Buffalo City Metro under fire for audit and governance failures

Buffalo City Metro’s leadership has come under intense scrutiny after the municipality’s audit improvement plan was found to be ineffective in addressing financial mismanagement. This follows the 2022/2023 audit outcome by the Auditor General (AG), which highlighted severe irregular expenditure within the municipality.

Tsakani Maluleke’s report painted a grim picture of the Buffalo City Metro.

The African National Congress-led municipality has been plagued by allegations of corruption, financial mismanagement, and unproductive operations in the past 10 years. During a public hearing at the East London City Hall on Thursday, the Buffalo City Municipal Public Accounts Committee (MPAC) criticised the metro’s leadership for its failure to implement corrective measures. The MPAC hearings, held annually to discuss the Auditor General’s findings, once again exposed deep-rooted financial irregularities within the African National Congress (ANC)-led municipality.

The latest report from Auditor General Tsakani Maluleke painted a grim picture of Buffalo City Metro, revealing that the municipality was the highest contributor to irregular expenditure in the Eastern Cape, accounting for R1.31 billion. This formed a significant portion of the province’s overall fruitless expenditure of R2.69_billion for the 2023-2024 period. The metro received a qualified audit report with material findings, underscoring persistent governance failures.

According to the report, procedures to monitor, measure and evaluate performance of staff were not developed, as required by the Municipal Finance Management Act. Additionally, the audit revealed that the incurred irregular expenditure had not been properly investigated to determine who was responsible.

Municipal leadership blasted for inaction

Democratic Alliance (DA) councillor and MPAC member, Anathi Majeke expressed disappointment at the municipality’s failure to implement its audit improvement plan. “There is a lack of seriousness within the municipality in addressing its challenges. The whole point of the audit improvement plan is to move away from repeated audit findings and ensure that municipal systems and processes work for the people on the ground,” Majeke stated.

She also criticised the municipality’s failure to provide sufficient information to MPAC, particularly on irregular expenditure, which has hampered the work of the committee. During the hearing, Majeke demanded accountability from municipal management, questioning what actions had been taken to address the longstanding issue of financial misconduct among staff members.

“The findings on irregular expenditure are not new; they are a recurring issue. The R1.3 billion in irregular expenditure ultimately leads to uncontrolled spending. What has management done in terms of enforcing consequence management?” Majeke asked.

A culture of unaccountability

The report also found that Buffalo City Metro had failed to develop and implement appropriate systems to monitor, measure, and evaluate staff performance, as required by the Municipal Systems Act 32 of 2000. The ongoing lack of accountability at the municipality had become part of the work culture.

Municipal manager, Mxolisi Yawa acknowledged the systemic issues and pledged to enforce consequence management more comprehensively. “It starts with assessing the environment to determine whether it allows employees to adhere to policies. Culture is stubborn, but we will introduce ethical and cultural change training. The adopted policy is in place,” Yawa said.

Billing Errors and Tender Irregularities

Further discussions during the hearing highlighted additional financial mismanagement. ANC councillor Phumezo Jaxa criticised the finance department for incorrect billing of businesses.

The Auditor General also flagged serious procurement irregularities. Some goods and services valued above R750,000 were procured without inviting competitive bids, in violation of supply chain management regulations. The same non-compliance was flagged in the previous year’s report, highlighting a pattern of misconduct. The AG further found that some invitations for competitive bidding were not advertised for the required minimum period.

Additionally, the municipality failed to provide evidence proving that contractors’ performance was monitored monthly, as mandated by the Municipal Finance Management Act. Municipal manager Yawa admitted that one of the primary contributors to irregular expenditure was the awarding of illegal or non-compliant contracts. “When contracts are found to have been awarded without following due processes, we terminate them—except for those delivering good performance. However, their continued expenditure still reflects as irregular,” Yawa explained.

MPAC has since instructed Yawa to provide a detailed account of the steps taken to enforce consequence management within the municipality.