Newcastle Municipality faced significant challenges in recent years, particularly when it came to addressing financial losses resulting from past wrongdoing. However, recent investigations by the Special Investigating Unit (SIU) have begun to yield promising outcomes.
In 2022, South African President Cyril Ramaphosa granted the SIU the authority to investigate allegations of corruption and maladministration within the previous administration of the Newcastle Municipality. The probe focused on the procurement of goods, services, and works, as well as related payments, to determine if fair, competitive, transparent, equitable, and cost-effective practices were followed.
A report by Newcastillian News in December 2022 revealed that the SIU had made significant progress in its investigation, specifically uncovering inflated prices in the purchase of Personal Protective Equipment (PPE) by the municipality.
The SIU examined 14 contracts worth a total of R2,387,230 and found that five service providers charged rates exceeding the regulated pricing set by the National Treasury.
“The investigation revealed that five of the service providers charged a rate for the supply of the PPE in excess of the regulated pricing issued by NT (National Treasury),” stated the SIU.
To rectify the situation, the SIU engaged with the implicated service providers, and three of them have signed an acknowledgement of debt (AoD), committing to repay the losses incurred by the Newcastle Municipality. The recovery process involves monthly installments to return the funds to the municipality.
However, progress in recovering the losses incurred by the municipality has been a slow process, five months after the SIU’s intervention. The service providers found guilty of overcharging the municipality are still in the process of repaying the funds.
According to the latest report from the Presidency, R23 of 2020 3rd Final Part 2, several referrals for Administration, including blacklisting, have been made. Zokwenza Development, Zamazunza Trading, and MSO Trading are facing charges of contravening Section 22C (6) of the Medicines and Related Substances Act of 1965, as amended. Four referrals have also been made against Christensen Tools (Pty) Ltd, Ingcebo Yam General Trading (Pty) Ltd, Purangie Enterprises (PTY) Ltd, and Zizi Afrika Trading (Pty) Ltd, on similar charges.
To complement the SIU’s efforts, the Newcastle Municipality has managed to recover a portion of the lost funds. As reported in July 2022, three acknowledgements of debt (AoD) were signed:
- MSO Trading (Pty) Ltd signed an AoD on 25 November 2021 for R246,500, related to a contract worth R1,234,500. The overpricing of PPE was the reason for the AoD, and it is being repaid in monthly installments.
- Zamanzunzu Trading signed an AoD worth R70,000 on 26 November 2020, concerning a contract worth R250,000. A payment of R31,500 has already been received, with the remaining balance being repaid in monthly installments.
- Zokwenza Development and Training CC signed an AoD worth R134,600 on 9 February 2022, related to a contract worth R335,000. This AoD is also being repaid in monthly installments.
As of now, the Newcastle Municipality has managed to recover R31,500, but efforts are ongoing to garnish the remaining funds.
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