City suspends senior official over R1.3 billion MTC Broadband investigation
21 July 2017
A senior official from the Department of Economic Development has been suspended pending a disciplinary hearing into allegations of misconduct relating to contracts and payments linked to the Johannesburg Broadband Network Project made by the Metropolitan Trading Company (MTC).
The official in question has already been implicated in an independent forensic investigation which recommends corrective action be taken.
In addition he is seen to be deliberately frustrating an investigation into the City’s seemingly inexplicable R1.3 billion acquisition of the 900km broadband network in 2015. This acquisition was done through MTC, a Municipal Owned Entity, which possessed no viable business plan nor had requisite capacity to run a broadband operation of this size.
The suspended official refused to allow investigators access to a number of devices which are believed to contain crucial information relating to the investigation.
Further to the suspension, the City has obtained a court order to create mirror images of the official’s devices so as to preserve all information on the devices to ensure that potential key evidence relating to this investigation is not destroyed. The mirror imaging of the devices will be conducted by independent technology experts in the presence of the official and an independent supervising practicing attorney appointed by the Court.
The aim of the Johannesburg Broadband Network Project was to provide access to broadband services which would improve the City’s service delivery, realise ICT cost related savings for the City and grant communities and businesses across Johannesburg affordable access to internet. Despite the astronomical cost, few of these benefits have been realized, necessitating a thorough investigation into this project.
The tender for the construction of a broadbrand network and ICT infrastructure was originally awarded on 19 December 2008 to a consortium. On 31 July 2014, the City terminated the agreement so as to operate the network itself through the MTC.
On commencing operations on 30 September 2015, the MTC ended the 2015/16 financial year with a net loss of R54 million.
By February of this year, MTC still continued to function with no viable business plan. In his most recent report, the Auditor General also found that the performance of MTC could not be assessed due to the lack of a viable business plan from the entity.
As a City, we cannot allow officials to undermine our residents’ right to know how and why their hard earned money was used to create an inefficiently operated entity which has drained the City of resources needed for service delivery.
The astronomical losses made in the administration of this project are yet again an indictment on financial management in the City and this cannot be allowed to continue.
Statement issued by Executive Mayor of the City of Johannesburg, Cllr Herman Mashaba, 21 July 2017
