The municipal manager of a North West district municipality has been charged R4.6m plus interest in his personal capacity by the auditor-general for failing to recover losses despite repeated warnings.
Allan Losaba of the Ngaka Modiri Molema district municipality in the North West has occupied this position since 2019.
Losaba has been issued a certificate of debt by auditor-general Tsakani Maluleke following a material irregularity issued by him for the overpayment for water tanker services rendered by a service provider.
This was in terms of the material irregularity powers invested in the auditor-general under the Public Audit Act in terms of the 2019 amendments.
A material irregularity is any non-compliance with, or contravention of, legislation, fraud, theft or a breach of a fiduciary duty identified during an audit that resulted in, or was likely to result in, a material financial loss, the misuse or loss of a material public resource, or substantial harm to a public-sector institution or the general public.
The municipality appointed a service provider in June 2018 to provide water tanker services as part of drought relief so water and sanitation services could reach various communities.
The initial contract term was for two years, effective from July 1 2018 to June 30 2020. However, the municipality extended the contract for an additional three months to September 30 and again for another three months to December 31 2020.
During the 2018/19 audit, it was noted the service provider overclaimed on kilometres and hours for water tankering services, resulting in a financial loss for the 2018/19 financial year.
Further losses were anticipated if internal controls were not implemented. However, the overclaiming on kilometres continued during the 2019/20 and 2020/21 financial years, causing further material financial losses to the municipality.
The auditor-general issued a material irregularity to Losaba, who made a number of commitments to address it, but those were not implemented, and recommendations for the recovery of the financial losses were included in the 2020/21 audit report.
Maluleke said on Friday, Losaba still failed to implement the recommendations, which led to the issuing of the remedial action for the accounting officer to recover the financial losses.
“Notwithstanding the issuing of the remedial action, the accounting officer still failed to recover the financial losses,” Maluleke said.
She said her decision to issue the material irregularity was primarily informed by Losaba’s failure “to recover the material financial loss suffered by the municipality following the remedial action that I issued against him, despite ample opportunity provided to him to implement the remedial action.
“Furthermore, the accounting officer failed to provide justifiable reasons for his failure to implement the remedial action calling for him to recover the financial losses suffered.”
In terms of the Public Audit Act, it is the responsibility of the mayor of the municipality to collect the debt from the municipal manager within the period stipulated and submit progress reports on the recovery process.
Failure by the mayor to comply would result in the matter being escalated to the relevant legislature.
“Where accounting officers and authorities meet their legislated responsibilities to deal with irregularities, commit to taking swift action when we notify them of a material irregularity and then implement these actions, we do not have to use our expanded powers,” Maluleke explained.
“The process up to issuing a certificate of debt comes with many checks and balances, giving the accounting officer or authority concerned enough opportunity to fix the problem flagged before a certificate of debt is issued.”
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