The Free State High Court has overturned a former acting municipal manager’s decision to sign an acknowledgement of debt with a company belonging to his cousin.
A SENIOR manager at the troubled Maluti-A-Phofung local municipality in the Free State is under fire after signing a R27 million acknowledgement of debt for a company owned by his cousin.
Corporate services director Sam Makhubu was acting municipal manager in 2023 when he signed the acknowledgment of debt with Kill Crime Security Service, whose co-director Thabiso Sekhosana, is his cousin as their mothers are sisters.
The municipality’s spokesperson Thabo Khessah on Tuesday said all they were prepared to say at this stage was that the matter is on current municipal manager Advocate Motsoahae Mofokeng’s table and is receiving urgent attention.
According to court documents, in February 2023, the municipality, represented by Makhubu, and Kill Crime Security Service, entered into and concluded an acknowledgement of debt for the payment for the capital sum of R27m based on the two service level agreements.
The municipality maintained that the then-acting municipal manager was not authorised to conclude the acknowledgement of debt as he was grossly conflicted at the time because he and Sekhosana are cousins as their mothers are sisters.
Sekhosana was the co-signatory of the acknowledgement of debt.
The two parties entered into two service-level agreements in August 2020 to provide security services and another in December 2022, but both were declared constitutionally invalid by Free State High Court Judge Joseph Mhlambi on January 30 together with the February 2023 acknowledgement of debt.
In addition, Judge Mhlambi also rescinded the default judgment for R27m obtained by Kill Crime Security Service in March last year.
The municipality was granted leave to file and deliver its notice of intention to oppose the relief applied for by the company in the default judgment matter within five days.
Judge Mhlambi heard that the municipality blamed Makhubu for its failure to enter an appearance to defend the action.
”It stated in its founding papers that he intentionally and deliberately failed and omitted to instruct the applicant’s (municipality’s) legal department to file a notice of intention to defend the first respondent’s (Kill Crime Security Service’s) action,” the judge noted in his ruling.
He found that the failure to oppose the action paved the way for the company to apply for the default judgment in the municipality’s absence.
”It was a premeditated and orchestrated plan to exploit the applicant and cause money that was not due to be paid to the first respondent. Both Makhubu and Sekhosana had ‘captured’ the applicant,” reads the judgment.
In its defence, Kill Crime Security Service maintained that the municipality always followed its procurement policy when entering into contracts.
However, it was found that both agreements were concluded in violation of the Constitution, municipal supply chain management regulations promulgated in terms of the Municipal Finance Management Act as well as the municipality’s supply chain management policy.
The policy provides that any invitation of competitive bids to prospective service providers must submit the bids using the National Treasury’s e-Tender or public advertisement in local or national newspapers, on the municipality’s website, or in the tender bulletin.
The regulations specifically prescribe that services may only be procured by a municipality through a competitive building process.
Attempts to contact Sekhosana were unsuccessful.
loyiso.sidimba@inl.co.za
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