The Buffalo City Metro has written off another R1.6bn in irregular expenditure, bringing the total amount wiped from its books in the past 18 months to R3.2bn.
The decision was confirmed during a special virtual council meeting on Monday, at which councillors approved the write-off of irregular spending linked to nine tenders flagged by the auditor-general (AG) for breaching procurement rules.
The biggest single write-off involves a R748m contract for the rehabilitation and maintenance of bridges and culverts across BCM.
The contracts, awarded in the 2021/2022 and 2023/2024 financial years, covered work ranging from repairs to municipal buildings and bridges to road construction, water and sanitation projects, and consulting services.
According to the municipal public accounts committee (Mpac), which investigated the spending, the irregularities occurred when tenders were not processed in line with the Municipal Finance Management Act and other regulations, though the work was completed.
Mpac chair Sakhumzi Caga told the council the committee recommended the write-offs only in instances where the spending was not the result of “fraud, negligence or misconduct” and “services were rendered with value obtained” and recovery was “not practically feasible”.
He said most of the irregularities arose from “technical interpretation disputes, delays in resolving audit findings, or structural limitations in the procurement system”.
The three-year bridge contract, repeatedly extended until June 2024, was administered by the roads and stormwater department under the city’s infrastructure directorate.
The AG declared the deal irregular in 2022, saying BCM had failed to rotate suppliers and reused the same rates without obtaining new quotes, breaching constitutional and National Treasury rules on fairness and competitiveness.
“The finding on supplier rotation was first raised in 2020, and engagements between [BCM] and National Treasury were initiated to resolve the interpretation issue,” the report said.
“These engagements remain unresolved.”
It added that the contract extensions took place without formal Treasury concurrence, in contravention of Section 116(3) of the Act.
Mpac said the irregular spending should be written off as irrecoverable because no official could be held personally liable.
“Internal controls have since been strengthened, with new SOPs [standard operating procedures] issued for panel contract allocations to ensure more transparent and auditable rotation,” Caga said.
Another contract, the water and sanitation infrastructure project, was referred to the city’s Financial Disciplinary Board for further investigation.
BCM management failed to probe R254m in irregular expenditure incurred during the 2023/2024 financial year on the project, which involved maintenance of pipelines, manholes, valve chambers and treatment works.
The contract, awarded in April 2019 for three years and later extended to June 2024, involved 16 service providers on a rate-based system.
In the first two years alone, irregular spending in the amounts of R132m and R188m had been written off as “irrecoverable since services were rendered, value obtained, and no deliberate misconduct occurred”, Caga said.
However, the AG declared the contract irregular in 2022, citing inadequate supplier rotation, unfair application of grading requirements and an improperly constituted bid adjudication committee.
The AG also found some contractors lacked valid registration or were deregistered, and work was allocated without fresh quotations being provided, in breach of Section 217(1) of the constitution.
Despite these findings, the contract was extended to 2024.
Mpac has now ordered the disciplinary board to continue with the investigation and apply consequence management, with a progress report due within 30 days.
Other irregular contracts included tenders worth R320m, R271m, R127m, R104m, R39m, R21m, R13m and R12.9m.
After the meeting, Caga said the metro must act against officials responsible.
“You will notice in almost all the contracts, the issue was with consequence management, which we recommended the metro must look into to ensure compliance.”
Opposition parties endorsed the write-offs but demanded accountability.
DA caucus chief whip Anele Majeke, who serves on the municipal public accounts committee, said: “The next step we should be taking as council, and also the executive mayor, Princess Faku, should be to take account of what’s been said, especially what the municipal manager should be doing and what he should be enforcing.”
PAC councillor Ayanda Gcobo also called on Faku to account for years of mounting irregular expenditure.
Faku, however, said the problem predated her administration.
“Since being elected in 2021, the city has been struggling with irregular expenditure, which was sitting at about R10bn when I started,” she told the meeting.
She praised Mpac for “reducing at least R1.6bn”, calling it an achievement, but warned that “we must never applaud issues of irregular expenditure”.
“We’ve inherited the irregular expenditure, and the current city manager here is the accounting officer; these matters happened before his time.
“Officials that did not follow the correct processes must be held accountable this year,” she said.
In June 2024, BCM also wrote off R1.6bn in irregular spending flagged by the auditor-general arising from six tenders awarded between 2018 and 2021 — expenditure since deemed irrecoverable.
Daily Dispatch
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