Forensic Investigation: The Case of Procurement Fraud in Madibeng Local Municipality (Northwest Province)

Abstract

Procurement fraud presents major challenges at Madibeng local municipality resulting in undesirable audit results and high levels of fraud and corruption. Furthermore, regular reports in the media show serious irregular expenditure of procurement fraud in which losses specific to procurement fraud in the tender process amounted R50 million. Further allegation according to tender fraud at the municipality has investigation has resulted in an investigation by the HAWKS, an elite crime fighting units, which is investigating two contracts to Tlou Integrated Tech cc, which didn’t have any Construction Industry Development Board grading. The tenders in question were also not advertised as per requirements of the PFMA and MFMA. Tlou Integrated Tech cc submitted invoice totaling R200 869.57 foe work that was never done. Similarly, another company called BA Poloborwo Construction received R2 778 409 -for which there was no proof of work done. The Madibeng local municipality is hamstrung due to procurement fraud which has impacted negatively on its financial sustainability and delivery of basic services. The irregular expenditure/fraud at Madibeng local municipality during the era of Jacob Zuma’s presidency have not been investigated fully. This lack of investigation has resulted in severe consequence resulting in the increase in irregular expenditure, resulting in heightening the culture of non-compliance, which in turn created an environment vulnerable to procurement fraud. The Auditor general report has consistently found Madibeng municipality to be the worst performing municipality in South Africa over a period of five years in which a total of R562 million has been lost through irregular procurement of good and services. This article addresses procurement fraud in the Madibeng local municipality which has become a problem child for government.