Seven former senior managers at the Nelson Mandela Bay (NMB) Municipality will have to cough up more than R7million as they have been held accountable for irregular expenditure.
Among those held personally responsible for the loss and who had appealed against the high court decision, is ex-municipal manager Mpilo Mbambisa, ex-chief financial officer Trevor Harper, and former executive director for Infrastructure and Engineering Walter Shaidi.
In an attempt to evade liability, their appeal against the decision of the Eastern Cape Division of the High Court in Gqeberha to the Supreme Court of Appeal (SCA) was dismissed.
The irregular, fruitless and wasteful expenditure came after NMB appointed Erastyle in 2014 as a consultant in the development of a comprehensive communication and marketing strategy, valued at about R6m for the Integrated Public Transport System (IPTS) of the municipality.
A Deloitte forensic investigator was appointed by the National Treasury to conduct an investigation into expenditure by the municipality of grant funding relating to the IPTS project.
According to court documents, the municipality made three unlawful payments to Erastyle after the company was appointed without a public tender process and in breach of the municipality’s Supply Chain Management (SCM) policy.
Unlawful payments to the company totalled R5 263 179, R1 390 800 and R984197. Enquiries to NMB were not answered by the deadline.
Attempts to reach the legal council for Mbambisa, Harper and Shaidi were unsuccessful.
During trial, the Deloitte forensic investigator testified that in December 2013, the Treasury had paid an amount of approximately R2.1 billion to the municipality. The investigation was aimed at establishing the amounts of money transferred to some 300 key suppliers involved in the IPTS project, and to locate the documents supporting those payments. The investigation revealed that invoices had been over-inflated. One of the invoices from Erastyle was submitted for payment of R5.2m, whereas the value of the work allegedly done was only R2m.
In the high court, after the municipality presented evidence, the defendants chose not to testify and called no witnesses. The high court declared the impugned appointment unlawful and invalid, and ordered Erastyle and the defendants to repay the impugned amounts to the municipality.
Judge of Appeal, Ashton Schippers, said those implicated could face criminal charges.
“In this case, the municipality proved that the defendants had incurred irregular expenditure – the impugned appointment and the unlawful payments were made deliberately or negligently in violation of the SCM policy – which the municipality was enjoined to recover.”
In August 2015, Deloitte furnished its report to the Treasury and the municipality. A criminal investigation into the conduct of municipal officials, based on Deloitte’s findings, commenced.
Cape Times