Joburg's 'rosy finances' a lie

Two weeks ago, the City of Johannesburg gave a glowing account of the metro's financial health, claiming increased capital expenditure and improved revenue.

But the auditor-general's office has called its bluff.

The office uncovered huge revenue losses, corruption, flawed procurement processes and weak internal controls - leaving city manager Trevor Fowler with no place to hide.

The city lost over R851-million on unauthorised water consumption. A further R308-million was lost due to "non-technical problems".

The city lost R1.5-billion due to unauthorised electricity consumption and a further R742-million as a result of " non-technical" causes.

Furthermore, several big power users - including luxury car dealerships, shopping centres and a hotel - have been implicated in an electricity meter-rigging scam.

The A-G's report said Johannesburg was R15.4-billion in arrears.

Previously, Fowler had said the city' s total revenue had increased by 13% to R39-billion, while its surplus had increased by 21% to R4.2-billion.

Chief financial officer Reginald Boqo also claimed that the city was on top of its billing problems.

He said of the R28-billion that was billed, R26-billion was collected.

But the municipal public accounts committee found numerous causes of concern, including:

• The city faces civil claims totalling R341-million;
• Municipal contracts were awarded to bidders who did not submit a declaration on whether they are employed by the state or connected to such persons;
• Contracts were awarded to service providers who work for other state institutions;
• Goods and services under R200000 were awarded without the required three quotations; and
• Goods and services above R200000 were procured without initiating an open bidding process.

The city's underspending on conditional grants for Treasury increased from 6.9% to 11.6%.

The municipal public accounts committee also berated the city's internal audit committee for failing to identify and curb breaches in the protocol for the awarding of contracts.

Floyd Rikhotso, an audit manager at the auditor-general's office, said the council would have to make several adjustments before the city could receive an unqualified audit.