Investigations of Allegations of Maladministration, fraud ... · PDF fileAllegations of Maladministration, fraud, corruption and any other serious ... Report on Preliminary Forensic

report on

Investigations of

Allegations of Maladministration, fraud,

corruption and any other serious

malpractices at Lekwa-Teemane Local

Municipality

Lekwa-Teemane

Local

Municipality

May 2014

Report on Preliminary Forensic Audit - Lekwa-Teemane Local Municipality

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Contents

Executive summary ........................................................................................................... 4

1. INTRODUCTION ........................................................................................... 9

2. THE COMPLAINTS AND ISSUES RAISED BY THE COMMUNITY ............. 9

3 COLLABORATION WITH LAW ENFORCEMENT: PRIORITY CRIME INVESTIGATION OF THE SOUTH AFRICAN POLICE SERVICE .............. 10

4 THE ISSUES INVESTIGATED BY THE INVESTIGATOR ........................... 10

5 POWERS AND JURISDICTION OF THE INVESTIGATORS TO INVESTIGATE THE COMPLAINT IN RESPECT OF THE MEMORANDUM OF CONERNS RAISED BY THE COMMUNITY IN BOITUMELONG TOWNSHIP ................................................................................................. 11

5.1 Mandate of the Investigator ................................................................. 11

5.2 The jurisdiction of the Investigators in respect of the Districts .............. 12

5.3 Approach to the investigation .............................................................. 12

6 T h e I n v e s t i g a t i o n ....................................................................... 12

6.1 The scope of the investigation ............................................................. 12

6.2 Method of gathering evidence ............................................................. 13

7 COMMUNITY CONCERNS, MANAGEMENT REPORT AND EVIDENCE AND INFORMATION OBTAINED DURING THE INVESTIGATION ............ 14

7.1 Lease agreement or sale of municipal farms ........................................ 14

7.2 Allocating of stands and alleged undertaking by the Mayor to allocate 1000 units .................................................................................................... 17

7.3 International Angling Tournament arranged through Mr. Pakiso Leshage of Local Economic Development Directorate ................................................ 20

7.4 Eligibility of Guilty Modise to be a Councilor; ........................................ 21

7.5 Determining if compensation was paid to any person who suffered any injury resulting from the case of culpable homicide against Mr. Smous ........ 25

7.6 Sale of Municipal River Sand to the community ................................... 28

7.7 Progress report on a criminal case of corruption against the Mayor Clr Makodi, Municipal Manager Mr. Makuapane, Clr. Guilty Modise and Clr. Majikela ....................................................................................................... 29

7.8 Malpractice by Oupanyana Magage in allocating RDP stands ............. 32

7.9 Coffin Project ....................................................................................... 32

7.10 Nepotism in appointment of staff and contractor ................................ 33

7.3 Awarding of tender on sewerage to Zela Makoko’s company .............. 41

7.4 Current Project in the LED office under Mr. Leshage .......................... 42

8 SPECIFIC ISSUES ...................................................................................... 43

8.1 Going concern ..................................................................................... 43

8.1.1 Issues of going concern ................................................................... 43

9 SCOPING CONCLUSIONS ......................................................................... 43


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Executive summary

This is a report of Greentime Management Consulting (GMC) on the preliminary

investigation and scoping of allegations by members of the community of Lekwa-

Teemane Local Municipality against council and Management for maladministration,

fraud and corruption amongst many other allegations.

i. The investigation followed 15 issues raised by the Department of Local

Government and Traditional Affairs (LGTA) based on the Memorandum of

Concerns lodged with the municipality and LGTA in Mmabatho, Mahikeng by

concerned community members of Lekwa-Teemane Local Municipality in

which it was alleged that;

a) Municipal farms were sold and leased out unfairly and corruptly.

b) The allocation of stands in the municipality was slow and corruptly

done.

c) The International Angling tournament did not benefit the local

community and Mr. Leshage (LED Manager) corruptly awarded

contracts for service providers during the event.

d) Mr. Pakiso Godfrey Guilty Modise was not eligible to be a councilor

e) Mr. Charles Smous (an official of the Municipality) was not disciplined

in the case wherein he was charged for culpable homicide through

negligent driving on the 15th of May 2004.

f) Unfair compensation of victims of the accident involving Mr. Smous

g) River sand was harvested and sold from municipal property without the

municipality and the community benefitting.

h) Clr. Guilty Modise was dismissed from the municipality for fraud and

yet he serves on the council.

i) There was a voice recording from a conversation in which Clr Modise

was soliciting for a bribe in an issue involving farms

j) The Mayor, Municipal Manager, Clr Majikela and Clr Modise solicited

for a bribe and a case of fraud and corruption was opened against

them in Bloemhof.

k) There was a corrupt tender award to Zela Makoko for sewer works in

Lekwa-Teemane Local Municipality.

l) The Office of the LED Manager was not assisting the community.

ii. The report seeks to provide guidance to the Department of Local Government

and Traditional Affairs on the merits of instituting a comprehensive forensic


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investigation on the affairs of the municipality of Lekwa-Teemane. Further to

that the report will establish time frames and budgetary implications of a full

forensic audit if required.

iii. The report also seeks to validate the allegations made by community

members against the council, councilors and officials of the municipalities as

contained in the memorandum of concerns issued to the municipality by

members of the community on the 18 March 2014.

iv. Based on the analysis of the allegations, oral evidence gathered from

interviews and documents obtained from complainants on which these

allegations were based, the following issues were investigated by GMC to

inform our recommendations:

a) Was the appointment of Mr. Pakiso Guilty Modise as a councilor of

Lekwa-Teemane in 2011 in violation of the provisions of any legislation

of the Republic of South Africa? Were the allegations that he had been

discharged as an employee of the municipality for fraud true?

b) Were Councilors, Council and Officials of the municipality involved in

any corrupt practices in violation of the Prevention and Combatting of

Corrupt Activities Act in their dealings with potential service providers?

c) Are there any merits in pursuing the case of corruption and fraud that

was reported to the police but however dismissed by prosecution for

lack of evidence and merits involving the Clr RM Makodi, (Mayor), Mr.

Andrew Makuapane (Municipal Manager), Clr Guilty Modise and Clr

Majikela. Even if there were no criminal charges that could hold in

terms of the law did these individuals behave in a manner befitting the

office they hold at Lekwa Teemane Municipality

d) Was the Supply Chain Management Unit of the Municipality functional

in terms of the requirements of the Municipal Finance Management Act

and Treasury Regulations as issued from time to time? Were there any

infringements or interferences from Senior Managers or Councilors in

the procurement of goods and services at the Municipality?

e) Did the Accounting Officer comply with requirements of the MFMA,

Municipal Structures Act and Municipal Systems Act in the carrying out

of his mandate as the Chief Executive Officer of the Municipality?

f) How were appointments in the municipality done in terms of processes

followed to fill vacant positions?

g) How were stands sold or allocated in the Municipality?

h) Was the Manager for LED (Local economic Development) fit for his

office in terms of qualifications and performance?

i) Why was there no disciplinary hearing preferred for Mr. Charles Smous

in the negligent driving case that resulted in serious injuries to


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passengers and the death of one passenger?

v. The investigation involved mainly the perusal of relevant documents relating

to the allegations against councilors and management, procurement of

contracts, interviews with officials of the Municipality and other role players,

perusal of relevant reports including but not limited to the report of the Auditor

General and District Internal Audit from the Shared Service, consultation with

the LGTA and analyses of relevant legislation.

vi. The conclusions and general findings are that:

a) There is an urgent need for extensive investigations into the affairs of

Lekwa-Teemane Local Municipality since the beginning of the term of

office of the current council. The investigations are to cover;

(i) Review of Council oversight and proceedings with specific reference to

all key resolutions taken and their implementation. Special emphasis

must be placed on disposal of stands and farms,

(ii) Investigate all contract awards done by the municipality since May

2011,

(iii) Investigate all appointments and promotions done since May 2011,

(iv) Suspension of the Mayor, Clr Modise, Clr Majikela, Municipal Manager

and Human Resources Manager pending the outcome of the

investigations to ensure that they do not interfere with investigations

(v) Land Audit

(vi) Skills Audit for all Section 57 posts and their line managers

b) The appointment of Clr Guilty Modise was based on a reference letter

written by the Municipal Manager to the ANC in 2011 giving confirmation

that Mr. Modise resigned from the service of the municipality voluntarily

when in actual fact he knew very well that Mr. Modise was discharged

from his job for fraud. The ANC deployed Mr. Modise as a councilor

ostensibly on the positive reference by the Municipal Manager. Mr. Modise

was discharged twice in the municipality for fraudulent acts. In both cases

the municipality did not report the matter to the police for possible

conviction.

c) On the 15 of May 2004, Mr. Charles Smous an employee of the

Municipality was involved in motor vehicle accident while on official duty.

The accident took the life of one 29 year old man and injured 6 other

passengers whose injuries varied from moderate to serious. Mr. Smous

was criminally charged for negligent driving. Despite witnesses testifying to

his over indulgence with alcohol. As a result of the aforementioned charge


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the Municipality’s insurance rejected the claim for third party

compensation. Mr. Smous was not charged for drinking and driving whilst

on duty leading to the accident that led to the loss of life and injured 6

people. There is no evidence to show why the municipality through the

office of the Human Resources Manager did not prefer disciplinary

proceedings against Mr. Smous. His conduct has to date cost the

Municipality R4.25m in compensation claims plus legal costs.

d) The charges of fraud and corruption on the Mayor, the municipal Manager,

Clr Majikela and Clr Modise were withdrawn due to the prosecutor who

advised that there was little chance of successful prosecution owing to

lack of evidence. The complainant is however adamant that he will pursue

the case. The background of the case shows that the complainant was

awarded a contract under mysterious circumstances. There is need for an

enquiry to be made and the case pursued to its logical conclusion. Even if

the suspects cannot be criminally prosecuted if proven their meetings with

the potential service provider outside of normal bidding processes casts a

shadow of doubt on their integrity and fitness to hold public office. .

e) Shortly before the renewal of the term of Office of the Municipal Manager a

number of vacancies were filled internally and externally. Only two

positions were filled externally with the rest having filled by staff members

of the municipality. It appears that standards were lowered to

accommodate certain individuals who were improperly promoted to

positions they did not qualify for. Mr. Charles Smous a brother to the

Mayor was promoted to Manager Public Works despite being a Standard

10 graduate without any technical qualifications. His past employment

record is not squeaky clean either. Mr. Pablo Mamogwa was promoted to

Manager Parks and Recreation from the position of Personnel Clerk in

charge of Leave Days. There is evidence that his work was substandard.

Reconciliations for employee leave days are still being done to date due to

his incompetence. Mr. Mamogwa does not possess any technical or

agricultural qualification to justify his position as a Parks Manager. Mr.

Serame Lesie was promoted to Manager Strategy and Planning in the

Office of the Municipal Manager, a position that was not on the original

adopted organogram but created to appease individuals who seemingly

have invisible power over the accounting officer.

f) In 2011, the council resolved to sell portions of Stand 932 in Boitumelong

to three individuals, Ms. Pearl Masendi, Mr. Mbulawa and Clr Majikela.

The land was previously zoned for institutions like Churches, schools

and/or crèches. However Mr. Mbulawa and Ms. Masendi were approved

by council for business. Mr. Majikela’s sale was also approved for

residential even though there was no motivation from the Town planners.

The stand in all cases was sold at lower than the valuation roll prices thus


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causing the Municipality to record an accounting loss in its books. All land

that has been sold in the last three years was sold at prices lower than

valuation role in contravention of standing policy that says land must be

sold at valuation role prices except in the case of institutional buyers like

churches and schools who buy municipal land at R5 per square meter.

This land is situated on a street corner and is central thus making it

strategic and prime. Mr. Zela Makoko an alleged friend of Clr Majikela also

bought stand 946 for business purposes. He acquired the stand at lower

than the valuation roll prices. It is common cause that the land is situated

in a strategic position of the township making it prime land.

vii. Other issues

(a) Procurement and contract management

i. Goods and services with a transaction values of below R200 000 were

procured without obtaining the required price quotations as required

by Supply Chain Management Regulation (SCM) 17(a) & (c).

Treasury Regulations

ii. Goods and services of a transaction value above R200 000 were

procured without inviting competitive bids, as required by SCM

regulation 19(a).

iii. Bids were not always evaluated by bid evaluation committees which

were composed of officials from the departments requiring the goods

or services and at least one SCM practitioner of the municipality as

required by SCM regulation 28(2).

iv. Bid adjudication was not always done by committees which were

composed in accordance with SCM regulation 29(2).

(b) Human resource management and compensation

i. The competencies of management officials were not assessed

promptly in order to identify and address gaps in competency levels

as required by the Municipal Regulations on Minimum Competency

Levels regulation.

(c) Going concerns issues

i. The accounting officer’s report indicates the Lekwa-Teemane Local

Municipality incurred a net loss of R29 046 542 (2012: R24 578 753)

during the year ended 30 June 2013 and, as of that date, the entity’s

current liabilities exceeded its total current assets by R160 199 844

(2012: R128 820 921). These conditions, along with other matters

indicate the existence of a material uncertainty that may cast

significant doubt on the entity’s ability to operate as a going concern.


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1. INTRODUCTION

1.1 On the 9 t h of May 2014 Greent ime Management Consult ing was awarded work to conduct a prel iminary invest igat ion into the Affa irs of the Lekwa -Local Municipali ty for the purposes of establ ishing whether or not there is a need for forensic invest igat ions at the municipali ty. The prel iminary investigat ion intends to g ive scope and indicat ion of invest igat ions that need to be done based on the al legat ions that were brought forward by members of the community on the 18 t h of March 2014.

1.2 This is a report by Greentime Management Consulting (GMC), issued in terms of section 106(1)(b) of the Municipal Systems Act 32 of 2000. of the Republic of South Africa,

1.3 The report is submitted to:

1.3.1 The Legal Advisor in the Department of Local Government and Traditional Affairs of the North West Government

1.3.2 The Head of Department of the Department of Local Government and Traditional Affairs of the North West Government

1.3.3 The Member of the executive Committee responsible for Local Government and Traditional Affairs of the North West Provincial Government

1.3.4 The Premier of the North West Government

2. THE COMPLAINTS AND ISSUES RAISED BY THE COMMUNITY

2.1 The investigation followed after the memorandum of concerns raised by the community of Boitumelong Township in 18 March 2014 which alleged that the Lekwa Teemane Municipality is involved in maladministration, fraud, corruption and other serious malpractices.

“Based on Mail & Guardian article (sic) of the 08t h

o f Apr i l 2014.

The ANC on Tuesday called for calm in Boitumelong near Bloemhof after six houses were burnt during a violent protest

Residents went on a rampage demanding the resignation of the Mayor and Councilors, whom they reportedly accused of nepotism and failing to deliver on the basis services”.


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2.2 As indicated above, the said media reports also referred to the alleged maladministration, fraud, corruption at Lekwa Teemane Municipality. This report only deals with allegations that relate to the Lekwa Teemane Municipality in North West.

3 COLLABORATION WITH LAW ENFORCEMENT: PRIORITY CRIME INVESTIGATION OF THE SOUTH AFRICAN POLICE SERVICE

3.1 The allegations raised on the memorandum of concerns were also subject to charges of criminal conduct lodged with the South African Police Service.

3.2 The relevant criminal conduct alleged was also verified from Bloemhof Police station with the help of the Branch Commander Sebolai and Captain Dikoko, Acting station commander. The criminal background check was done from the Crime Administration System with the help of Sergeant Monatise from Klerksdorp (CIU).

4 THE ISSUES INVESTIGATED BY THE INVESTIGATOR Based on the terms of reference from Department Local Government & Traditional Affairs, North West the following matters were investigated by the Investigators:

4.1 Investigating the lease agreement or sale of municipal farms. 4.2 Allocating of stands and alleged undertaking by the Mayor to

allocate 1000 units.

4.3 Investigate the International Angling Tournament arranged through Mr. Leshage of Local Economic Development Directorate.

4.4 Eligibility of Guilty Modise to be Councilor.

4.5 Progress report on a case of culpable homicide against Mr. Smous, a municipal employee and whether disciplinary action was taken.

4.6 Determining if any compensation was paid to any person who suffered any injury resulting from the case of culpable homicide against Mr. Smous.

4.7 Investigating sale of Municipal river sand to the community.

4.8 Investigating the allegations that Mr. Guilty Modise was dismissed for misconduct whilst a Municipal employee and grounds thereof.


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4.9 Investigate a voice recording against Mr. Guilty Modise on corrupt activities.

4.10 Progress report on a criminal case of corruption against the Mayor, Municipal Manager, Clr. Guilty Modise and Clr. Majikela.

4.11 Investigating the malpractice by Oupanyana Magage in allocation RDP stands.

4.12 Investigating the Coffin project.

4.13 Investigating any nepotism in appointment of staff and contractors.

4.14 Awarding of tender on sewerage to Zela Makoko’s company.

4.15 Investigating current projects on the LED office under Mr. Leshage.

4.16 Investigate any other matter that may come to our attention during the Investigations.

4.17 Making recommendations and report within a week after completion of the Investigations.

5 POWERS AND JURISDICTION OF THE INVESTIGATORS

TO INVESTIGATE THE COMPLAINT IN RESPECT OF THE MEMORANDUM OF CONERNS RAISED BY THE COMMUNITY IN BOITUMELONG TOWNSHIP

5.1 Mandate of the Investigator

5.1.1 The Investigator firm is an independent entity given mandate by the Department Local Government & Traditional Affairs.

5.1.2 Section 106 (1)(b) of the Municipal Systems Act 32 of 2000. If an MEC has reason to believe that a municipality in the province cannot or does not fulfill its statutory obligation binding on that municipality or that maladministration, fraud, corruption or any other serious malpractice occurred or is occurring in a municipality in the province, the MEC must inter alia;

5.1.2.1 by written notice to the municipality, requesting the municipal council or municipal manager to provide the MEC with information required in the notice;

5.1.2.2 If the MEC considers it necessary, designate a person to investigate the matter.


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5.2 The jurisdiction of the Investigators in respect of the Districts

5.2.1 The allegations referred to above, relate to, inter alia, the allegations made by the community of Boitumelong Township. The question that arises is, whether the Investigators powers extend to the jurisdiction outside Lekwa Teemane municipality. It was determined that the Investigations will be limited to Lekwa Teemane Municipality.

5.3 Approach to the investigation

5.3.1 In terms of the mandate given to the Investigators, the Investigators’ investigations and findings transcend lawfulness. The focus is on good administration and proper conduct. Such enquiry has three components:

5.3.1.1 What happened?

5.3.1.2 What should have happened; and 5.3.1.3 Is there a discrepancy between the two and does

this constitute improper conduct as envisaged in section 106 (1) (b) of the Municipal Systems Act 32 of 2000. Maladministration, fraud, corruption or any conduct resulting in unlawful or improper prejudice to any person, as envisaged in the Municipali ty Systems Act 320 of 2000 and/or, as in this case, a violation of the Prevention and Combatting of Corrupt Activities Act, 2004?

5.3.2 The mandate of the Investigator was not limited to the investigation of community concerns, but could also investigate suspicions or allegations of improper conduct on own initiative.

6 T h e I n v e s t i g a t i o n

The investigation was conducted in terms of section 106 (1) (b) of the Municipal System Act 32 of 2000. The provisions of the Prevention and Combatting of Corrupt Activities Act, 2004 also informed the investigation, in view of the allegations made.

6.1 The scope of the investigation


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The scope of the investigation was restricted to the period 09 May 2014 to 23 May 2014 but covering events from May 2004.

6.2 Method of gathering evidence

6.2.1 Documentation studying and contents considered

6.2.1.1 Copies of the relevant advertisements and relevant documents.

6.2.1.2 Voluminous documentation received from the Lekwa Teemane Municipality and the Community members, including:

i. Memoranda and other internal documents pertaining to the Investigations;

ii. Documents relating to the relevant meetings with the office bearers and Community;

6.2.2 Correspondence

6.2.2.1 Correspondence and documents received from the concerned parties.

6.2.3 Interviews conducted

Interviews were conducted with:

6.2.3.1 The Munipal Manager of the Lekwa Teemane Municipality (Mr. Makuapane);

6.2.3.2 The acting Chief Financial Officer of the Lekwa Teemane Municipality (Mr. Winkler);

6.2.3.3 The Mayor of Lekwa Teemane Municipality (Mrs. Makodi);

6.2.3.4 The Directors of Lekwa Teemane Municipality;

6.2.3.5 The Community members of Boitumelong under the leadership of Mr. Lekgotla Leshonang (Community Convener) and Sammy Dintoa (Community Secretary);

6.2.3.6 Officers from Bloemhof Police Station;

6.2.3.7 Member of the Council;

6.2.4 Consultations

Consultations were held with:

6.2.4.1 Officials of from the Internal audit;

6.2.5 Criminal report


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Copies of the relevant criminal reports documents contained in the file

were obtained with the help of the Police Officer from the Central

Investigation Unit (CIU ) stationed in Klerksdorp.

6.2.6 Legislation and other prescripts The relevant provisions of the following legislation and other prescripts were considered and applied, where appropriate:

6.2.6.1 The Municipal Finance Management Act of 2003;

6.2.6.2 The Treasury Regulations and directives, issued in terms of the PFMA;

6.2.6.3 The Preferential Procurement Policy Framework Act, 2000 and the Regulations issued in terms of the Act;

6.2.6.4 The Prevention and Combatting of Corrupt Activities Act, 2004;

6.2.6.5 The Accounting Profession Act no.26 of 2005;

6.2.6.6 The Supply Chain Management Policy of the Lekwa Teemane;

6.2.7 Records of the Companies and Intellectual Property Commission (CIPC) Records of the CIPC pertaining to the companies and close corporations referred to during the investigation were perused.

7 COMMUNITY CONCERNS, MANAGEMENT REPORT AND EVIDENCE AND INFORMATION OBTAINED DURING THE INVESTIGATION

It will be reported in the following format;

i. Terms of Reference ii. Detailed Issues raised by the Community members. iii. Respond by the management of Lekwa Teemane

Municipality iv. Investigators preliminary findings v. Recommendations by the Investigators

7.1 Lease agreement or sale of municipal farms 7.1.1 Community concerns

A lot of farms in the municipality have been contracted to white farmers

and other rich black people while the majorities in Boitumelong are in

serious poverty.


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7.1.2 Management Response Most Municipal farms are leased to emerging black farmers.

7.1.3 Findings Background Info;

The council resolved the following on the 25 November 2011, Council no 169/2011.

i. That a comprehensive audit be done on all land available in Lekwa-Teemane Municipality area.

ii. That a physical audit be conducted by the Chairpersons of Governance and

iii. Administration, Infrastructure and with Health and Social Services Portfolio Committees with the Director: Corporate Services.

iv. That Councilor Modise leads the team to conduct the audit.

v. That a comprehensive report on the auction of the grazing camps be submitted to Council by the Community Services Director involving the Chairperson, Cllr. Modise and Director Corporate Services, Mr. Zweni.

vi. That all lease agreements be audited and tariffs reviewed.

Grazing camps

The Council resolved the following on the 07 March 2012, Council no: 36/2012.

i. That the full report on the auction of the grazing camps be submitted to Council.

ii. That all beneficiaries within the camps be verified and monitored.

iii. That all disputes regarding grazing camps be dealt with by the community services.

Based on the above resolution the following was noted:

i. Most farms have been unbundled into grazing camps with the help of Ben Van Zyl, the qualified valuators.

ii. Notice 05/2011 was made by the Municipal Manager, Mr. Makuapane intending to lease out certain of the Grazing Camps within its Jurisdiction. The camps were auctioned on Monday 14 March 2011 at 10h00 in the Council Chamber, Christiana.

iii. Most of the grazing camps have been leased to both black and white emerging farmers.

iv. The ratio was leased at 56% to whites and 44% to Black farmers.

v. The grazing camps are leased at R10 per hectare per


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annum

vi. Most of the lease contracts were signed on 2011 and expiring in 2016 i.e. 5 (five) year lease period (Based on the scrutinized signed lease contract).

vii. Herewith the details of the individuals who have leased the grazing camps

Initials and Surname Portion

Total

Hectors Race Annual amount

E.W Groenewalt 12A, B 302 White 10 328.40

F.H.D Conradie

10 C, D &

12C 458 White 15 663.60

P& C De Villiers 7A,B,C,D,E 634 White 21 682.80

Cvd W Vermeulen 10A,B 271 White 9 268.20

Bojo Farming (Tos

Joubert) 2A, B,C 621 White 21 238.20

Sonop Farming (Ben

Portgiter) 3 A, B, C 574 White 19 630.80

J.S Wageng & T Letebele 9 A, B, C 467 White&African 15 971.40

N Mseswa 11 A, B 464 African 15 868.80

T Wesi 5 286 African 9 781.20

V.P Bangiwe 8 B, C 462 African 15 800.40

S.B Laat 4A 165 African 5 643.00

B.F Van Eck 4B 126 White 4 309.20

L.F Gaborone 1A, B,C 449 African 15 355.80

J& M Byles 1B, C,D 187 White 6 395.40

J Mpangalazane 17D 100 African 3 420.00

S Lithoko 6C 137 African 4 685.40

viii. Based on the resolution passed on the 25th of November 2011, Council no 169/2011. The Councils passed the resolution to audit all the land that is owned by the Munipality up to date there was no land audit done to determine all the land and farms that is


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owned by the municipality.

ix. Per on the voice recording it was noted that Clr. Modise, Municipal Manager owns the farms that is owned by the municipality therefore one should expect the independent party to perform the full and farm audit (Refer to section 7.9 for the detailed explanation)

x. Per the meeting held with the Mayor Makodi on the 22nd of May 2014, she also alluded that Lekwa Teemane does know all the land /farms that is under the owner their name.

7.1.4 Conclusion and Recommendations

We couldn’t satisfy ourselves that all the farms and land that are owned by the municipality has been recorded in the fixed asset register in terms of Grap 17 since there is no detailed land or farm audit done on the list of the farms that is owned by the municipality.

Therefore, a full detailed forensic investigation need to be performed, in order to validate all the land and farms that are under the ownership of Lekwa Teemane municipality.

7.2 Allocating of stands and alleged undertaking by the Mayor to allocate 1000 units

7.2.1 Community concerns i. The refusal of the municipality to allocate residential stands to

the Boitumelong community is of serious concern. ii. The mayor did not live to his promises of allocating

approximately 1000 stands by February 2014.

7.2.2 Management Response i. We are in the process of allocating residential stands before the

end of April 2014.

7.2.3 Findings Background;

On 25 November 2011 the Council resolved the following, resolution 164/2011;

i. That the Council approves the selling of Stand no.946 Boitumelong to TT Resources at the amount of R121,752

ii. That the cost of rezoning be for the account of the applicant.


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iii. That the installation of services be for the account to the applicant.

iv. That the amount is payable within 3 months after acceptance of the price.

v. That in future all Close Corporation must submit all their company documents with their applications.

On 07 March 2012 the Council resolved the following, resolution 51/2012;

i. SV Mbulawa- Remaining extent ERF 932 Boitumelong, P. Masendi also applied for a portion of ERF 932. Her position is already subdivided and rezoned. Cllr Majikela also applied for a portion of ERF 932 for residential purposes.

ii. That this basis treated on a first come first serve basis iii. That bilateral between P. Masendi and SV Mbulawa

be held as the portion that Mbulawa is interested has already been subdivided and rezoned by P. Masendi.

On 29 June 2012 the Council resolved the following, resolution 124/2012;

i. That Council approves the offer to purchase the remaining extend of ERF Boitumelong by Clr. M.E Majikela for residential purposes (R20,520)

ii. That Council determines the price at which the stand be sold to Mr. Majikela

iii. That the stand be rezoned to residential. iv. That the cost of rezoning be residential and all other

costs pertaining to the stand for the account of the applicant.

On 23 April 2013 the Council resolved the following, resolution 57/2013

i. That Council sells stand number 3694 Boitumelong to D.P Medupe to develop offices at R126,772.56

ii. That the applicant be informed that the cost of rezoning and all other costs with regards to purchase of the stand will be for their account.

iii. That the Policy: Conditions of selling Erven be strictly adhered to.

Based on the above the following was noted;

(a) The land was previously zoned for institutions like Churches, School and/or Crèches however Mr. Mbulawa and Ms. Masendi were approved by council


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for business. (b) Mr. Majikela’s sale was also approved for

residential even though there was no motivation from the Town planners.

(c) The land was sold to three individuals, Ms. Pearl Masendi, Mr. Mbulawa and Clr. Majikela.

(d) Ms. Pearl Masendi is an employee at the municipality and Clr Majikela is the member of the Council.

(e) In terms of Section 14 (1)-(4) of MFMA Acts 53 of 2003;

14. (1) A municipality may not transfer ownership as a result of a sale or other transaction or otherwise permanently dispose of a capital asset needed to provide the minimum level of basic municipal services.

(2)A municipality may transfer ownership or otherwise dispose of a capital asset other than one contemplated in subsection ( 1 ) , but only after the municipal council in a meeting open to the public.

(a) has decided on reasonable grounds that the asset is not needed to provide the

(b) has considered the fair market value of the asset and the economic and minimum level of basic municipal services: and community value to be received in exchange for the asset.

(i) There was no community participation or open public sale on the disposals of stands.

(ii) The stands were sold at lower than the valuation roll prices thus causing the Municipality to record an accounting loss in its books therefore the land was not sold at the open market per the MFM Act.

(iii) All land has been sold in the last three years

was sold at prices lower than valuation role in contravention of standing policy that says land must be sold at valuation role prices except in the case of institution buyers like churches and school who buy municipal land at R5 per square meter.

(iv) This land is situated on a street corner and is central thus making it strategic and prime.

In February 2014 the Mayor made pronouncement that she will be allocating stands to the community before end April 2014. Based on the work performed the following was noted;


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i. Per the stands waiting list there is a total of 2000

applicants, however only 1011 are available. ii. On the meeting held on the 22nd May 2014, the

Mayor Makodi ratified that stands will be allocated on first come first serve basis however preference will be on the elders.

iii. The Mayor also alluded that the Stands will be allocated after the Investigations has been completed but has to resolve the basis that will be used to allocate the stands since there’s is no systems in place to allocate stands.

7.2.4 Conclusion and Recommendations A detailed forensic audit need to be performed for all the

stands that was sold in the past five years in order to determine whether the stands was sold in open and reasonable manner at the fair market value.

Also to measure the quantum of loss that was created on the sale of stands. Whether the systems to be put in place to allocate stands will be not be detrimental to the community members.

7.3 International Angling Tournament arranged through Mr. Pakiso Leshage of Local Economic Development Directorate

7.3.1 Community concerns Mr. Pakiso Leshage as LED manager has failed the community in the International Angling Tournament and also failed to give an official report on the tournament.

7.3.2 Management Response 3rd Feeder World Angling Champion

i. The Municipality did not have a budget for the above event

ii. SAFBAF and LOC had their own budget and had total control over the event

iii. The District Municipality has procured Gala dinner The following were the opportunities during the 3rd Feeder

World Angling Championship and were mostly given to youth members around Lekwa-Teemane.

i. Cleaning of town ii. Security services iii. Security Entertainment iv. Transport services


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v. Catering service

All the above services were procured by LOC and the LED Unit only facilitated the availability of such services to youth and guarantee the empowerment and ensuring that LED is visible. The report of the event can be accessed from the LOC.

7.3.3 Findings The International Angling tournament was held on the 25th November 2013 at Bloemhof dam. 16 countries participated on the competition mainly European countries. Over 80 individual’s participated in the competition. The species targeted were Carp, Mudfish, Catfish and Yellow fish.

Based on the above the following was noted

i. The tournament was a private event and not a municipality event.

ii. The tournament was organized by the Local Organization Committee under the stewardship of SAFBAF, under the leadership of Mr. AS Maree, SAFBAF Secretary.

iii. The tournament was funded by private companies and Lekwa Teemane did not make any monetary contribution.

iv. Lekwa Teemane municipality only contributed the chamber for meetings and town hall to host both the opening and closing ceremonies.

v. The Boitumelong community members didn’t benefit except for cleaning (R2,500) and security services (R2,200).

7.3.4 Conclusion and Recommendations The LED unit should include the participation of the National

Governmental Structures in the form of support so that the community of Boitumelong can benefit as well.

The LED should notify the community of Boitumelong in advance before the beginning of the tournament since Lekwa Teemane municipality is a conduit between the LOC (SAFBAF) and the community of Boitumelong.

7.4 Eligibility of Guilty Modise to be a Councilor; Allegations that Mr. Guilty Modise was dismissed for misconduct whilst a Municipal employee and grounds thereof; Voice recording of Mr. Guilty Modise on corrupt activities


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7.4.1 Community concerns

i. Clr. Guilty Modise committed a lot of corruption and fraud while he was an official at the municipality

ii. Clr. Guilty Modise sold residential stands and RDP houses unlawfully and he was removed from the position and redeployed to the local traffic department, where he sold licenses and leaners licenses unlawfully.

iii. We have some voice recording were Clr Modise claims to be owning a far together with Clr Majikela, he also spoke about a guy from Pretoria and that guy was paid a bribe to fake contract papers

iv. Councilor Modise’s young brother Letlhogonolo Modise was leased a Municipality swimming pool to generate cash for his own benefit since last year December. The fire department was using its own vehicle to supply clean water to the swimming pool while the community spends the whole of December without water and the Mayor and the MM, Clr Modise and Councilor Majikela were involved in a bribery scandal. It is said there was a guy from Bloemhof but working in Pretoria who applied for a tender from the Municipality and were requested by the above to pay R60 000.00. The guy managed to pay R20 000.00. A case was opened and got a written warning.

7.4.2 Management Response

i. The Municipal Manager was not part of the decision to deploy Mr. Pakiso Modise as Clr; the decision was taken by the political party that he is representing the Council.

ii. Clr P Modise was never convicted of the allegations leveled against him and he was never dismissed but he resigned.

iii. The Municipality did put a notice requesting interested parties to send proposals for lease of the swimming pool did not received any response form interested parties and 12 months later Mr. Letlhogonolo Modise made an application to Council to lease the swimming pool and Clr Modise during the discussion of this item as per the council standing orders recused himself and the council resolved to lease the swimming pool to Letlhogonolo Modise.

7.4.3 Findings Background

Clr Pakiso Modise was appointed to council at Lekwa-


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Teemane in May 2011 as an ANC Party representative councilor. He was not elected by the community. Clr Modise was previously an employee of the municipality.

i. As an employee of the municipality Mr. Modise was discharged twice for fraud. Councilor Modise was employed in 2001 as a Meter Reader and was discharged on the 30th of January 2006 on allegations of fraud. He was hired again by the municipality as a Housing Administration clerk on the 25th of March 2006 three months after discharge. On the 27th of June 2007 Mr. Modise was fired for fraud in a disciplinary hearing presided over by Advocate Eric Law of de Klerk Attorneys.

ii. Mr. Modise’s employment history file disappeared from the municipal offices. Mr. Yanta (Human Resources Manager) confirmed in writing that the file went missing just before council elections in 2011.

iii. The response by Management to the allegations by community members categorically stated that Mr. Modise was never fired from the municipality at any time but resigned by his own volution.

iv. In May 2011, the Municipal Manager was asked by the ANC to give information on how Mr. Modise left his employ of the municipality and his response was that Mr. Modise had resigned from the Municipality. We could not confirm the contents of the letter as the municipal Manager could not remember where the copy was filed. We have reasonable grounds to believe that the Municipal Manager did not want us to have sight of the said letter to the ANC Regional Office.

v. Mr. Makuapane was the Acting Municipal Manager at the time that Mr. Modise was fired and signed his dismissal letter.

vi. In our interview with Ms. Connie Fourie who at that time was the PA to Mr. Makuapane, Connie confirmed to investigators that she had handed over the dismissal letter to Mr. Modise and he had signed for it.

vii. The Municipal Manager told the investigators that Mr. Yanta had written the letter to the ANC on his computer and only gave him for signature. He said, it was the responsibility of the Human Resources Manager to handle the dismissal however this was contrary to the information that we obtained from Ms. Fourie.

viii. We have in our possession the HR System generated Employee Details Report that confirms that Mr.


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Modise was discharged on two occasions from the municipality. The system shows how an employee would have left employment.

ix. Both the Municipal Manager and the Human Resources Manager were aware that Mr. Modise was fired from the Municipality.

x. We have an audio recording whose source we cannot ascertain, however if confirmed as authentic it reveals the character and person of Clr Modise. Mr. Modise was recorded in a conversation with one Velile and his son. The audio recorded Mr. Modise soliciting for a bribe in return for extension of Mr. Velile’s farm lease to ten years. Mr. Modise indicated that he was very connected and can make things happen. He had connections with one Fikile from the deeds office in Pretoria and could change title deeds. Mr. Modise also revealed that the Municipality was not aware of how many farms it owned and where they were.

xi. On the 25th of November 2011, a council resolution 169/2011 was passed for a Land Audit and Clr Modise was tasked to lead the team that was mandated to undertake the Audit.

xii. The Land Audit was never concluded. The Municipal Manager confirmed to the investigators that there was no report prepared for the said Land Audit.

xiii. Clr P.G.G. Modise’s young brother L. Modise was indeed offered to lease the Municipal swimming pool for a period of 3 years based on Resolution 42/2013 passed on the 23rd April 2013. We have no evidence that Clr Modise recused himself from the meeting and therefore cannot comment on his influence on the decision to lease the swimming pool to his brother.

7.4.4 Conclusion

a. It is evident that Mr. Makuapane deliberately lied to the ANC leading to the Party making a decision to deploy Mr. Modise as a Councillor at Lekwa Teemane Municipality. Both Mr. Makuapane and Mr. Yanta were aware of the fact that Mr. Modise was fired for fraud and further went on to lie in their response to the community. As the community was aware of the circumstances leading to the discharge of Mr. Modise, these lies and deliberate misinformation incensed members of the public thus motivating the violent demonstrations that took place in Bloemhof and greater Lekwa-Teemane Local Municipality.

b. We have reason to believe that Mr. Modise’s file may not have been lost at all but the Municipal Manager and Human


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Resources Manager were deliberately hiding this file to conceal the contents of the file for reasons the investigators have no knowledge of. The behavior of both the Municipal Manager and the Human Resources Manager can only give the impression that there is an unholy alliance between the two municipal officials and Clr Modise. It is our opinion that Mr. Modise was deployed as a Councilor on the basis of the positive reference given by the Municipality without which the ANC would not have made Mr. Modise a Councilor.

7.4.5 Conclusion and Recommendation

i. The conduct by both the Municipal Manager and the Human Resources Manager was unethical and cast serious shadow of doubt as to their integrity as Municipal Officials. “In terms of Section 61 (2) (a),(b) which stipulates the fiduciary duties of the Accounting Officer, the Accounting Officer may not use the position or privileges of, or confidential information obtained as, accounting officer for personal gain or to improperly benefit another person”. The position of councilor is a very senior position in the municipality and there are financial benefits that accrue to serving councilors. It cast further suspicion as to why the Municipal Manager would like to serve under a Councilor who has a history of dishonesty.

ii. We therefore recommend that there be disciplinary

proceedings preferred on both the Municipal Manager and the Human Resources Manager for bringing the municipality into disrepute and causing the deployment of an unfit councilor.

iii. There is need for further investigations on the authenticity of the audio recording and Mr. Modise’s involvement with municipal farms. His connection with the deeds office needs to be investigated to check if municipal land ownership has been fraudulently transferred.

iv. The general conduct of Mr. Pakiso Godfrey Modise is questionable and therefore all transactions that he was involved in need to be investigated. We further recommend that Mr. Modise, Mr. Makuapane and Mr. Yanta be suspended during the investigation to ensure that they do not interfere with such investigations.

7.5 Determining if compensation was paid to any person who suffered any injury resulting from the case of culpable homicide against Mr. Smous


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7.5.1 Community concerns i. In 2004/2005 Mr. Smous was involved in a car

accident while on duty driving sport committee to Mahikeng. It was noted that he was under the influence of alcohol which led them to have the accident. A member of the committee lost a life and the Municipality did not take action although he was found guilty by a court of law.

ii. The municipality took a decision to pay a white boy

from Holland a compensation of R3 million for the same accident while the family of the deceased received nothing.


i. The bargaining council agreement prescribes that a person suspected of misconduct must be charged with the same within 3 months, which was not done in the case of Mr. Smous.

ii. Mr. Makuapane, the current Municipal Manager was not the Accounting officer (Municipal Manager) during the accident of Mr. Smous.

iii. It was not the Municipal decision to pay R3 million but it was paid in compliance with an order of Court.

7.5.3 Findings Background Mr. Sello Charles Smous has been an employee at Lekwa Teemane Municipality since 1996. Below is the various positions held till to date:

1996 - Community service secretary at Lekwa Teemane Municipality (Bloemhof office) 2000 - Creditors Clerk & Storekeeper at Treasury department. 2001- Admin officer with Municipality. 2013- Manager Public Works

Mr. Smous has Grade 12 qualifications from Gaopalelwe Secondary School and he is also the biological brother to the Mayor of Lekwa Teemane Municipality, Clr R.M Makodi.

Accident The accident took place on the 15th of May 2004 on the road

between Bloemhof and Schweitzer Reneke. The car was driven by Mr. Smous and that he was negligent in that the vehicle left the road and overturned while there were travelling on their way to Bloemhof. It is not alleged that any other vehicle was involved in the accident.


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According to the consultations made by Adv. P.J Loubser on the

11th June 2008, Mr. Smous confirmed that the passengers in his vehicle were members of Sports Committee of the local community and they attended a sports meeting in Vryburg on the day of question. He was mandated by the local Municipality to use the vehicle of the Municipality to convey this committee to Vryburg back to Bloemhof. After the meeting on that day most of the passengers in the vehicle as well as Mr. Smous himself, had attended a social function at Vryburg where they consumed a substantial quantity of intoxicating liquor.

According to Mr. Smous, he was under the influence of the

intoxicating liquor when he drove the vehicle back to Bloemhof on that specific night. His statement is that he simply lost control of the vehicle, that it then left the road and that it then overturned.

Per the letters written by Adv. P.J Loubser addressed to Guillaume

de Klerk Attorneys dated the following was noted;

“To complicate matters further, it was disclosed to me that Mr. Smous was charged in Court for culpable homicide following the death of one of the passengers in the vehicle. At the commencement of the proceedings, his counsel handed in a statement in terms of which Mr. Smous pleaded guilty to the charge of culpable homicide on the basis that he caused the accident by his own negligence. Mr. Smous was then accordingly found guilty of culpable homicide and sentenced.” The following were noted:

a. The HR Manager confirmed that the Municipality was aware of the accident that involved Mr. Smous. There was no disciplinary action issued with regards to the case.

b. Per the interviewed held on 21st of May 2014 confirms that there is evidence that Mr. Smous was charged for culpable homicide at the court however per the background criminal check of Mr. Smous the was no evidence of such.

c. It was also confirmed from the acting CFO, Mr. Winkler that the Insurance turned down the claim therefore payments had to be made from the municipal confers.

d. Mr. de Jong “White boy” a 27 year, Dutch and English speaking. Lives in Drachten, Holland. He was represented by Van Der Hoff Attorneys. The court sanctioned Lekwa Teemane Municipality to pay all the damages made to Mr. de Jong “White boy”. A total of R3,25m was paid to him (verified on the bank statement) and R825,179.65 was relating to the legal cost paid.

e. The other passengers who were involved in accident were


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represented by Edeling. Van Niekerk Attorneys were paid the total of R200,000. The amount was dispersed as follows:

Plaintiffs Amount received Legal Fees Total

Mr K. G Namane 24 284.00 10 716.00 35 000.00

Mr F. G Strydom 17 972.00 12 028.00 30 000.00

Mr. T V Moseki 28 452.00 11 548.00 40 000.00

Mr. L.E Mmusi 12 157.00 7 843.00 20 000.00

Mr. N.M Motate 57 291.00 17 709.00 75 000.00

200 000.00

f. Pitso Serape (deceased) who died on the accident had a surviving daughter that is 10 year old and has not received any compensation from the Municipality. Mr. Serape the father of the deceased (Mr. Pitso Serape) is paying school fees from his Government pension (SASSA) meagre income albeit Pitso Serape died on the accident. The family of the deceased had not been paid anything.

7.5.4 Conclusion and Recommendations The period of 10 years has elapsed since the date of the accident. It is a common law that a disciplinary hearing should be conducted within a reasonable time from the date of misconduct, notwithstanding the outcome of a civil or criminal matter. It is highly unlikely that any presiding officer in a disciplinary hearing will condone a period of 10 years as within the boundaries of a reasonable time frame. Therefore a legal opinion should be sorted regarding this matter. Further investigation need to be carried out why the family of the deceased was not paid. Someone should have expected the Municipality to have taken the concomitant measures that the family of the deceased didn’t receive any form of compensation.

7.6 Sale of Municipal River Sand to the community

7.6.1 Community concerns The MM is not reporting to the community about the river sand which is being dug by and being sold to the community by a white guy by the name of Mr. FJ Beukes without


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License or permission from the municipality.

7.6.2 Management Response No management response

7.6.3 Findings i. We inspected the accounting record in order to

ascertain whether there was no any receipt from Mr. F.J Beukes, consequently there was no evidence of any payment received except for rates and taxes since he is the resident of Lekwa Teemane Municipality.

ii. Both the Mayor and the Acting Chief Financial Officer also alluded that the River Sand is being harvested from the private property not within the Municipality property.

iii. Detailed evidence was requested from the community in order to substantiate the evidence but was not forthcoming.

7.6.4 Conclusion and Recommendation

i. Municipality does not have a record of the land that is within their jurisdiction where sand is being harvested, we therefore cannot ascertain whether or not River Sand is being harvested within the Municipality property.

ii. Detailed audit needs to be performed to determine all

land that is owned by the Municipality.

7.7 Progress report on a criminal case of corruption against the Mayor Clr Makodi, Municipal Manager Mr. Makuapane, Clr. Guilty Modise and Clr. Majikela

7.7.1 Community concerns The Mayor, the Municipal Manager, Clr Pakiso Modise and Clr Majikela

were involved in a bribery scandal were there was a guy from

Bloemhof but working in Pretoria applied for a Tender from the

municipality were requested by above four Musketeers to pay bribery

of R60 000.00 but the guy paid a deposit of R20 000.00 and he has a

written proof and a case was opened at the Bloemhof Police Station.

7.7.2 Management response The council and Municipal Officials through the office of the


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Municipal Manager did not respond to the allegations of the bribery charges against the Mayor, Clr Majikela, Clr Modise and the Municipal Manager, Mr. Makuapane.

7.7.3 Findings Background

i. A case of fraud and corruption under case no. 142/5/2013 was opened by a Mr. Nthutang Kekana wherein he alleged that he was requested to make a capacity payment fee of R60 000.00 for a proposal that his civil engineering consulting company in joint venture with OJM Consulting Engineers submitted to Lekwa-Teemane Local Municipality. The capacity payment was for the purposes of determining if the company had capacity to do the work. It is alleged that Mr. Maimane the other JV partner handed over R20 000.00 as deposit to the Mayor Mrs. Rebecca Makodi who in turn passed the said R20 000 cash to Clr. Majikela at a meeting that was supposedly held in Wolmaransstad.

ii. Clr Modise was reported to be present at the same

meeting. It is also alleged that the Municipal Manager was not present at the time the exchange of cash took place but was however aware of the meeting. The attendees of the meeting then waited for the Municipal Manager to bring a confirmation receipt of the cash. Mr. Makuapane allegedly brought the confirmation letter signed by him as receipt of the R20 000 cash deposit for capacity verification. See Annexure A1

iii. Mr. Kekana then verified with the office the existence

of such fee and was told that there were no such fees at the municipality.

iv. OJM JV KEKANA and Lekwa-Teemane Local

Municipality signed a service level agreement on the 16th of October 2012 wherein it was a requirement that the JV submit a Status Quo Study on the existing conditions of Roads and storm water in Christiana Unit on or before the 30th of December 2012.

v. The assignment was done on risk with the proviso

that payment will only be done if the JV identifies funders of the project.

vi. OMJ JV Kekana is alleged to have delayed the


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submission of the report and the contract was then cancelled.

vii. Mr. Kekana submitted an invoice for work done on the

7th of March 2013; however the Municipality holds that it does not owe the JV any money since they did not comply with the terms and conditions of the SLA.

viii. Mr. Kekana alleges that their payment was rejected

because Clr Majikela requested that he be paid a fee to influence the payment but the client did not pay.

ix. Mr. Kekana alleges that it was because of these

overtures that he then decided to report the matter to the police as fraud.

7.7.4 Findings

i. OJM JV Kekana was awarded a tender to undertake Planning, Design and Implementation of roads and storm water network Master Plan for the Christiana Unit in Lekwa-Teemane Local Municipality on risk. The sponsors of the project were supposed to raise funding for the project.

ii. OJM JV Kekana did not raise the finance required for the project

iii. The transaction was a Private Public Partnership in all intent and purpose

iv. There is no evidence to suggest that the accused were at the meeting as alleged by Mr. Kekana

v. The case was withdrawn at the advice of Senior Public Prosecutor J. Nel on the basis that there was no evidence linking the accused to the allegations

vi. Captain Bokwana of CCI Unit in Klerksdorp who was the investigator confirmed that the plaintiff failed to give them compelling evidence that was needed for successful prosecution

vii. The cellphone recordings and sms messages did not link the accused to the fraud case.

viii.

7.7.5 Conclusion and Recommendations There was no compelling evidence from the plaintiff to

suggest that there was a crime committed. However it is our opinion that the flow of the transaction from the proposal to execution until the cancellation of the contract suggest that there were talks behind the scenes that were not in line with the Service Level Agreement. We therefore recommend a thorough investigation on this matter.


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We are of the opinion that both officials of the Municipality and the plaintiff were involved in an act of corruption whose innocence or lack thereof will be determined by examination of the process undertaken to appoint OJM JV Kekana.

7.8 Malpractice by Oupanyana Magage in allocating RDP stands

7.8.1 Community concerns i. Mr. Oupanyana Magage is an official of the

Municipality; his job is to allocate residential stands and application of RDP houses.

ii. Mr. Magage is selling stands to desperate community members for mere R2000.00; he sold one stand to more than one person.

7.8.2 Management response

On the allegations that Mr. Magage is selling stands we have requested those affected to either provide us with proof or open criminal against him.

7.8.3 Findings There was no evidence from the members of the community, no one who came with the specific charges relating to the sale of RDP stands by Oupanyana Magage.

7.8.4 Conclusion and Recommendations i. Further forensic needs to be performed in conjunction

with the Department of Human Settlements to establish how many RDP houses were built in the last 3-5 years.

ii. Forensic needs to be performed to determine the methods used to allocate the RDP stands by the Lekwa Teemane Municipality officials.

7.9 Coffin Project

7.9.1 Community Concerns The coffin project was funded in 2012, the mayor told the beneficiaries that the project will be funded but nothing has ever been received until now.



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No response from the Management

7.9.3 Findings i. The Coffin project was handled by the Department of

Social Services therefore is not within our scope since we have been commissioned to do the Investigation at Lekwa Teemane Municipality.

ii. Per the interview held with the officer from the

Department of Social Services, Mr. Motsiri on the 22nd of May 2012. Mr. Motsiri confirmed that the project was applied for but due processes at the department was followed in terms of awarding the project however the community beneficiaries application unsuccessful owing to incomplete documentation as requirement by the Supply Chains guidelines per the Treasury regulations i.e. tax clearance, bank account etc.


Further forensic may be performed to determine whether the Coffin project may be resuscitated with the help of Local Economic Development unit (LED).

7.10 Nepotism in appointment of staff and contractor

7.10.1 Community Concerns

a) The Mayors church colleagues and Clr. Guilty Modise’s family members are employed in the municipality.

b) The Mayor appointed Mr. Caffer Morapedi as the Manager in the office of the Mayor permanently (Political appointment).

c) The Mayors Husband was taken from his previous job and employed as a grounds man at the department of Health.

d) The Mayors little sister was also taken from her job and employed to the Municipality strategically to the Christiana in the Finance Department.

e) Another of Mayor’s little sister was taken and employed in Vryburg, the department which she was employed is not known though.

f) Mayor’s nephew is employed at the Sandveld and another nephew is in learnership of the Municipality and his contract expired which is now being continuously being renewed while his co-workers their contracts were not renewed.

g) Councilor Modise’s young brother Letlhogonolo Modise was leased a Municipality swimming pool to generate cash for his


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own benefit since last year December. The fire department was using its own vehicle to supply clean water to the swimming pool while the community spends the whole of December without water.

h) Clr. Guilty Modise’s younger brother Letlhogonolo Modise works from one municipality learnership to another. He worked for all the learnership and was finally given a swimming pool to lease.

i) Clr. Modise’s cousin is also in a learnership at the Municipality. j) Zela Makoko is a close friend of Clr. Guilty Modise and Clr.

Majikela, all municipal tenders are given to Zela Makoko and their friends and his firm has caused a lot of problem in the community.

k) The Mayor has appointed Keepile’s step daughter as a P.A in the office of the Mayor while she is from Rustenburg.

7.10.2 Management Response i. We confirm that Mr. Morapedi is appointed

permanently as the Manager in the office of the Mayor. The Municipality recruitment policy was followed and Mr. Morapedi was the successful candidate and it is not the mayor who declared the position permanent but the Council.

ii. The Municipality is not responsible for the appointment of the Mayor’s husband and is not in a position to respond.

iii. The Municipality is not responsible for the appointment of the Mayor’s sisters and is not in a position to respond.

iv. Mr. Letlhogonolo Modise is not permanently employed by the Municipality he is currently on a Learnership programme.

v. The Municipality is not responsible for the appointment of Mr. Modise's cousin and is not in a position to respond.

vi. The Municipality did put a notice requesting interested parties to send proposals for lease of the swimming pool did not received any response form interested parties and 12 months later Mr. Letlhogonolo Modise made an application to Council to lease the swimming pool and Clr Modise during the discussion of this item as per the council standing orders recused himself and the council resolved to lease the swimming pool to Letlhogonolo Modise.

vii. The Municipality is not responsible for the appointment of Mr. Modise's wife as a CDW and is not in a position to respond.

viii. The allegations of poor workmanship of the sewerage


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project, the contract was never awarded to Mr. Makoko as it is mentioned in the memorandum.

7.10.3 Findings

7.10.3.1 Appointment of Managers

a) The following managers was appointed on the 01st January 2013

Manager Positions Qualifications Level

Date of

Appointment

Mr. C Smous Public Works Matric 2 01-Jan-13

Mr. B. D July Public Safety Matric 2 01-Jan-13

Mr. Leshage LED B Admin 2 01-Jan-13

Mr. S Lesie Strategic Planning B Admin 2 01-Jan-13

Mrs. B Laaste Administration B Admin+ HR 2 01-Jan-13

Mr. P

Mamogwa

Parks, Recreations and

Cleaning Matric 2 01-Jan-13

b) The above positions were internally advertised and the general public was not given a chance to apply for the positions. c) Per the scrutiny of their CV’s none of them had any of the Managerial experience

Conclusion and Recommendations

i. Based on the responsibility given to the above managers one should have expected them to have the managerial experience and the relevant qualifications.

ii. Therefore detailed skills audit needs to be performed to determine whether the managers have the necessary skills in order to accelerate service delivery.

7.10.3.2 Appointment of Contractors

a) Swimming Pool contract given to Clr. Modise younger brother


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7.10.4 Findings

i. On the 23rd of April 2013 Resolution 82/2013 was passed by council to lease the Bloemhof swimming pool to Mr. L.R. Modise for a period of three years. It was resolved that no lease fee be paid for the first year of the contract since the swimming pool needed to be renovated however service account was to be paid by the leasee.

ii. The council was aware that the applicant was the brother to Clr. Pakiso Godfrey Modise.

iii. A twelve month period had lapsed since the request for proposals had been requested from interested parties.

iv. We could not get the advertisement for request of proposals that was done in March of 2012 to confirm time limits regarding the dates on which proposals had to reach the Municipality and there we cannot comment on whether Mr. L.R Modise’s application was valid and in line with the request for proposals.

v. We could not establish a log for work done by the Municipality at the Bloemhof swimming pool in contravention of Resolution 82/2013. Further investigation of the Public Works department’s involvement in doing repairs at the swimming pool.

vi. The council gave out a moratorium on lease fees in the first year of the three year lease contract a condition that members of the public were not aware of.

vii. The swimming pool is currently not functional.

7.10.5 Conclusion and Recommendations i. There is no evidence of nepotism in the case,

however there was no transparency in the award of the lease to Mr. Letlhogonolo Modise. In terms of disposal or lease of Municipal property there was need to comply with Section 14(1) of the MFMA that the disposal of Municipal Assets must be done in a transparent manner.

ii. The Bloemhof swimming pool lease must have been put to public tender setting out the conditions of the lease to ensure that all interested parties could participate.

iii. There is need to investigate allegations on the use of municipal equipment on repairs of the pool.

i. Procurement and contract management - Lack of supporting


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documentation In accordance with section 62(1)(c)(i) of the Municipal Finance Management Act, "the accounting officer of a municipality is responsible for managing the financial administration of the municipality, and must for this purpose take all reasonable steps to ensure that the municipality has and maintains effective, efficient and transparent system of financial risk management and internal control." In accordance with section 2, paragraph 1, of the Preferential Procurement Policy Framework Act No.5 of 2000, “framework for implementation of preferential procurement policy, “an organ of state must determine its preferential procurement policy and implement it within the following framework: (a) A preference point system must be followed; (b) (i) for contracts with a Rand value above a prescribed amount a maximum of 10 points may be allocated for specific goals as contemplated in paragraph (d) provided that the lowest acceptable tender scores 90 points for price; (ii) for contracts with a Rand value equal to or below a prescribed amount a maximum of 20 points may be allocated for specific goals as contemplated in paragraph (d) provided that the lowest acceptable tender scores 80 points for price; (c) any other acceptable tenders which are higher in price must score fewer points, on a pro rata basis, calculated on their tender prices in relation to the lowest acceptable tender, in accordance with a prescribed formula; (d) The specific goals may include— (i) Contracting with persons, or categories of persons, historically disadvantaged by unfair discrimination on The basis of race, gender or disability; (ii) Implementing the programmes of the Reconstruction and Development Programme as published in Government Gazette No. 16085 dated 23 November 1994; (e) Any specific goal for which a point may be awarded must be clearly specified in the invitation to submit a tender; ( f ) the contract must be awarded to the tenderer who scores the highest points, unless objective criteria in addition to those contemplated in paragraphs (d) and (e) justify the award to another tenderer; and (g) Any contract awarded on account of false information furnished by the tenderer in order to secure preference in terms of this Act, may be cancelled at the sole discretion of the organ of state without prejudice to any other remedies the organ of state may have. (2) any goals contemplated in subsection (1) (e) must be measurable, quantifiable and monitored for compliance.” In accordance with section 111 of the MFMA, “each municipality and each municipal entity must have and implement a supply chain management policy which gives effect to the provisions of this Part.”


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Further in accordance with section 115 (1) of the MFMA, “the accounting officer of a municipality or municipal entity must: (a) Implement the supply chain management policy of the municipality or municipal entity; and (b) Take all reasonable steps to ensure that proper mechanisms and separation of duties in the supply chain management system are in place to minimise the likelihood of fraud, corruption, favouritism and unfair and irregular practices. (2) No person may impede the accounting officer in fulfilling this responsibility.” During the investigation of procurement and contract management, it was noted that the preferential procurement point system was not used for the following tenders that follow a competitive bidding process, as a result we were unable to determine whether these bids were evaluated and adjudicated fairly and unbiased manner. It was further identified that a lack of supporting documentation were obtained from the Municipality. The following competitive bid was identified as such:

No

Item description Total rand-value of award

1 16/2009: Construction of the new Utlwanang library R 4 168 698

2 10/04: Construction of internal roads and associated storm water facilities in Geluksoord

R 5 502 079

R 9 670 777

Non-compliance with section 111 and 115 (1) of the MFMA

All items of non-compliance findings listed above have resulted in irregular

expenditure. These findings identified on sample base suggest that

significant instances of undisclosed irregular expenditure may exist in the

total population of procurements.

i. Procurement and contract management - No advertisement register

In accordance with section 62(1)(c)(i) of the Municipal Finance Management Act, "the accounting officer of a municipality is responsible for managing the financial administration of the municipality, and must for this purpose take all reasonable steps to ensure that the municipality has and maintains effective, efficient and transparent system of financial risk management and internal control."


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In accordance with section 2, paragraph 1, of the Preferential Procurement Policy Framework Act No.5 of 2000, “framework for implementation of preferential procurement policy, “an organ of state must determine its preferential procurement policy and implement it within the following framework: (a) A preference point system must be followed; (b) (i) for contracts with a Rand value above a prescribed amount a maximum of 10 points may be allocated for specific goals as contemplated in paragraph (d) provided that the lowest acceptable tender scores 90 points for price; (ii) for contracts with a Rand value equal to or below a prescribed amount a maximum of 20 points may be allocated for specific goals as contemplated in paragraph (d) provided that the lowest acceptable tender scores 80 points for price; (c) any other acceptable tenders which are higher in price must score fewer points, on a pro rata basis, calculated on their tender prices in relation to the lowest acceptable tender, in accordance with a prescribed formula; (d) the specific goals may include— (i) contracting with persons, or categories of persons, historically disadvantaged by unfair discrimination on the basis of race, gender or disability; (ii) implementing the programmes of the Reconstruction and Development Programme as published in Government Gazette No. 16085 dated 23 November 1994; (e) any specific goal for which a point may be awarded must be clearly specified in the invitation to submit a tender; ( f ) the contract must be awarded to the tenderer who scores the highest points, unless objective criteria in addition to those contemplated in paragraphs (d) and (e) justify the award to another tenderer; and (g) any contract awarded on account of false information furnished by the tenderer in order to secure preference in terms of this Act, may be cancelled at the sole discretion of the organ of state without prejudice to any other remedies the organ of state may have. (2) Any goals contemplated in subsection (1) (e) must be measurable, quantifiable and monitored for compliance.” In accordance with section 111 of the MFMA, “each municipality and each municipal entity must have and implement a supply chain management policy which gives effect to the provisions of this Part.” Further in accordance with section 115 (1) of the MFMA, “the accounting officer of a municipality or municipal entity must: (a) Implement the supply chain management policy of the municipality or municipal entity; and (b) Take all reasonable steps to ensure that proper mechanisms and separation of duties in the supply chain management system are in place to minimise the likelihood of fraud, corruption, favouritism and unfair and irregular practices.


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(2) No person may impede the accounting officer in fulfilling this responsibility.” During the audit of procurement and contract management, it was noted that the municipality does not have an advertisement register in place; however we identified the following tenders that should have been included in the form of an advertisement register. During the audit of procurement and contract management, it was noted that the preferential procurement point system was not used for the following tenders that follow a competitive bidding process, as a result we were unable to determine whether these bids were evaluated and adjudicated fairly and unbiased manner. It was further identified that specification committee minutes and reports, evaluation committee minutes and reports and adjudication committee minutes and reports were not obtained from the Municipality. The following competitive bid was identified as such:

Account nr Supplier Payments made

IKAGEN Ikageng solutions R 1 800 289

BAAGAS Baagashani projects & TT resources R 920 512

YELLOW Yellow Equipment earthmoving & Equipment R 235 040

CEM BR CEM Brick R 933 038

NAIS/T Nais/tank projects solutions R 10 394 008

MARUPS Marups Trading enterprise R 412 512

COROBR Corobrik R 231 360

MHLOPH Mhlopha security services R 844 805

TSHWAR Tshwaragano R 1 314 415

ZANDIL Zandile management service R 939 737

KM DET KM Detroit business enterprises R 1 070 405

THAMAA Thamaano/Pace setters JV R 1 545 168

100659 NooitgedacgtSandwerke R 205 848

B VAN B van Zyl& Co R 162 001

R 21 009 138

Non-compliance with section 111 and 115 (1) of the MFMA All items of non-compliance findings listed above have resulted in irregular expenditure. These findings identified on sample base suggest that significant instances of undisclosed irregular expenditure may exist in the total population of procurements.

7.2.1 Conclusion and Recommendations a) The accounting officer should review and monitor compliance with

applicable laws and regulations of Section 111 and 115 (1) of the


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MFMA, to ensure that all tenders awarded are supported with adequate information.

b) Based on the above all the contract entered between the Municipality and the service providers must be investigated in the past 3-5 years in order to determine whether the tenders was fair, efficient and transparent.

7.3 Awarding of tender on sewerage to Zela Makoko’s company

7.3.1 Community concerns a) Zela Makoko is a close friend of Cllr. Guilty Modise, Cllr Majikela

and Mayor Makodi. b) All municipal tenders are given to Zela Makoko and his friends

company caused a serious mess to Boitumelong Community, Ext 5.


a) The allegations of poor workmanship of the sewerage project, the contract was never awarded to Mr. Makoko as it is mentioned in the memorandum.

b) The only project that Mr. Makoko benefited from was the constructions of Roads at Christiana were he had a joint venture agreement with the main contractor.

c) The problematic sewer pipes at Ex.5 is as a results of the specifications given to the Contractors but Dr. R.S Mompati district is in process to rehabilitation the project.

d) We are not privy to the blacklisting of any company given another subcontracting in the current sewer project, and therefore we are unable to respond.

7.3.3 Findings a) The contract of the sewerage was handled from the Dr Ruth

Segomotsi District therefore is not within our scope because is not under the area of jurisdiction that we have been commissioned to do an investigation.

7.3.4 Conclusion and Recommendations a) Detailed forensic on supply chain for all the tenders issued

in the past 3-5 years need to be performed to determine whether the tenders were issued in a transparent and efficient and economic manner as required by the Preferential Procurement Policy Framework Act no. 5 of 2000.


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7.4 Current Project in the LED office under Mr. Leshage 7.4.1 Community concerns

a) LED manager has failed to bring some economic development to the Municipality

b) Mr. Leshage is using his office to push for his personal interest and those of the rich white which he gives business to.

c) The Rich White people have access to Mr. Leshage’s office while the poor black community members don’t have access.

d) For three years the office of the LED held angling tournament but no official report was issued to show the benefits of such events to the community.

e) Mr. Leshage owns more than 20 herds of cattle and some of these cattle are being kept at Mr. Bernard’s farm pretending he does not have cattle.

f) Mr. Leshage does not corporate with stakeholders such as LED forum, youth in tourism and the community at large, he undermines all these structures.


a) Mr. Leshage’s private ownership of livestock is not violating any laws or municipal codes and he acquired them before he became an LED manager.

b) LED forum is a structure recognized by the Municipality, the structure is not yet inducted or work shopped about their functions hence the non-functioning of the structure at this stage.

c) Youth in Tourism is an initiative of the District Municipality and our role as a municipality is facilitation and ensures that there is appropriate impact.

7.4.3 Findings

a) Mr. Leshage, Manager at the LED office was employed last year 01st of January 2013.

b) Since Lekwa Teemane has been making a deficit for the past 3 years no monies or budget was allocated for the running of the unit.

c) Therefore there are no projects that the LED unit is running at the moment.



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a) Management should relook at whether the manager and staff has all the necessary capabilities to run the LED unit since it is the backbone of the Municipality.

b) The community should be involved in the running of the LED unit in order to expedite service delivery.

8 SPECIFIC ISSUES

8.1 Going concern

8.1.1 Issues of going concern

According to section 62(1)(c)(i) of the MFMA, "the accounting officer of a municipality is responsible for managing the financial administration of the municipality, and must for this purpose take all reasonable steps to ensure that the municipality has and maintains effective, efficient and transparent systems of financial risk management and internal control."

The accounting officer’s report indicates the Lekwa Teemane Local Municipality incurred a net loss of R29 046 542 (2012: R24 578 753) during the year ended 30 June 2013 and, as of that date, the entity’s current liabilities exceeded its total current assets by R160 199 844 (2012: R128 820 921). These conditions, along with other matters as set forth in note 45, indicate the existence of a material uncertainty that may cast significant doubt on the entity’s ability to operate as a going concern.

Conclusion and Recommendation The MEC of Local Government should determine whether the

municipality will be able to operates as a going concern in the foreseeable future.

9 SCOPING CONCLUSIONS


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The situation at Lekwa-Teemane Local Municipality remains volatile with

community members vying for blood. It is imperative therefore that the

Department move with haste to solve the issues at the Municipality to ensure

that peace is achieved. The community was of the opinion that the

Investigation will bring closure to their allegations and were not aware that it

was a scoping exercise aimed at finding out if an extensive investigation was

needed. They are categorical in terms of their requirements failure of which

could result in another spate of violence. The Boitumelong community want

the Authorities to fire the Mayor, Clr Modise, Clr Majikela and Mr Makuapane

(Municipal Manager) and furthermore place the Municipality of Lekwa-

Teemane under Section 139 (c). The community also wants a Skills Audit to

be instituted.

It is our opinion that despite the concerns of the community having been

exaggerated with emotions their concerns are valid based on the following

reasons:

1. The Municipality has going concern issues as raised by the Auditor-

General in the Audit Report of 2012/13.

2. The Municipality is technically insolvent with liabilities outweighing

Assets by R160m.

3. The Municipality has been getting disclaimers from the AG for the last

three years on various issues ranging from non-compliance with the

MFMA to internal control lapses.

4. Council and Management’s failure to formulate and implement

strategies that will get the Municipalities out of its current problems.

5. The support structure of the Administration has unqualified and

underperforming managers.

6. The Municipality’s affairs are not transparent to the community.

7. Supply Chain Management does not comply with the MFMA and

Treasury regulations.

8. The Municipality does not have an inventory of the farms it owns.

9. The performance management systems are not complied with.

Our preliminary investigation therefore concludes that there are sufficient

grounds for further investigations on a number of issues in order to

successfully discipline Managers and Councillor’s on charges of

maladministration and/or corruption.

The following terms of references will therefore be established for immediate

work to commence to ensure that violence, maladministration and corruption

do not persist.


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I. Institute a Land Audit.

II. Investigate all procurement transactions above R150 000.00 done from

May 2011

III. Review all Stands sales from May 2011

IV. Audit all specific grants to ensure that they were used for the correct

purposes.

V. Institute a skills Audit of all Section 57 Managers and their line

Managers.

VI. Investigate possibilities of instituting a 139 (c) on Lekwa-Teemane

Municipality.

VII. Any other issues that you may find during the investigation.

The above terms of reference will be undertaken over a period of six weeks.

Forensic Investigations by their nature are risky and complex and therefore

require the use of senior consultants. The work can be done by a six member

team with four seniors and two juniors. A budget of R850 000.00 inclusive of

disbursements will suffice to deliver the forensic work from scratch.