eThekwini Municipality writes off R1.1 billion in irregular expenditure

The eThekwini Municipality, during a council meeting on Thursday, wrote off  R1.1 billion in unauthorised irregular, fruitless and Wasteful Expenditure (UIFW) . 

The municipality wrote off R203 million in UIFW in relation to the procurement and Supply Chain Management (SCM) and Information Technology directorate. Thamisanqa Xuma, chairperson of the Municipal Public Accounts Committee (MPAC) said that the irregular expenditure incurred was due to the procurement of maintenance and support services for the current Human Capital System (Payspace).  

The report stated that there were inadequate contract management processes and that the contract was approved but not signed by the service provider in the 2024/2025 financial year. 

Xuma said any consequence management has been or will be dealt with in accordance with the council policy in regard to misconduct and oversight by the Financial Misconduct Disciplinary Board.

The second UIFW pertains to a failure to follow the appropriate SCM procurement process and apply National Treasury guidelines for the procurement of Covid-19 Personal Protective Equipment (PPE), food hampers, and temporary shelters for homeless people in the 2020/2021 financial year audit.

The report stated that disciplinary action was taken against the employees, resulting in the dismissal of one of the employees and a final written warning for the other. One of the officials retired before the disciplinary hearing, while another was found not guilty.

Sunitha Maharaj of the Minority Front (MF) remarked on the R203 million, saying that the write-off was huge and cannot be ignored or relegated to the disciplinary board to use existing frameworks to deal with. as such issues will be ongoing.  

She said that change must be initiated and that the MF suggests a review and redesign of the internal audit unit work for the prevention of such a waste of ratepayers' monies by job evaluation reviews, identifying weaknesses and flaws in completed contract documents, as well as monitoring reports using cash flow reporting on such expenses.

“This will prevent runaway cost drivers and even use cash blocking if these expenses go beyond calculated amounts, as these can be projected and ringfenced,” she said. 

Regarding UIFW expenditure prior to the financial year January to June 2025, the Auditor-General South Africa (AGSA) identified non-compliance with regulations of the Preferential Procurement Regulations (PPR) 2017, with a specification condition that only locally produced goods or locally manufactured goods, meeting a stipulated minimum threshold for local production and content, must be considered.

The audit found that 80 previously awarded contracts worth R953 million contravened the local content provisions from January to June 2025. The municipality stated that the root cause of the irregularity was due to oversight by line departments, SCM and Bid Committees and that this was an error of a technical nature.

Jay Singh, a councillor representing the United Independent Movement (UIM) said he considered the write-off as a severe breach of public trust and a significant impediment to service delivery.

He believed that a culture of transparency and accountability can only be fostered through consistent enforcement and a commitment to ethical governance at all levels of the council.

“Our position is that the proposed measures, while a step in the right direction, must be rigorously implemented and continuously monitored to be effective. The movement also calls for the immediate prosecution of individuals found responsible for financial misconduct, regardless of their position, to send a clear message that corruption will not be tolerated,” he said. 

zainul.dawood@inl.co.za