In a brazen defiance of municipal finance laws, the embattled City of Matlosana paid plant hire firm EK Construction R4.5-million within hours for services that were contracted to take up to 30 days or more to complete.
The payments, in violation of the Municipal Finance Management Act (MFMA), occurred while the city was under a mandatory provincial intervention for financial collapse, raising questions about accountability, and possible corruption.
On December 12, 2024, Matlosana officials signed several purchase orders with EK Construction for rental of equipment, including honey suckers, TLBs, and sewer jets.
Shockingly, invoices were paid the same day they were issued on December 13 – before a single hour of work was verified.
For instance, on December 13, the city processed a payment of R688 000 for 340 hours of TLB and sewer jet services. Despite the expected 15-day work span, the city processed an upfront payment of R652 000 for 135 hours of landfill clean-up. These two payments are among the seven transactions the city executed on December 13, the same day invoices were issued.
Further, the provincial authorities, tasked with rescuing the bankrupt municipality, did not endorse the payments as
required under the fiscal oversight provisions.
The MFMA discourages advance payments unless explicitly permitted, requiring proof of service delivery before disbursement. Key violations include that MFMA Section 65, which mandates payments only after services are delivered, except in emergencies. The documents revealed that they only recorded sewer line blockages as an
emergency.
The provincial executive representative did not sign concurrence over the transactions, yet city officials proceeded unchecked. The service agreement was retroactively dated to August 2024, potentially masking irregular spending.
On February 17, municipal manager Lesego Seametso wrote to the chairman of the city’s financial misconduct board, reporting her office’s preliminary investigation into services rendered by EK Construction and payments made.
“It has come to my attention through an enquiry by the Hawks… that further investigation is needed, particularly on the work done and payments made. As a result, I proceeded to gather information to ascertain the allegations of an unlawful payment,” Seametso wrote.
She said a preliminary probe established, among others, that the appointment of the service provider was inconsistent with the recommendations of the bid adjudication committee.
“According to requisitions, work was requested to be performed for a full month, 30 days for the month of December 2024, however, invoices were received on 13 December 2024 and were for the full 30 days and were honoured by the municipality in full,” she said.
She said only 13 days could have been worked, and as such, 19 days were not delivered but payment was made.
Director of community services Pheello Setona said, “I have previously spoken on this matter internally at the management meeting, and later on that day I received threats. Furthermore, a case of false allegations was opened against me after having spoken on this. As a result, I would rather not comment.
EK Construction denied allegations of irregular payments, blaming the municipality’s “persistently inefficient” supply chain processes for delays in procurement documentation.
Imraan Kaka, attorney for EK Construction, said, “The characterisation of these payments as ‘advance payments’ is factually and legally incorrect…All invoices issued were for work already completed at the time of billing. The payment of these invoices by the City of Matlosana was based on services actually rendered, not prospective or anticipated work.”
The lawyer cited systemic inefficiencies within the municipality, explaining, “Although the general expectation is that a purchase order (PO) must precede the provision of services, our client was often instructed to proceed without a formal PO in hand due to the urgency of the circumstances and the city’s administrative delays. These instructions were issued verbally by senior municipal officials.”
The company denied allegations of collusion with municipal staff.
Matlosana CFO Mercy Phetla robustly defended payments to EK Construction, asserting they were lawful, validated, and drawn from approved budgets, despite acknowledging systemic delays in procurement
documentation.
Phetla stated payments were backed by signed purchase orders, log sheets, invoices, and confirmation of work done by municipal departments.
“The finance department is on the receiving end, and it is not the duty of any official or myself in [finance] to verify work performed,” she added.
Yesterday, municipal spokesperson Ntswaki Makgetha said the city was investigating
allegations of irregular payments to EK Contractors.
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