Durban — The KwaDukuza Municipality was left licking its wounds as the consequence of being trigger-happy and suspending a senior official, who made an “honest mistake”.
A more tactful approach would have prevented the legal bills worth millions stemming from the resulting investigation and disciplinary action taken.
The North Coast municipality had recently succumbed to pressure and reinstated its CFO, Shamir Rajcoomar, who was on precautionary suspension for more than a year.
Law firm Shepstone & Wylie Attorneys made known their findings and recommendations after they were tasked with conducting an investigation into the entity’s missing revenue of R30 million.
It then emerged that the money was not missing but kept in what was supposed to be the municipality’s obsolete FNB bank account.
Rajcoomar was suspended on July 7 last year on a misconduct charge for the mistake the municipality’s finance department had made.
This gaffe resulted in the municipality incurring unnecessary FNB bank charges of R71 609.
Rajcoomar’s suspension was lifted on June 26 (last month) and he returned to work on July 1 after the municipality realised their error and are now saddled with massive legal bills and could possibly be held responsible for the legal costs he incurred in defending himself.
The Dolphin Coast Residents & Ratepayers Association’s (DOCRRA) chairperson, Deon Viljoen, said Rajcoomar made an honest mistake in the line of duty, but the Council’s suspension decision was unwarranted.
“The municipal manager erred in encouraging Council to consider suspending Rajcoomar, only to reverse that decision after realising they made a mistake, a year later,” Viljoen said.
Rajcoomar declined to comment.
The trouble started when Rajcoomar’s department opened a primary account with ABSA on October 13, 2015, while it still had a similar one with FNB.
Whether the municipality’s finance unit communicated effectively enough with all its customers and service providers about switching to ABSA that it was no longer transacting via its FNB and Standard Bank accounts was not clear.
As a result, Contour Technology, a company the municipality contracted to collect electricity bills between October 2019 and September 2022 deposited R30m into the FNB account, which was declared “missing” by the municipality’s internal audit department.
The missing funds stirred allegations that Contour had deposited the money into an unknown bank account, causing workers, the ANC and unions to protest over the supposed misappropriation of public funds.
“It triggered the municipality to institute a formal investigation into whether Contour had breached its SLA (service level agreement) with the municipality by paying municipal revenue into an unknown or third-party account,” read a Shepstone & Wylie Attorneys statement, the law firm tasked with probing Conour’s conduct.
They also found that Vodacom continued to bill the municipality using the wrong accounts.
“We also discovered a monthly debit order payment to Standard Bank with a slightly different amount each month ranging between R1 100 – R2 479.
“On inquiry by the CFO to Standard Bank, the response was that this was a fee charged for its customers using the bank’s payment portals.
“These are costs which could be avoided if the municipality used one primary bank account,” read the report.
The report indicated that during the investigation, Rajcoomar’s justification for failing to shutdown the old FNB account was that some consumers did not make the switch to pay their bills even after being notified about the new account several times.
At the time the municipality had about 1 900 consumers paying monthly to a total of about R10m to FNB.
“Therefore, in order to not lose this revenue, they decided to keep the account open.”
The report cleared Contour of any misconduct, and called for consequence management and accountability (CMA) measures against certain finance officials, but did not recommend the suspension of individuals.
Based on the outcome, the municipality hired another law firm, Zuma and Partners, to conduct further investigations.
They then recommended that Rajcoomar be suspended pending disciplinary action for, among other offences, financial loss incurred through unnecessary bank charges which were classified as unauthorised, irregular, fruitless and wasteful expenditure.
After his suspension, Rajcoomar approached the Durban High Court and the South African Local Bargaining Council (SALBC) seeking to overturn the actions brought against him.
Opposition parties, including the DA, and several ratepayers associations supported him.
They maintained the action against Rajcoomar, including legal costs, was wasteful.
“KwaDukuza Municipality prides itself on being one of the most financially sound municipalities in the country, yet they have suspended the individual (Rajcoomar) who is responsible for that accolade.
“To date, these legal fees amount to over R3 million in addition to the payment of his salary,” read a recent statement from DOCRRA and its counterparts.
Rajcoomar was reinstated amid the flack council received for their actions and the further legal fees it incurred from the high court matter.
The councillors held a special meeting in May to determine who among them had to be held accountable for the Rajcoomar saga.
“Council must decide on the costs from the Zuma and Partners’ investigation.
“Further, the council has to decide how to classify the money spent on the Shepstone and Wylie Reports,” read the minutes of the meeting.
Municipality spokesperson Sifiso Zulu said the council spent approximately R600 000.00 on Shepstone & Wylie, whose report established prima facie evidence against Rajcoomar. He did not say how much Zuma and Partners’s services cost.
He said the cost of legal actions, which were brought by Rajcoomar against the council, would be determined by the court, as the matter was yet to be struck off the roll.
“If the costs judgment is against the municipality, the municipality needs to foot the bill for such costs,” said Zulu.
With Rajcoomar being vindicated, which cooled down his Bargaining Council and High Court action, the council was concerned about his possible claim for legal costs incurred.
“The council's decision may render the matters that are still at the SALBC and the High Court moot. Therefore, the only thing to deal with will be the costs of those matters.
“The party that decided to make the matter moot will be responsible for the legal costs for all parties,” read the minutes of a council meeting.
Another concern for the members of the council was the precedent set for other employees who may face disciplinary actions in future.
“Can the Municipal Manager withdraw suspensions or charges due to pressure without the disciplinary case running its course?” read the document.
Viljoen said the ratepayers association was deliberating over who should face the consequences for costs incurred in the Rajcoomar matter.
“We are going to do our best to hold individuals to pay those costs otherwise the ratepayers are paying them,” said Viljoen.
Sunday Tribune