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·      The investigation covers Nkomazi’s struggles to pay salaries, contravention of the MFMA, incomplete projects, embezzlement of funds and lack of service delivery. ·      An unfit and inezxperienced law firm was paid R11m upfront ·      Mayors justifies upfront payment to service providers

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Sizwe sama Yende

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A rural Mpumalanga municipality’s R11 million upfront payment to a law firm is among many financial and service provider appointment irregularities that are part of a forensic investigation.

The Mpumalanga Department of Cooperative Governance, Human Settlements and Traditional Affairs (Coghsta) has confirmed that an investigation at the cash-strapped Nkomazi Local Municipality in Malalane was nearing completion.

Last week, the Municipal Public Accounts Committee (MPAC) found that the municipality paid the advance payment only to find later that the law firm could not do the job.

The law firm was hired to assist the municipality in a lengthy litigation against South Africa’s richest man Johan Rupert’s company, Leopard Creek Share Block. The dispute is about evaluation of the property and the rates and taxes the company should pay.

Leopard’s Creek, situated along the banks of the Crocodile River near the Kruger National park, is known for hosting the  internationally acclaimed Alfred Dunhill Championship annually. The property comprises 335 745 hectares of undivided land, 251 residential sites divided between 80 residential riverfront sites bordering the Crocodile River, and 171 bush or golf course sites.

UNFIT AND INEXPERIENCED LAW FIRM

The municipality has since reclaimed R6 million from the law firm.

“The service provider, [it] was then later discovered that is deemed unfit or not experienced enough to handle the case. Therefore, a decision was taken to end the contract with the service provider and an amount of R6 million was refunded back to the municipality,” reads the MPAC report.

Despite this MPAC finding, Nkomazi mayor Phindile Magagula denied that there was anything wrong with the law firm or the upfront payment. Magagula said it was standard practice to pay lawyers upfront. 

RELATED: Municipality told to recover R5m ‘wasted’ in fight against Johann Rupert’s company

Mpumalanga Coghsta spokesperson, Freddy Ngobe, said that a draft report of the forensic investigation into Nkomazi had been handed over to the department.

The investigation, Ngobe said, covered the municipality’s struggles to pay salaries, contravention of the Municipal Finance Management Act, labour matters, incomplete projects, embezzlement of funds and lack of service delivery.

“Among the financial irregularities being investigated comprise of irregular appointment of service providers including attorneys,” he said.

The Democratic Alliance has since demanded that Nkomazi municipal manager, Oscar Nkosi, must institute an urgent investigation into the fruitless and wasteful expenditure emanating from the legal dispute.

THE DISPUTE

The municipality and Leopard Creek’s legal tussle began in 2011.  Nkomazi evaluated Leopard Creek at R1.4 billion and sought to cancel a 1996 agreement from which Leopard Creek enjoyed paying R35 000 year in property rates. This arrangement did not change when Parliament passed the Property Rates Act in 2004.

In 2017, the municipality claimed that Leopard Creek owed it R76.4 million in property as per its evaluation.  Leopard Creek’s experts, however, evaluated the property at R330 million in 2018.

Leopard Creek won a Mpumalanga High Court case in 2023 that reviewed and set aside the R1.4 billion evaluation of the property after it was dissatisfied with a decision of the Ehlanzeni Evaluation Appeal Board that favoured Nkomazi municipality.

On November 13, the Supreme Court of Appeal found that the board ignored expert opinion when it sided with the municipality about the value of the property.