The uMshwathi Local Municipality in KwaZulu-Natal has launched an internal probe into potentially fraudulent payments worth R4.3 million. The investigation was prompted by Standard Bank, which flagged hundreds of suspicious transactions. The municipality's finance department conducted a preliminary review of payments made to Eskom, revealing that the bank account used did not match Eskom's official banking details.
According to documents seen by Eyewitness News, the scheme involved redirecting money meant for suppliers, with the municipality's account name listed as a known supplier, but the account number not correlating with the supplier's name. In many instances, the account name was listed as Eskom, but the account number did not match any of Eskom's publicly listed account numbers. This allowed the municipality to appear as though it was paying Eskom, while the money was being siphoned off elsewhere.
The potentially fraudulent transactions were ongoing for a number of years, with suspicions that more than R4.3 million may be uncovered once a forensic investigation is conducted. The municipality's council has voted for an independent forensic investigation into the matter. The investigation will aim to uncover the extent of the fraud and identify those responsible.
The uMshwathi Local Municipality is a small municipality located in the sugarcane-rich area of the KwaZulu-Natal Midlands, with 14 wards and an annual budget of about R300 million. It falls under the uMgungundlovu District Municipality. The municipality's Acting Chief Financial Officer, Thenjiwe Mkhulisa, has advised that the fraud could result in financial loss for the municipality, a negative audit outcome, and reputational damage.
The KwaZulu-Natal Department for Cooperative Governance and Traditional Affairs has blocked the municipality's move to appoint a permanent Chief Financial Officer until the investigation is complete. The municipal council's decision to conduct a forensic investigation comes after Standard Bank sent an email to the municipality's Acting Chief Financial Officer in July, alerting them to the potentially fraudulent transactions.
Sources have described the alleged fraud as 'blatant corruption' aimed at crippling the small municipality. Eyewitness News has sent questions to the uMshwathi Local Municipality, but there was no response at the time of publication. Eskom referred Eyewitness News' questions to the uMshwathi Local Municipality.
The investigation is expected to reveal the full extent of the fraud and identify those responsible. The municipality's council has taken steps to address the issue, including reporting the matter to the South African Police Service and the Auditor General. The forensic investigation will provide a detailed analysis of the transactions and help to prevent similar incidents in the future.
Key points
- The uMshwathi Local Municipality has launched an investigation into potentially fraudulent payments worth R4.3 million.
- The potentially fraudulent transactions involved redirecting money meant for suppliers, with the municipality's account name listed as a known supplier, but the account number not correlating with the supplier's name.
- The KwaZulu-Natal Department for Cooperative Governance and Traditional Affairs has blocked the municipality's move to appoint a permanent Chief Financial Officer until the investigation is complete.
