officials.

The report was tabled by MEC Nomusa Dube in Durban yesterday. She said the report found irregular spending by the municipality over the last three years that amounted to more than R2.188bn.

The report further stated that there was non-compliance with the Municipal Finance Management Act and abuse of the urgent procurement policy in a bid to award contracts to certain “favoured” companies.

The report also found there was sufficient evidence that Mlaba used irregular and unlawful influence to award a contract in which he had personal business interests. This pertained to the tender for the conversion of waste to energy at Durban’s Bisasar Road landfill site.

Dube said the report also found Sutcliffe allegedly failed to report fraudulent activities to the police, thus contravening both the Municipal Finance Act and the Prevention and Combating of Corrupt Activities Act.

The report stated Sutcliffe only revealed these corrupt activities after more than a year, when he was questioned by investigators compiling the report.

Neither Mlaba nor Suttclife were available for comment.

At least 10 serving and former municipal councillors and more than 13 city officials are accused of corruption and breaking the law by trading with the municipality and not declaring their business interests.

The report advises disciplinary action be taken against the heads of both the treasury and housing for alleged failure to prevent irregular expenditure in the city.

Dube gave the municipality 14 days to act on the report and warned that her department would be keeping a close watch.

She would also ensure that tenders awarded irregularly and monies taken from the municipalities were returned.

Many parties have responded with outrage at the report. The ANC has welcomed the report and said that those officials responsible should face the full might of the law.

“The ANC will not tolerate any corruption and maladministration in municipalities and the provincial government, including ANC-led municipalities. Any form of maladministration only serves to delay the full emancipation of our people from the ravages of poverty and neglect. This we will not allow, irrespective of who the possible culprit may be,” said Sihle Zikalala, ANC provincial secretary.

The DA said the report showed that all was not well with the administration in the city.

“That so many senior officials have been named as being potentially guilty of irregular activities is proof that for far too long now Durban has been run by a coterie of seemingly corrupt individuals,” DA caucus leader Tex Collins said.

He called for all officials who have been named in the report to be placed on immediate suspension pending the outcome of internal disciplinary action or criminal action.

http://www.timeslive.co.za/local/2012/02/08/city-bigwigs-fingered

City bigwigs fingered
NIVASHNI NAIR | 08 February, 2012 0

Former Durban mayor, Obed Mlaba, former municipal manager Michael Sutcliffe, 10 councillors and several heads of department and employees have been fingered in a forensic investigation that found high levels of maladministration and corruption in the eThekwini Municipality.

The Manase report, which documents the findings of an investigation instituted by KwaZulu-Natal MEC for cooperative governance and traditional affairs, Nomusa Dube, was tabled yesterday.

It recommends that disciplinary action be taken against managers and employees in almost every department and that millions of rands lost through irregularities be recovered.

Mlaba and Sutcliffe will not face disciplinary action because they are no longer employed by the municipality, but Dube said “appropriate steps will be taken”.

The investigation came after the auditor-general found that the city had irregularly spent R535-million. At the same time the Ngubane audit implicated Sutcliffe and three other officials in irregular housing contracts, whereas Mlaba was alleged to have had shares in a company that nearly landed a R3-billion tender to convert the city’s waste to energy.

The Manase report has found that there is sufficient documentary evidence confirming Mlaba’s involvement in the Waste Volume Reduction Plant at the Bisasar Road Landfill site tender.

Dube said a company linked to Mlaba had allegedly expressed interest in a tender in breach of the municipal code of conduct.

The report says Sutcliffe, who controlled the city’s R25.9-billion budget, contravened the Municipal Finance Management Act when he allegedly failed to promptly report irregular expenditure emanating from dodgy housing contracts in writing to the mayor, MEC and auditor-general.

It has also found that Sutcliffe contravened the act when he failed to take reasonable steps to prevent irregular expenditure.

It adds that Sutcliffe contravened the Prevention and Combating of Corrupt Activities Act by not reporting fraud and corruption in a housing tender to police.

“The former municipal manager only reported this matter two years later, after interviews with the investigating team,” the report states.

The report has found that 10 councillors and 161 municipal employees had business contracts with the municipality.

“[The] council has swiftly and adequately dealt with disciplining all of the initially identified 38 officials. Similar action should be taken against the additional 123 identified employees,” Dube said.

The report has found that there was non-compliance and disregard for the act in several departments and an excessive and inappropriate use of Section 36 of Supply Chain Management policies, which allows heads of department to cite “emergencies” to forgo tender procedures and select their own suppliers.

The investigation has found high-level corruption in the housing department relating to low-cost housing tenders, which were irregularly awarded to unqualified contractors not registered with the National Home Builder Registration Council.

It has further found a “negligent” duplicate payment and the irregular award of tenders to fibre-optic cable suppliers.

The municipal’s human resources department has been implicated in irregularities pertaining to recruitment, selection and appointment of staff, while the electricity department has been found to have abused overtime.

Dube has given the municipality 21 days to respond.

The council is expected to comment on the report today.

http://www.iol.co.za/dailynews/news/mlaba-found-to-have-unlawfully-influenced-tender-1.1229726

Mlaba found to have unlawfully influenced tender

February 8 2012 at 11:57am
By Bheki Mbanjwa

Former eThekwini mayor Obed Mlaba “unlawfully and irregularly” influenced the awarding of a tender for a waste reduction plant at the Bisasar road landfill site, the forensic probe into maladministration and corruption in eThekwini municipality has found.

According to a summary of the forensic report released by MEC Nomusa Dube on Tuesday, the investigators found enough documentary evidence that Mlaba had been “directly involved” in the waste reduction plant tender, while certain employees of the municipality were also found to have colluded with the company that won the tender.

These employees were, however, not named. The forensic report has recommended that the tender process “be started afresh as the integrity of the process has been grossly compromised, and that certain employees of the eThekwini metro be further investigated by the municipality for negligence and/or collusion with the company”.

Last year it was reported that Mlaba had been a “silent partner” in the company that was identified as the preferred bidder for a R3-billion tender for the conversion of waste to energy at the landfill site.

The Obed Mlaba family trust also reportedly owned a further 20 percent of the company, Environmental Waste Solutions (EWS), but later the tender was “hijacked” by another company with a similar name, Our Environmental Waste Solutions, also trading as EWS.

Two of Mlaba’s daughters were directors in the new company, while the major shareholder in the initial preferred bidder was allegedly sidelined.

Meanwhile, as part of the forensic investigation, the report said there was no evidence linking Mlaba’s wife to Isidingo Security, adding that further action would only be warranted should any evidence become available.

The company is a major service provider of security services to the municipality.

Last night Mlaba said he could not comment because he had not seen the report.

“I am no longer part of council and therefore I have not been privy to the report. I am sure that once I have seen it I will call a press conference to clarify some of the issues,” the former mayor said.

http://www.witness.co.za/index.php?showcontent&global[_id]=76299

Durban’s rot uncovered

FORMER eThekwini mayor Obed Mlaba, ex-municipal manager Mike Sutcliffe and a host of top city managers have been fingered in a damning forensic report that has finally blown the lid on financial mismanagement and alleged graft in KwaZulu-Natal’s economic heartland.

With a whopping 53% contribution to the province’s GDP, the state of local governance in the eThekwini metro has been a matter of concern, but problems were allowed to continue for years, with the Msunduzi Municipality regarded as the problem child.

Amid sustained media reports about alleged corruption and complaints about a small clique of politically connected buddies winning tenders in eThekwini, the province stepped in ahead of last year’s local government election and instituted a forensic probe.

This after damning reports by the Auditor-General (A-G), the city’s own audit committee and an internal investigation were rubbished by some of the city’s top officials.

The long-awaited Manase forensic report was tabled yesterday in a closed sitting of the full council by KZN Co-operative Governance MEC Nomsa Dube, although councillors were only given an abridged version.

As expected, it fingered Mlaba in a multi-million rand waste disposal tender at the Bisasar Road landfill site, which also reportedly involved his family members.

He was reported last year to be actively seeking a stake in the project, allegedly telling a potential partner that it was “his retirement plan”. There was also alleged collusion between municipal employees and the preferred bidder.

It was found that the awarding of the tender had been “grossly compromised” and that certain municipal employees should be further investigated for negligence and/or collusion with the preferred bidder.

It was recommended that the tender process should start afresh. Mlaba’s fate remains unclear, however.

The report also recommended that Sutcliffe, whose reign as municipal manager ended on January 3, should face criminal prosecution for not reporting certain fraudulent and corrupt activities to the police in terms of the Prevention and Combating of Corrupt Activities Act. He is also alleged to have contravened the Municipal Finance Management Act (MFMA) by not promptly reporting irregular expenditure in writing to the mayor, the MEC and the A-G.

The municipality may also try to recover money from him. In terms of the awarding of controversial scarce skills allowances to senior managers, there was no evidence that Sutcliffe had acted irregularly or beyond his mandate.

The report also recommended disciplinary action against the following top officials:

• Deputy city manager (treasury) Krish Kumar is alleged to have contravened the MFMA by not taking all reasonable steps to prevent irregular expenditure.

• Deputy city manager (infrastructure) Derek Naidoo is alleged to have contravened the MFMA in a similar way. He is also accused of non-compliance with the metro’s supply chain management (SCM) policies as well as failure to exercise due care.

• Housing head Cogi Pather is similarly accused of non-compliance with the metro’s SCM policies and the MFMA, and failure to exercise due care.

Pather and other housing officials are also liable for irregular expenditure.

The report makes it clear that housing is the main problem division in the metro, responsible for R428?million out of the metro’s R532?million irregular expenditure identified by the A-G in the municipal financial year ending on June 30 last year.

• The report recommended that the head of geographic information and policy, Jacquie Subban, face disciplinary action for negligence resulting in duplicate payments, as well as the irregular awarding of two contracts to H20 Networks for the installation of fibre optic cable by way of Section 36 emergency tenders.

It said that the awarding of the contracts to H2O should be investigated by the municipality. Some of the top managers implicated in the report, including Naidoo and Kumar, said they could not comment as they had yet to see it.

Kumar said: “I would like to say that whatever we have done, we did in the best interest of the city and as far as fraud and corruption goes, we were not involved.”

In his reaction, Mlaba told The Witness: “Once I have seen the report, I will have to call a press conference to tell my side of the story.”

Repeated attempts to reach Sutcliffe, Subban and Pather were unsuccessful.

eTthekwini municipal spokesperson Thabo Mofokeng said the city’s new municipal manager, Sbu Sithole (the former Msunduzi administrator), and the mayor, James Nxumalo, would hold a press briefing today.

MEC Dube stressed yesterday that the investigation was not a witch-hunt against certain individuals, but was “intended to confront head-on some of the ills bedevilling this municipality and arrest the rot before it collapses this institution”.

She said it was important to note that no one had been found guilty.

The immediate tasks to be undertaken included:

• The council adopt the report and its findings and provide a comprehensive response within 21 days.

• Urgently institute disciplinary proceedings against all officials and councillors implicated in the report.

• Review and amend the composition of all bid committees.

• Recover council money from all those liable immediately.

• All disciplinary issues be instituted and finalised within a period of three months.

Dube also noted the 38 officials identified by the A-G to have been conducting business with the municipality had been disciplined, but that an additional 123 had since been found to have not disclosed their business interests and would have to be acted against.