KwaDukuza scrutinised over grants for disaster
Durban — Projects registered under the R1.2 billion disaster-funded grant in the KwaDukuza Municipality (KDM) were scrutinised by the Auditor-General of South Africa (AGSA) after allegations of corruption emerged.
One of the projects is the Hulett Bridge which links the Darnall and Zamani townships and is used to access work, school and medical facilities. It was damaged during the April 2022 floods. Despite a contract being awarded, the site has been left half-built with corroding infrastructure.
AGSA spokesperson Africa Boso confirmed that a response sent to Action SA councillor Nel Sewraj was official and part of the processes whenever there’s a request for the national audit office to consider investigating or auditing a matter in terms of the Public Audit Act (PAA).
“The audit matters related to the municipality’s 2022-23 annual audit have been shared with municipal management … and are also contained in the audit report we have tabled to the municipal council,” Boso said.
Sewraj, ActionSA’s KwaDukuza caucus leader, stated that at a special council meeting held on April 14 last year, a list of 25 contractors was presented to the council. Sewraj wrote to the AGSA requesting a real-time audit to be conducted on all 25 companies listed on KDM’s panel for road rehabilitation. He drew the AG’s attention to the R1.2 billion disaster grant received by the municipality and the conflicts of interest in some of the participating companies.
ActionSA also flagged a company whose owner is alleged to own two other companies on the panel. Multiple tenders have already been awarded to these companies. Sewraj said some of the companies could have been awarded work amounting to between R10m and R20m each.
Nomalungelo Mkhize, the AGSA business leader in KZN, said they had assessed Sewraj’s request to investigate allegations of irregularities during the appointment of service providers participating in the flood relief grant-funded projects at KwaDukuza Municipality. The audit team gave attention to two matters during their 2022/23 Municipal Finance Management Act MFMA regularity audit.
They performed supply-chain-management-compliance testing using computer-assisted audit techniques (CAATS) with the assistance of their information systems audit team to determine possible conflicts of interest, as well as assess the legal status of the contractors used for the road rehabilitation projects, as per the records held by the Companies Intellectual Properties Commission (CIPC). The team also reviewed the appointment process for the panel of contractors to determine if the process was fair, equitable, transparent and competitive.
Mkhize said the audit identified conflicts of interest in some of the participating companies. These were communicated to management and those charged with governance for follow-up and further appropriate action to assess whether they were fraudulent declarations by the bidders.
Mkhize said the audit team selected a sample of awards related to disaster-relief grants received during the year and tested the awards for compliance with supply chain management policy. They noted several aspects of non-compliance which were not deemed to be material.
She said the audit team performed tailored audit procedures on their appointment to the panel to address the allegations made. She added that several discrepancies were noted in the documentation submitted during the bidding process by the above three companies.
The conclusions made included fraud risk factors that were communicated to management and those charged with governance.
“Management agreed to recognise the related expenditure as irregular and also committed to investigating this matter further. We will follow this up in next year’s audit to ensure that appropriate actions have been taken,” Mkhize said.
The AGSA also raised a control deficiency relating to the lack of rotation for the appointment of contractors included in panel appointments and made recommendations on how to address the internal control deficiency identified. Sewaj said ActionSA was elated that the AG had corroborated its suspicions of tender irregularities and possible fraud in KDM. The party would ensure consequence management measures were instituted against those found guilty.
Privi Makhan, DA KwaDukuza Municipality caucus whip, said that despite relentless efforts to compel officials to facilitate in-loco inspections, these requests were blatantly ignored.
“This dismal display comes as no surprise as the project has been shrouded in controversy since its inception a year ago. Allegations of extortion by the construction Mafia, compromised contractors and labour disputes have been synonymous with the project.
“In addition to the original project value of R29 million, the cost of an accelerated work programme for the account of the council stands at just over R5 million. Is this yet another KDM project that will end up costing more than the approved budget?” Makhan asked.
She added that except for heavily armed guards and security cameras, the project area was devoid of any construction activity.
“In addition to this, the Civil Engineering Business unit has purposefully removed reports that provide pertinent project information such as contractual milestones and cash flow projections from the Infrastructure and Technical Services Portfolio committee,” Makhan said.
This nefarious move, she said, has hamstrung councillors from effectively interrogating projects implemented under the disaster-grant funding.
Despite several attempts to get comments from the KwaDukuza Municipality, none was forthcoming by the publication time.
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