Limpopo municipality paid R2m to wrong people

South Africa

More than R2m that was meant to pay service providers of a struggling Limpopo municipality was somehow mysteriously misdirected to “unintended recipients”.

The Mokgalakwena municipality’s council in Mokopane has now appointed a forensic investigation team after the discovery of what seemed like a transactional fraud. The money, meant for two service providers, was paid by the municipality into “incorrect” bank accounts about a fornight ago.

In 2015, R5m mysteriously disappeared from the same municipality’s bank account and has not been found to date in another incident of transactional fraud.

Acting municipal manager Kenneth Maluleka said council had resolved on commissioning a forensic investigation into the financial and information technology systems after the transactional fraud was discovered a day later.

On January 24, the municipality’s finance department made payments to numerous companies. A day later, it emerged that two of its suppliers had not received their payments, Maluleka said.

He said upon investigation, it was discovered that the banking details of the two suppliers had been changed and the money was paid to “unintended recipients.”

“An amount of R2,416,544.69 was made into wrong banking accounts,” he said, adding that the transactional “fraud” was reported to both Standard Bank and Absa on January 25.

Maluleka said the municipality was banking with Standard Bank and that the money was supposed to have been paid into FNB accounts for both service providers. One of the service providers was supposed to be paid R1,5m, while the other was due to be paid R800,000. However, the money mysteriously went into two different Absa accounts, he said.

Maluleka said the municipality requested Absa to place the two “fraudulent” accounts on hold in order to secure the municipal funds while investigations were being held. However, Absa was hesitant to freeze the accounts and has requested the municipality to provide them with a court order to that effect,” he said.

Maluleka stated that they then went on to appoint a firm of attorneys “on an urgent basis” to approach the court in order to obtain the court order needed. A fraud case has since been opened at Mokopane police station. Absa was also in the process of investigating the accounts in question and investigations were still continuing.

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