Category Archives: Mandla Zulu

Rank Corruption in Housing in Durban – A collection of recent newspaper articles

Hawks set to arrest top eThekwini officials
City manager among officials under spotlight

The Hawks have opened an inquiry into allegations of fraud and corruption made last month against senior officials of the eThekwini municipality.

The Times has established that one of the officials under investigation by the police unit is city manager Mike Sutcliffe.

The Sunday Times yesterday reported that the Hawks planned to make arrests in the municipality within days.

The pending arrests – confirmed by a senior Hawks official in Durban – follow a damaging report into R3.5-billion in contracts dished out over the past 10 years.

The report, by auditors Ngubane & Company, recommends that disciplinary and criminal charges be brought against Sutcliffe, his deputy in charge of procurement, Derek Naidoo, housing chief Coughlan Pather and procurement chief Themba Shezi.

The city was also rocked by the auditor-general’s 2009-2010 report, which cited irregular and non-compliant spending.

Both reports were tabled before the city’s executive committee last month.

Yesterday, opposition parties in the eThekwini council called for tough action against the officials implicated in the tender irregularities.

DA caucus leader Tex Collins said that if any municipal official, regardless of status, were found guilty of inappropriate behaviour, criminal charges must be brought against him.

Inkatha Freedom Party caucus leader Mdu Nkosi said criminal charges should be brought against officials found guilty of flouting tender procedures.

“The ANC must stop treating the eThekwini municipality as a branch of the ANC. They must lead by example and use the resources of the community in a proper way,” he said.

Nkosi said the IFP wanted KwaZulu-Natal local government MEC Nomusa Dube to launch an independent investigation into tender irregularities.

But KZN local government spokesman Lennox Mabaso said the department had ruled out intervening at this stage.

“There will be no over-zealous incursion … the minister has met the council. The MEC’s office will monitor developments in the municipality,” he said.

The Ngubane report, which has outlined financial mismanagement and tender irregularities, has recommended that members of the city’s tender adjudication committee be charged with misconduct and that multi-million-rand contracts awarded for housing in Chatsworth be suspended.

Irregularities uncovered in the Chatsworth projects include, according to the Ngubane report, bid rigging, the awarding of tenders to city employees and city councillors, and bypassing the tender process in favour of certain suppliers, consultants and contractors.

The report said Sutcliffe refused to be interviewed by the forensic auditors during a meeting about the Chatsworth project on May 14 last year “until information regarding the investigation is proved to him”.

The auditor-general’s report uncovered R532-million in irregular expenditure and a host of supply-chain management contraventions for the year to the end of June 2010. Unnamed council sources have reportedly said Sutcliffe is feeling the pressure from “all sides” for the first time in his eight-year tenure. His contract expires in June.

New probe into KZN housing

March 3 2011 at 12:08pm


ALLEGED irregularities in a housing contract awarded by the eThekwini municipality to a company operated by controversial former metro policeman S’bu Mpisane are the focus of a new investigation by the state corruption watchdog, the Special Investigating Unit.

The project – at Lamontville in the south of Durban – has been in the crosshairs of the SIU since September, when investigators visited the site. On this visit, it emerged that while the project had officially been signed off as completed, less than half of the almost 1 000 planned units had actually been built.

In terms of supply chain management regulations, monies can only be paid on completion of projects and once the handiwork has been certified as completed.

The Mercury can confirm that payment for the project – R37 112 768 – was released in three tranches by the provincial government to the eThekwini municipality in November and December 2007.

But when the SIU went to Lamontville for a site inspection in September 2010, they found that, even three years later, only 470 out of the 952 units had been built.

In the meantime, although the first phase of the project was still far from completion, the eThekwini municipality was looking for more funding.

Only a month after the SIU’s site visit, in October last year, the municipality asked the provincial government for additional funding to the tune of R82 million to extend the Lamontville project to 1 531 units at an increased subsidy of R55 706 per unit. As approved in July 2007, as part of the government’s “project-linked subsidy”, each of the original 952 units was subsidised to the tune of R38 984.

Although the R82m increase was approved by the province, the money has not yet been handed over to the municipality. SIU spokeswoman Marika Miller this week confirmed that investigations were ongoing.

The initial investigation came after Human Settlements MEC Maggie Govender requested that the SIU investigate concerns around the Lamontville housing project.

Last year, the developer in the Lamontville project, Zikhulise Cleaning, Maintenance and Transport, was ordered to repair several homes and destroy and rebuild at least two, as the department declared them substandard.

Zikhulise is managed by former metro policeman Mpisane and owned by his wife, Shauwn, the daughter of the late Florence Mkhize, a former prominent eThekwini councillor.

Meanwhile, three officials from the provincial human settlements department – Zodwa Dlamini, Sharone Fleshman and Ntombi Masuku – were arrested by the police earlier this year for alleged involvement in the illegal sale of departmental property, and charged with separate counts of fraud totalling R1.1m.

The eThekwini municipality could not be reached for comment

Chihuahuas bite back
Zohra Mohamed Teke
Thursday, 24 Feb 2011

Now there are calls for the eThekwini city manager’s head to roll and for criminal charges to be brought against him

Mike Sutcliffe once described the ANC as his “favourite South African brand” and dismissed critics as “whining Chihuahuas” after earning their wrath over Durban’s street name changes.

Now there are calls for the eThekwini city manager’s head to roll and for criminal charges to be brought against him.

This follows explosive allegations in a forensic audit report implicating Sutcliffe and his top team in fraud and corruption in eThekwini municipality’s housing tender and procurement process involving billions of rand . His political career hangs by a thread, as swords are drawn. The silence of supporters within his party has been deafening and not gone unnoticed.

But Sutcliffe describes the report by audit firm Ngubane & Co as a “political witch-hunt”, and challenges its authors to prove the allegations against him.

In a letter to the chairman of the council’s audit committee, Sipho Nzuza, Sutcliffe says those implicated were not given an opportunity to respond before the report — commissioned by the committee after the suspension of two officials suspected of fraud — was made public. “Allegations in the report are completely without substance, they are considered defamatory and there is no evidence to suggest any impropriety, fraud, corruption [or] negligence in the conduct of the city manager ,” he says.

The matter prompted city mayor Obed Mlaba — not regarded as a Sutcliffe supporter — to rebuke his officials for speaking out on the matter before investigations were concluded.

Then, reports began to emerge about Mlaba’s own alleged links to council contracts via his daughter’s company , despite rules barring council families from tendering for contracts. Mlaba said he was not aware of those contracts.

While a senior ANC KZN source has called the report “flawed, meaningless and one-sided”, Ngubane & Co is standing by it. It also says its probe was limited by “nonco-operation from officials, including the city manager” and has called for “deep investigation” into the real beneficiaries of tender-rigging.

The report, it seems, is the tip of the iceberg but with local elections around the corner the ANC is trying to limit exposure of corruption within its ranks.

Some observers believe it is unlikely that Sutcliffe — once the ANC’s blue- eyed boy — will be asked to stay on for another term .

Day of reckoning for eThekwini
Report may be bad news for controversial city boss, writes Edward West

ETHEKWINI city manager Michael Sutcliffe, the African National Congress (ANC) municipal leader many Durbanites say they “love to hate”, seems unlikely to be considered for another term after his contract expires this year after eight years in office.

Top city officials and councillors have been accused of fraud and corruption by a forensic audit investigation into the city by Ngubane & Co.

The report makes allegations against Mr Sutcliffe and mayor Obed Mlaba, and eThekwini municipality is claimed to have “irregularly awarded” R3,5bn worth of contracts over the past 10 years.

Mr Sutcliffe has previously done his best to dismiss the Ngubane audit investigation and, among other things, has claimed that it was not conducted properly and that tangible and documentary evidence had not been provided for many claims in the audit.

The tabling of the Ngubane report by the city council today comes hard on the heels of the ordering by the mayor of a full-scale forensic investigation into the city’s financial affairs, which followed the recommendations of the city’s audit and risk committee, based on the Ngubane report, the a uditor- g eneral’s 2009-10 report and the city’s internal audit department’s report. The a uditor-g eneral said in his report, published last week, there had been irregular and non- compliant expenditure of R534m at the municipality last year.

The political fallout from the claims of corruption has been widespread. Relations between the city politicians, headed by Mr Mlaba, and the management of the city are reputed to be strained, something pundits say has been worsened by the death late last year of the ANC’s eThekwini regional chairman John Mchunu, a close ally of Mr Sutcliffe.

The Democratic Alliance (DA) in KwaZulu-Natal has called for the suspension of Mr Sutcliffe, his deputy and head of housing, and the party has questioned the inactivity of the mayor while the alleged graft took place, noting Mr Mlaba’s daughter had also been a beneficiary of irregular expenditure and tender procedures.

Eleven councilors and two municipal officials are alleged to have been beneficiaries of tenders handed out by the municipality.

“The report alleges that Michael Sutcliffe, Derek Naidoo and Cogie Pather have been failing in their duties to manage their respective responsibilities which have led to R502m in irregular expenditure.

“Their protests and threats of legal action this week have been the cries of desperate men trying to cling on to power,” says DA eThekwini spokesman on economic development, Dean Macpherson.

Inkatha Freedom Party’s (IFP’s) eThekwini councillor Prem Iyir says although eThekwini’s councilors have not yet officially seen the Ngubane report, the IFP supported the independence and credibility of the report.

The IFP also supported Mr Mlaba’s stance on the issue that any officials or councilors discovered to have been corrupt in the report, should be dealt with according to due process.

The ANC in the province has clamped down on corruption, something that has been evidenced in the KwaZulu-Natal provincial government, where seeds of a no- tolerance culture toward corruption has led to a number of officials in various departments being brought to book.

Mr Mlaba’s third term as mayor comes to an end after the local government elections and although he cannot be reappointed, it is possible that he may be redeployed.

Mr Sutcliffe’s contract period ends in June , although he has indicated he would not mind being reappointed. At the moment, neither seems likely.

City officials’ fate in balance
Investigator to assess damning Durban audit report
Feb 23, 2011 9:38 PM | By NIVASHNI NAIR

The fate of Durban’s city manager, Mike Sutcliffe, and three other senior officials is in the hands of an independent forensic investigator assessing the damning Ngubane & Co audit report.

The full eThekwini council yesterday approved an executive council decision to appoint an independent forensic firm to investigate the report, which implicated Sutcliffe, his deputy in charge of procurement, Derek Naidoo, housing head Coughlan Pather, and procurement head Themba Shezi in irregular housing contracts of R3.5-billion over the past 10 years.

The report, which Sutcliffe and his administration have challenged, recommended bringing criminal or disciplinary charges against the four.

Ngubane & Co found they overstepped their mandate and ignored procedures in awarding contracts for a Chatsworth housing project.

It also recommended charging all members of the bid adjudication committee with misconduct.

Ngubane & Co investigated the financial affairs of the municipality after the auditor-general’s 2009-2010 report cited irregular and non-compliant spending of R534-million at the municipality.

It found that 53 contracts, totalling more than R16-million, were awarded to councillors and companies owned by employees of the city and that contracts worth R42.5-million were given to government employees outside the city.

Durban’s mayor, Obed Mlaba, said yesterday the new probe would “prove or disprove” any findings against Sutcliffe and his administration.

The independent forensic investigation firm is expected to be appointed soon as the deadline for the completion of the probe is two months.

The council’s DA caucus leader, Tex Collins, told The Times that the four had “nothing to worry about if their hands were clean”.

“If any members of the 20000 employees of the city have honestly never done anything wrong, then they have nothing to fear, but if there is a slight whiff that they have, then they better watch out because they will be pinned down,” he said.

The report, which has not yet been made public, could influence the looming local government election.

Sutcliffe and Naidoo were appointed by the ANC.

Mlaba admitted yesterday that the city’s image was tarnished.

“Our municipality has been one of the most envied and now that image is tarnished. We need to rally behind efforts to clean up and maintain the position as one of the best municipalities in Africa,” he told the city council.

When the allegations surfaced, Sutcliffe tried to save his image in the hopes of being reappointed when his contract ends in June.

He called the Ngubane & Co report a “witch-hunt” and pointed out 90 inaccuracies. –

Investigate, suspend and charge, say auditors

February 18 2011 at 12:29pm


THE FIXING of old council houses in Chatsworth and how contractors were appointed to do the work are at the core of an explosive report by Durban auditing firm Ngubane and Co.

The report calls for criminal charges or disciplinary proceedings to be brought against city manager Mike Sutcliffe, Derek Naidoo, the deputy city manager: procurement and infrastructure, housing head Cogi Pather and procurement head Themba Shezi.

It has also been recommended that four service providers used in the Chatsworth project be suspended until a full investigation is completed.

They are Vaughan Charles and Associates, RGZ Project, Uhlanga Trading Enterprise and Doctor Khumalo Construction.

The Ngubane report also recommends that all bid adjudication committee members be charged with misconduct.

In 2009, the municipality’s internal audit unit tasked Ngubane and Co with investigating whether procurement procedures had been followed in the rehabilitation of council homes in Westcliffe, Bayview and Crossmoor.

The council wanted to spruce up its old rental stock before selling it.

The report on the investigation alleges top city officials overstepped their mandates or ignored procedures in awarding contracts for the project, the cost of which was initially estimated at R30.8 million.

It also says witnesses are afraid to speak because they fear for their lives.

Ngubane and Co had a wide-ranging mandate that included:

* Performing a value-for-money audit of goods and services bought.

* Establishing if there had been any irregularities in procurement.

* establishing if the alleged irregularities entailed financial misconduct, non-compliance and or criminal conduct.

In the event of irregularities being found, the company was to establish who had been responsible for these and the prejudice the municipality suffered. It was also required to provide evidence that could be presented at criminal, disciplinary and civil proceedings.

In its report the company said it had had to deal with several limitations.

These included the safety of individuals.

“Employees who formed part of the investigation at all levels of the organisation are fearful to co-operate with the investigation team, for fear of reprisal.”

Witnesses apparently also claimed that Sutcliffe and Naidoo were allegedly responsible for serious violations of the supply chain management regulations, but they were afraid to reveal their identities and would co-operate further only if they were protected.

The report says external individuals were also prepared to co-operate, but they also required protection.

Ngubane claimed that supply chain management staff had repeatedly avoided the investigation team and that Pather had not given his full co-operation to the team.

The Ngubane investigation also found that the directors of Inyanga Trading 377, the preferred supplier of paint for the Chatsworth project, were the wives of two senior managers in the municipal housing department.

Magandran “Magan” Naidoo and Thavandran “Devan” Govender are in charge of the rental housing stock. They are married to the company’s directors, Ronnika Naidoo and Jannika Govender. All four work for the council.

Among the alleged irregularities found by Ngubane and Co were:

* Circumventing the outcome of tender processes in favour of certain companies.

* The awarding of contracts to employees and councillors of the eThekwini municipality.

* The suspected irregular awarding of R3.5 billion in contracts since 2000 in ways that deviated from the city’s supply chain management policies.

* Intentional exclusion of the supply chain management component from the housing unit’s procurement processes and restricting procurement functions to key officials.

* Lack of segregation of duties.

* Fruitless and wasteful expenditure in acquisition processes of the housing unit.

* Overexpenditure on housing projects and poor management of finances and projects.

* Failure to keep a proper record and registry of documents for audit purposes.

* Inciting subordinates to unprocedural and irregular conduct.

* Failure to take remedial action in cases of serious and substantial contravention of statutes, regulations and policies of the municipality and local government.

The Ngubane and Co team says that in interviews with municipal officials and other witnesses, it received information relating to further irregular conduct of senior officials at eThekwini.

In addition to its recommendations on the Chatsworth project, it calls for further deep investigation into the following projects:

* The South Central and Northern regions rehabilitation project.

* The R293 Rehabilitation Project.

* The Lamontville Rehabilitation Project.

Report fingers top Durban officials

February 11 2011 at 08:42am
By Wendy Jasson da Costa

The eThekwini municipality is sitting on a damning forensic report that fingers some of the city’s top officials for alleged financial irregularities.

The report, which follows an investigation by Durban accounting and forensic investigations firm, Ngubane and Co, calls for disciplinary action and investigation into the city’s financial affairs.

The report has not been tabled or given to all executive committee members but was discussed at a closed committee meeting this week. Municipal manager Mike Sutcliffe and city treasurer Krish Kumar were asked to leave that meeting, although the reasons are unknown at this stage.

On Thursday eThekwini mayor Obed Mlaba said he was not prepared to divulge any of the report’s details.

Questioned on who the report fingered and what it said about Sutcliffe, Mlaba said: “Whether the city manager is in trouble or not, I don’t know at this stage.”

Mlaba said no other information would be coming from him as the municipality’s financial issues were under investigation and he would not respond to rumours or allegations by the opposition.

“We are a committee (exco), we act as a collective, even as different parties.”

This comes amid reports of tensions between Mlaba and Sutcliffe, with the mayor allegedly feeling that he had been isolated by senior officials on mayoral decisions.

These tensions, it is alleged, date back to the days of the late ANC regional chairman, John Mchunu, who was apparently the only one briefed and consulted by Sutcliffe on major decisions affecting the city.

Earlier this week, Desmond Msomi, the managing director of Ngubane and Co, confirmed the existence of the report, but said he could not divulge anything about the investigation as the firm had been commissioned by the municipality’s internal audit unit and was bound by confidentiality rules.

DA councillor Tex Collins on Thursday said he did not have a copy of the report, but “information at hand suggests that several highly placed individuals within the administration should in fact be suspended pending the outcome of further forensic investigations”.

Apart from the Ngubane report and the 2009/10 audit report, which has not yet been made public, Mlaba this week called for another full-scale investigation into the city’s money matters.

In his 2009/10 audit report, auditor-general Terence Nombembe highlighted the city’s R532 million in irregular expenditure as well as its lack of internal controls and supply chain management contraventions.

That report also underlined 25 cases of alleged procurement fraud and irregularities, as well as the delivery of municipal housing which was under investigation.

In his State of the Nation address on Thursday night, President Jacob Zuma said the government had directed the Special Investigating Unit to probe alleged maladministration or corruption in various government departments, municipalities and institutions.

The unit’s Willie Hofmeyr on Thursday night confirmed that the agency was investigating housing irregularities in the municipality.

Minority Front councillor Patrick Pillay said: “The writing is on the wall, the days of irregular and wasteful expenditure are over. The flouting of tender regulations and usage of section 36 freely and without due consideration to the city and its ratepayers will soon be over.”

Sutcliffe and Kumar could not be reached for comment on Thursday night. – The Mercury

February 9 2011 at 08:53am
By Gugu Mbonambi

Shock probe into city finances

The eThekwini municipality’s executive committee yesterday ordered an unprecedented probe into the city’s financial affairs by an outside auditor.

The independent audit, unanimously endorsed by all parties on exco, comes a week after Auditor-General Terence Nombembe red-carded the city for R532-million in irregular expenditure and a host of supply chain management contraventions for the municipal year ending June 2010.

The city nevertheless received an unqualified audit opinion, raising eyebrows in opposition quarters.

The DA’s spokesman for economic development, Dean Macpherson, told The Mercury last night that the audit was likely to encompass the entire municipality “from the municipal manager to the janitor”.

Nombembe’s audit report noted that 25 cases of alleged procurement fraud and irregularities were under investigation, including the delivery of municipal housing.

The latter is already the subject of a probe by Willie Hofmeyr’s special investigating unit in line with a national proclamation signed by President Jacob Zuma.

The new audit was announced by mayor Obed Mlaba, after exco met in committee yesterday with various parties, including Herman van Zyl from the auditor-general’s KwaZulu-Natal office, the municipal risk committee, and its external and internal audit committee.

City officials, including municipal manager Michael Sutcliffe and financial officer Krish Kumar, were not present.

Exco resolved that an outside independent auditor be appointed to conduct the investigation.

Given that a local government election is scheduled for May, and Sutcliffe’s term of office ends in June, any investigation would have to be completed by then.

Mlaba indicated that he wanted it finalised within two months.

He said that the city had been the subject of various media reports based on the auditor-general’s findings.

While exco appreciated that the municipality was in a “financially stable position”, it was concerned about the findings.

This related particularly to non-compliance with supply chain management regulations in the housing unit and Section 36 awards – which are supposed to be used in exceptional circumstances as they deviate from normal procurement processes. Other concerns include the revenue management system and municipal staff and councillors doing business with the municipality.

Mlaba said he had been mandated by exco to lead the process of appointing a company or persons to head the probe.

He said the city was committed to clean governance and urged those with information to come forward once the audit firm had been appointed.

“We will have zero-tolerance to anything that is untoward in our city. All political parties represented in exco are one when it comes to this investigation.”

DA caucus leader Tex Collins said that such an investigation transcended politics because it affected all Durbanites.

“This affects people living in the most humble dwelling in rural areas, to people in the biggest mansions in Umhlanga, and as councillors we are bound by the council code of conduct to ensure that the city’s books and processes are correct,” he said.

The Mercury has published articles relating to the awarding of Section 36 contracts, and reported that at least 20 councillors were among those believed to have flouted the law by doing business with the municipality.

A fortnight ago, Van Zyl told exco that any company with a budget the size of eThekwini’s – R24,1-billion in the past financial year – would usually have a dedicated person to ensure it followed internal controls and financial regulations.

Sutcliffe declined to comment last night, including whether he believed the knives were out for him. In a Sunday Tribune interview this year, he expressed interest in retaining the job, incurring the wrath of some comrades who believed he was lobbying for the post through the media and that new blood at the helm of the city was necessary. – The Mercury

ANC chief’s fat-cat deals

March 12 2010 at 07:19am
By Wendy Jasson da Costa

The chairperson of the ANC’s biggest and most influential region in KwaZulu-Natal, John Mchunu, has been awarded tenders worth at least R40-million by the eThekwini municipality.

Mchunu recently made headlines for allegedly vetoing the completion of a R1.5m elephant sculpture project for the new Warwick Avenue interchange, apparently because it was the symbol of the IFP.

Now, The Mercury has learnt that Mchunu benefited financially from tenders awarded to two of his companies, Inyameko Trading 148 cc and Zakhele and Mondli Trading Enterprise cc.

Although he is legally entitled to tender for work in the municipality, opposition parties have slammed it as “highly unethical” since eThekwini is governed by the ANC, and have claimed nothing in the municipality happens without Mchunu’s approval.

The revelation comes while the issue of lifestyle audits and “tenderpreneurship” tears the ANC and its alliance partners apart.

Mchunu yesterday acknowledged involvement in construction work and that he was a tender beneficiary, but said there was no conflict of interest and that he had declared his business affairs in the legislature’s register of members’ interests.

Inyameko Trading 148 cc received work totalling R37.3m from the municipality between 2005 and February, 2010.

The municipality’s website lists the firm as a sub-contractor in the pipeline replacement project.

Inyameko Trading is also a Masakhe company, which is an emerging contractor development programme of the Public Works Department.

Zakhele and Mondli Trading Enterprise, which has pocketed R4.4m to date, received a municipal tender in 2008 to “rehabilitate units that are structurally unsafe homes”.

Municipal manager Michael Sutcliffe said: “I have no idea what business he is part of or what his role may be. If he is involved in business, I would hope he has declared that interest as it would be illegal for an MPL to not declare his interests.”

Both Sutcliffe and Mchunu denied that the ANC exercised influence over the tender awarding process in the municipality.

However, Cosatu spokesperson Zet Luzipho said: “People have gone into tenders to enhance wealth, not service delivery,” and said that while he would not talk about individuals, he strongly believed that the government would solve many problems by eliminating tenders.

Other MPLs were outraged on learning that Mchunu had benefited from municipal contracts.

The ACDP’s Joanne Downs said called the revelations “absolutely shocking”.

“He has a huge influence and you can’t tell me his position does not affect the outcome of tenders.”

She said there was a problem with the way in which the ANC awarded tenders, because it consolidated its power, but not by rightful means.

The DA’s John Steenhuisen said many of the municipality’s officials, including Sutcliffe, reported directly to Mchunu.

“For tenders and contracts in Durban, the buck stops with him.”

Steenhuisen asked why Mchunu appeared to spend “more time in city hall than in the legislature”.

He said the municipality’s tender board previously consisted of councillors, but that was now prohibited by the Municipal Finance Management Act.

Minority Front leader Amichand Rajbansi said he believed the municipality’s tender committee should be changed every three months to ensure impartiality.

Derek Luyt, of the public service accountability monitor, said the law or code of ethics for all senior public servants should be amended to compel them to put their interests into a blind trust.

“No politician, no matter from what political party, should be tendering for government business. For us it’s not a question of whether it’s legal – there is something wrong if there is a conflict of interest,” he said.

Responding to a list of questions from The Mercury, Themba Shezi, head of supply chain management and procurement in the municipality, said politicians were legally barred from participating or influencing the tender process.

Asked about the influence of the ANC in awarding of tenders, he said: “The law applies to everybody, including ANC members.”