How eThekwini Municipality incurred R493 million in unauthorised expenditure

The eThekwini Municipality incurred R493 million worth of unauthorised, irregular, fruitless and wasteful expenditure (UIFWE) over three financial cycles. 

This was contained in a brief report from the Municipal Public Accounts Committee (MPAC) at a council meeting on Thursday. The UIFWE occurred in various units in the 2023/24, 2024/25, and 2025/26 financial years. 

Reports were prepared by the eThekwini units that incurred irregular expenditure after internal investigations. The reports disclosed the deviation from the Supply Chain Management Policy (SCM), the reasons for the deviation, and the value of the expenditure. 

The reports, together with supporting documents, were submitted to the Internal Control Unit for review and thereafter were submitted to the Bid Adjudication Committee.

The municipality stated that the Internal Control Unit reviewed and applied its mind to the reports and considered whether there was any value for money obtained by the municipality, or any losses suffered by the municipality due to non-compliance detected. 

Thami Xulu, the chairperson of the MPAC committee in eThekwini, stated that officials should be held responsible for incurring UIFW expenditure and believes that the necessary disciplinary proceedings should be instituted.

However, Xulu explained that it was not the responsibility of the MPAC to undertake such actions but rather the sole responsibility of the Accounting Officer and his management, with the Financial Misconduct Disciplinary Board playing a role in instances of financial misconduct. 

“As part of our oversight duties, we receive quarterly reports from the Financial Misconduct Disciplinary Board and the team led by the Executive Director: Corporate and Human Capital, to monitor the implementation of consequence management in the municipality,” he said. 

The UIFWE write-off was:

• R3.3 million for eThekwini Water and Sanitation (EWS) in the 2023/24 financial year. Irregular expenditure was incurred under an expired contract for the operation of the Mkhizwana water treatment plant. The report stated that payments were made after work had been assessed to satisfaction and that value for money had been attained.

• R891,000 for EWS in the 2024/25 financial year. Failed to pay the supplier. Interest charged and payable as per the arbitrator's award.
• R102 million for EWS in the 2024/25 financial year for the inappropriate use of the SCM regulation 36 for the provision of water loss insurance for underground leaks for individual dwellings for a period of six months. Payments were made after work had been assessed to satisfaction, and value for money was attained.  

• R19 million for Recreation and Parks in the 2024/25 and 2025/26 financial years. Irregular expenditure due to the use of an expired contract for the provision of shark safety gear for beaches within the municipality's jurisdiction. Inadequate contract management renewal processes.

"If the expired agreement was not used to pay for the services rendered by the KwaZulu-Natal Sharks Board, the service provider would have been compelled to remove the shark nets from the bathing beaches; therefore, value for money was attained," the report stated.

• R2.9 million for Information Technology (IT) in 2025/26 for the use of an expired contract for the provision of support and maintenance of the Revenue Management System (RMS). Services were delivered per contract specifications. 

• R165 million for eThekwini Transport Authority (ETA) in the 2024/25 financial year. In relation to the unjustified use of section 36 on a contract. Failure to adequately follow SCM processes by the line department for culvert widening and associated works in KwaMashu. Services were delivered per contract specifications. 

• R199 million for ETA in the 2024/25 financial year for unjustified use of section 36 and failure to follow SCM processes by the line department for the construction of the Eleventh Avenue Interchange Phase 2 ramps, including the design and construction of two pedestrian bridges and ancillary works along the C3 route - Ward 21. Services were delivered per contract specifications. 

The MPAC stated that the above matters were submitted to the Disciplinary Board for consequence management processes.

zainul.dawood@inl.co.za