Water and Sanitation Minister Senzo Mchunu is considering pursuing criminal charges against the Umgeni Water Amanzi board over millions of rands raised in an unsuccessful search for a chief executive late last year.
Water and Sanitation Minister Senzo Mchunu is considering pursuing criminal charges against the Umgeni Water Amanzi board over millions of rands raised in an unsuccessful search for a chief executive late last year.
Mchunu also intends to recover money allegedly wasted by the board when it tried to employ a new chief executive without following proper appointment procedures – and after being ordered to stop all new appointments.
The council has chosen an unqualified candidate, and then carried out an unnecessary, protracted and expensive arbitration process, a “self-made” situation that has cost Umgeni millions of rands.
Mchunu vacated the seat – which was removed by his predecessor, Lindiwe Sisulu, in 2020 and reinstated through a high court order – on Friday after giving notice of his intention on February 28.
The minister, who oversees Umgeni and all other water bodies, appointed a seven-member interim council, headed by Mzimkulu Msiwa, on the same day.
Now the board member has been Mchunu, who is in the process of merging Umgeni with Mhlathuze Water to create a single provincial water entity, with news that he will challenge the removal in court.
His lawyer, Sanjay Lorick, wrote to Mchunu on Tuesday saying the council would challenge the “unjust” dismissal, in the high court, along with a forensic report into the executive saga.
“Our client wants to challenge the termination and review and set aside the report. The minister’s right to appoint council members and terminate the appointment cannot be an absolute right without recourse,” wrote Lorick.
He said the minister had terminated the council based on a report with “material deficiencies” and had acted without inviting council members to comment on its content and findings.
“The report is unbalanced, as it fails to take into account all the opinions of each member of the council, as well as their written input.”
Lorick also challenged whether Mchunu had procedurally appointed the new council and asked for documentation and “precise details” on “exactly how the minister chose the interim council.”
The board’s tenure at Umgeni was particularly controversial, with the Special Investigations Unit looking into corruption involving technology services company EOH and widespread procurement abuse during the Covid-19 lockdown.
The previous chief executive, Thami Hlongwa, resigned a few days before he was due to be fired due to his ties to a company owned by Siboneleo Shinga, a tenderpreneur who was killed in Durban in January 2021.
Irregular expenditure incurred by the entity was about R2 billion last year, with an estimated R500 000 occurring during the 2021-22 financial year.
Several million rand blown by the entity in the search for the chief executive – and in the appointment made by the Board in defiance of the instructions to stop doing so ahead of the merger with Mhlathuze Water – understood to have spurred Mchunu into action.
Audit firm Gobodo was commissioned to investigate the executive debacle and submitted a report in early February on the basis of which he then acted.
In a letter to councilors dated February 28, Mchunu asked them to give reasons “I am not submitting this matter for criminal investigation under section 86 (2) of the Public Finance Management Act. [PFMA]”.
He also asked the board members to make a representation as to “why I am not asking you to refund the money that was wasted because of unnecessary arbitration. [and] sanctioned by the council”.
The minister gave councilors seven days to give reasons why they should not be terminated as councillors.
In the letter, Mchunu said the board “created itself” in the situation regarding the chief executive search by failing to meet the minimum requirements for the position when selecting candidates.
He also chose a service provider to run the process “because of the quick response to respond to recruitment requests” and not based on supply chain management procedures.
The council then engaged in a “dishonorable” process by entering into arbitration with the pre-selected candidate, knowing that the person did not have the necessary qualifications for the position.
Mchunu said the costs incurred in the arbitration were “exhorbitant” and “unnecessary.”
“The cost of litigation will be lower, because the person never has to face a case against the council,” he wrote.
The council then refused to accept the arbitration award and had entered into a costly and irrational appeals process, which “made it difficult to understand and accept the view that the council was only acting on legal advice”.
Mchunu said he considered the conduct illegal and immoral and in breach of the PFMA.
“This may require me to refer the matter to the appropriate law enforcement authorities for criminal investigation,” he said.
In response to Mchunu on behalf of the council, former chairman Ziphozethu Mathenjwa said the forensic report by Gobodo contained “material errors” and “undermined the character and bonafides of councillors”.
Mathenjwa said the council “unequivocally denies that it has engaged in irregular expenditure” and acted “within the law” and Umgeni’s policies.
“The board is not clear about the possible criminal offense and the basis of the conclusion,” he said.
Mathenjwa said that even if the investigators found irregular expenses, a process should be followed, which Mchunu did not allow before taking action against him and other councils.
Mchunu’s spokesperson, Kamogelo Mokgotsi, said Mchunu had not referred the matter to law enforcement “at this stage”.
Mokgotsi did not elaborate on the irregular expenditure incurred by the council. “The matter is sub-legal and we cannot share that information at this time.”
The department will “monitor the situation” regarding potential court action by the outgoing board.