One South African municipality uses iron sticks to manage its finances 

Masilonyana Local Municipality keeps track of financial receipts by sticking them on iron sticks and has supplied no evidentiary documents to the Auditor General (AG) for 10 years. 

This bookkeeping method was flagged by member of parliament George Michalakis, who is leading efforts to criminally investigate the Terrible Ten. 

The Terrible Ten are among the municipal managers with the worst records in office, with their municipalities beset by mismanagement and corruption. 

Their tenures have resulted in hundreds of millions of rands in taxpayer funds being lost to fruitless and wasteful expenditure. 

Michalakis told BizNews these municipal managers have enjoyed operating with impunity and have refused to implement the findings of AG reports. 

The most glaring example of mismanagement is Michalakis’ home municipality of Masilonyana in the Free State. 

Masilonyana includes towns such as Theunissen, Winnie Mandela (formerly Brandfort), Winburg, Soutpan, and Verkeerdevlei. 

Winburg is the oldest town in the Free State, officially proclaimed in 1841 and serving as the capital of the Republic of Natalia before becoming the capital of the Orange Free State. 

The municipality is also unique in having one of the few places where salt is produced inland in South Africa, with the town of Soutpan being next to a natural salt pan. 

Here, large quantities of salt are mined and refined to meet local demand and, in some cases, for export worldwide. 

The municipality’s economy is based on the mining industry, which generated 40% of its GDP. The rest comes primarily from the finance and agriculture sectors. 

64,000 South Africans live in Masilonyana, which is located between the two largest economic hubs in the Free State – Bloemfontein and Witbank. 

More recently, the municipality has become prominent for housing the place where Winnie Mandela was banished in 1977.

Her house in the local township has been restored and is now a national heritage monument and museum.  

Masilonyana’s mess

Michalakis explained that Masilonyana is one of the worst-run municipalities in the country, with poor bookkeeping enabling wasteful expenditure on a grand scale. 

This mismanagement has continued despite repeated findings against the municipality by the AG, which have been laid bare before parliament. 

“This is the crux of the case against them: despite the Auditor-General pointing it out, they did absolutely nothing to stop it,” Michalakis said. 

“So, in my opinion, there is not only a factor of incompetence but, in some instances, either serious gross neglect or possibly some corruption as well.” 

The gaps that allow corruption and wasteful expenditure to occur are created by poor record-keeping and non-existent financial controls. 

“From this municipality, Masilonyana, there are reports that they manage their payments on these iron sticks,” Michalakis recalled. 

“At the end of the month, they take the slips and put them into a file in storage. There is no bookkeeping or tracking of where the money is spent.”

He explained that this is how money is then transferred to the incorrect accounts or to criminal actors, either by mistake or deliberately. 

These funds are not tracked, and Michalakis said the municipality does not seem to care where the money goes. 

“In some instances, they neglect to submit the most basic accounting documents to the AG to enable them to be audited in the first place,” he said. 

“Again in Masilonyana, for almost a decade, they have not submitted a single evidentiary document to the AG for them to be audited.”

This means that the municipality has failed to show where its money is being spent when questioned by the AG. 

Masilonyana is currently under provincial administration, with the Free State government stepping in to try to halt its collapse. 

In justifying its action, the provincial government said the municipality has faced consecutive disclaimer audit opinions in recent years and has wasted millions of rands in taxpayer funds.