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Court finds Steve Tshwete manager ‘neglectful’ for signing a contract he did not read
The manager of Steve Tshwete Local Municipality in Middelburg, Mandla Mnguni, has been caught in another controversy of unauthorised, irregular or fruitless or wasteful expenditure.
Source: Supplied
Sizwe sama Yende
A court has passed scathing remarks about a controversial municipal manager in Mpumalanga for signing a service level agreement and deciding to litigate to avoid paying a service provider.
Steve Tshwete manager, Mandla Mnguni, withheld R4.8 million due to Maximum Profit Recovery (Pty) Ltd, and tried accusing the company of fraud even though he signed the contract.
The Mpumalanga Division of the High Court in Middleburg slammed Mnguni for being neglectful and contradicting prescripts of the Municipal Finance Management Act (MFMA) for signing a contract he apparently had not read.
Mnguni leveled fraud accusations against Maximum Profit Recovery (Pty) Ltd to cover up for his blunder when the company demanded payment for two invoices of R1 615 873.71 and R3 138 043.72 for work it had done.
The company was appointed to conduct VAT reviews for the municipality and claimed R48.6 million back into the council’s coffers. Mnguni, in his court papers, claimed that the company invoiced for work it was not supposed to do but failed to provide any proof to substantiate his claim.
The problem began when Mnguni claimed that Maximum Profit unilaterally amended the service level agreement by including a clause to perform VAT return functions when it was given a draft copy to sign on May 9 2023.
Maximum Profit told the court that its official honestly believed the municipality had mistakenly not included this clause in the agreement.
Mnguni received the contract with the new clause back from Maximum Profit and signed it without hesitation. He returned the contract to the company accompanied by a Power of Attorney.
Judge Moira Mankge found in her September 12 judgement that the service level agreement was binding.
Mnguni had approached the court to declare the contract unlawful and void ab initio (void from the beginning) and that the municipality was not liable for paying the two invoices dated 10 August and 11 September 2023.
Judge Mankge said: “The municipal manager was, in my view, neglectful when signing the service level agreement without due diligence. When he causes himself to sign document without proper due diligence, he may easily be accused of breaching fiduciary duties and the requirement of the Local Government: Municipal Finance Management Act 56 0f 2003, which mandates due care, diligence, and adherence to the law to prevent mismanagement of municipal funds and resources.”
She added: “The municipal manager’s signing of the service level agreemen] and Power of Attorney, which could result in the municipality being invoiced for services rendered, without proper due diligence, contradicts MFMA, which requires the municipal manager to prevent unauthorised, irregular or fruitless or wasteful expenditure, making failure to conduct due diligence a potential breach.”
Steve Tshwete mayor, Mhlonishwa Masilela, said that he was going to study the judgement when asked if he would institute any disciplinary action against Mnguni.
“I will investigate this case and come back to you,” Masilela said.
Mankge noted that Mnguni brought the allegation of fraud seven months after signing the service level agreement and after Maximum Profit had done work.
“The mere fact that the respondent did not charge for VAT return function, this alone in my view, supports the respondent’s guiltlessness,” she said.
MORE CONTROVERSIES
The People’s Eye reported in July that a whistleblower reported Mnguni to the auditor-general and Mpumalanga Cooperative Governance, Human Settlements and Traditional Affairs MEC, Speedy Mashilo, for tender corruption.
The whistleblower alleged that Mnguni ignored a bid adjudication committee recommendation that warned him about collusion and he then sought two legal opinions to review the committee’s decision.
Despite the red flag, Mnguni defiantly appointed Maqhoba Trading Enterprise and Mayivuthe to be on the panel of electric contractors on August 8 2023 for the financial years 2023/24, 2024/25 and 2025/26.
The two companies are owned by his associate, Joel Mahlangu.
Mnguni lived in Mahlangu’s house at an upmarket suburb in Aerorand Middelburg since he separated from his wife 2024 after she stormed into Steve Tshwete municipal offices with a knife in hand to threaten an employee Mnguni allegedly had an extra-marital affair with.
Mnguni defied the legal opinion, which advised him to implement the Bid Adjudication Committee’s recommendation.
He approached the lawyer who then changed his mind and offered an opinion that concurred with him.