eThekwini City Manager Musa Mbhele has come under fire from labour union, Municipal and Allied Trade Union of South Africa (Matusa), for his decision to appeal a court judgment that found the metro liable to pay a service provider R30 million.
The appeal was unsuccessful, and the City could now be forced to pay the principal debt of R30m, plus interest and other costs.
The union stated that as a result of Mbhele’s actions, the City could incur R20m in fruitless and wasteful expenditure as a result of the interest and costs.
Matusa has written to the KwaZulu-Natal MEC of Cooperative Governance and Traditional Affairs (Cogta), Thulasizwe Buthelezi, expressing concerns that the municipality could now face a total liability of R50m, which includes the fruitless and wasteful expenditure.
The court matter concerns the dispute between the city and Daily Double Trading 479 cc/Pholobas Projects over contracts that were cancelled in 2018.
The company, which also claimed it was blacklisted, took the City to court demanding R44.1m for the cancelled contracts and the blacklisting.
The City denied that it had blacklisted the company. Before the court could hear the matter, a lawyer representing the municipality reached out to the company with a settlement offer of R30m, which was accepted.
Despite this, the City did not honour the settlement, disputing that the lawyer had the authority to make such an offer. The company then went to court over the settlement agreement and was successful with the court ruling that the City must pay the R30m.
The City took the matter on appeal but lost the appeal earlier this month.
Matusa stated in its letter that the decision to appeal the matter was misguided and that Mbhele failed to take proper advice from his deputy city managers.
In a letter to Cogta, the union claimed: “It is clear that the city manager abused his powers and authority when he instructed legal services to appeal a judgment which was initially issued at the Durban High Court, and the municipality has lost the case.”
“The Mercury” has seen correspondence in which Mbhele explained his reasoning behind deciding to appeal the judgment. At the time, Mbhele was the acting City manager.
Among the officials mentioned in the email is Sibusiso Makhanya, the deputy city manager of Trading Services, who is currently suspended after being accused of failing to provide information to defend the city against another multi-million rand claim, resulting in R6.6m in fruitless and wasteful expenditure.
In the email, Mbhele stated: “I have received advice from the team via WhatsApp communication through DCM: Makhanya advising that payment must be made instead of petitioning the Supreme Court of Appeal (SCA). I have applied my mind to this proposal and made the following considerations: The risk of paying court costs to appeal this decision as an attempt to save R43 million of ratepayers’ money is worth taking.... The key point here is that the process leading to the initial court decision is inherently and fundamentally flawed (in that powers of council to recommend settlement above R5 million were usurped).
“If we quickly pay, we will then forfeit an opportunity to salvage ratepayers’ money that will be lost and unwittingly aid fraudulent transactions like this in this organisation. Consequently, I have taken a decision that we appeal this judgment.”
The office of the Cogta MEC stated that it had received the letter from the union and would respond in due course.
DA councillor Thabani Mthethwa said the DA will request the mayor to put the matter on the executive committee agenda so that it can be ventilated.
“If the report indicates that this could have been avoided, of course, someone has to account for it.”
IFP councillor Mdu Nkosi stated that the executive committee of the metro will deliberate on this, as the Municipal Finance Management Act is clear that in such cases, the fruitless and wasteful expenditure must be recovered from those responsible, but they would not want to pre-empt the next action.
eThekwini Municipality’s spokesperson Gugu Sisilana said the City is not aware of the correspondence between the union and Cogta.
“Regarding the alleged R50m payout, we have no comment since we have not made such calculations.
“While we find it unfortunate and distasteful that internal email correspondence is becoming the subject of public discourse, we find nothing inappropriate if the City Manager makes attempts to save R30m of the ratepayers’ money, where no services were rendered, but the city is supposed to pay on the strength of a suspicious settlement agreement.
“The interesting question is why there is so much pressure and attention on the accounting officer to honour a dubious settlement greement?”
The Mercury