City of Johannesburg mayor Dada Morero has alleged that the city’s ailing financial status is a challenge he inherited from previous DA-led administrations.
He claims irregular tenders, services rendered without formal contracts, and lack of internal system controls have landed the city in the hot water it now finds itself in.
The alleged malfeasance dates back to the 2021/22 financial year, when the DA’s Mpho Phalatse still held the reins as mayor.
This controversial assertion follows finance minister Enoch Godongwana’s damning letter to Morero, in which he read him the riot act and instructed him to come up with a plan to address the billions of rand in unauthorised, irregular, fruitless and wasteful (UIFW) expenditure the metro was battling with.
Two weeks ago, Godongwana flagged lack of consequence management as a crisis, after discovering the city had racked up R1.4bn in unauthorised expenditure, R22bn in irregular spending, and R705m in fruitless and wasteful payments.
He told Morero the metro, which has an annual budget of R89bn, had taken “little to no action” to address these problems.
He said the city’s failure to act swiftly would result in Godongwana exercising his powers to revoke crucial National Treasury grant funding to the municipality.
However, Morero has responded to the Treasury by revealing he found the city’s books in tatters when he assumed office, with much of the UIFW expenditure having accumulated years before he took over.
Morero’s report, which the Sunday Times has seen, explains to Godongwana that the city has developed a programme to strengthen internal controls, financial reporting and consequence management to curb errant spending.
[About] 53% of the total UIFW expenditure incurred during the 2021/22 financial year is due to multiyear contracts.
“As at end of the previous financial year 2020/21, the city had accumulated a total balance of approximately R16.6bn (R12.8bn in 2019/20) as per audited consolidated group annual financial statements (AFS). Total quarterly UIFW declarations by departments and municipal entities during the financial year 2021/22 amounted to R1.2bn, there was a reconciling difference of R205.9m, and further transactions reported by group finance of R3.4bn. [About] 53% of the total UIFW expenditure incurred during the 2021/22 financial year is due to multiyear contracts.”
In his report, Morero tells Godongwana the city’s probe had revealed how there had been instances of tenders previously awarded with contracts already in operation. These were declared to be irregular either by the courts or after a year-end audit by the auditor-general, an internal audit outcome or an investigation.
“These contracts would not have been cancelled for purposes of ensuring continuity of operations, and to avoid or mitigate service delivery disruptions.
“There are no financial internal control systems that have been put in place to monitor the continued payments on these multiyear contracts that [have been] declared irregular, resulting in understatement of declarations of UIFW expenditure during the year, and therefore delayed reporting to [the municipal public accounts committee].”
In the plan submitted to the Treasury, the mayor tells a grim tale of how investigations had found that under the previous administration services were rendered without formal contracts in place, or where the contract term or amount had expired.
“[There were] flawed procurement processes, ineffective controls over payment processes, inadequate controls over work in capital, deviant financial accounting processes, and ineffective financial reporting controls.
“Some of the internal control deficiencies identified from previous investigations on UIFW expenditure and probity advisories on high-value tenders [include] ineffective controls over procurement, supply chain management regulations, [and] policy and procedures; noncompliance; inadequate contract management controls; and ineffective financial controls.”
Central to the finance minister’s concerns is the lack of consequence management. He noted the city had done little to nothing to rectify the situation, and that it had not presented a plan to address the matter and act against the responsible officials or any councillors who might have contributed to the situation.
However, Morero insisted he had taken action to address the crisis, having revived the city’s disciplinary board, which reported to council as recently as July 31. He said this structure had been empowered to act against UIFW expenditure.
It consists of an independent forensic investigator, three city officials, and a delegate from the Treasury.
He reported that to date the city had concluded six forensic investigations and recovered R535m. The mayor said that, of the R23.6bn he flagged in the last financial statements, R12.9bn had been regularised in terms of the Municipal Finance Management Act.
Morero vowed to get the city’s disciplinary board working to bolster its efforts to address the minister’s concerns and take action against those responsible for the city’s dire financial position.
“As of June 30 2025, only R6.7bn remains under investigation, while the rest has been fully investigated and is being processed by the relevant municipal committees. Council has also approved 12 additional matters amounting to R2.5bn for preliminary investigation by the disciplinary board.”
Morero said he expected the city’s rate of progress would result in the UIFW expenditure balance being significantly reduced when the 2024/25 financial statements were presented.
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