Johannesburg lost R3.5 million buying data and airtime for phones that were never used

The City of Johannesburg lost R3.5 million when buying airtime and data that were loaded onto municipal SIM cards but never used. 

While the issue was flagged back in 2019, the city has only moved to recover the funds through legal means in 2024. 

The service provider, for whom the city paid for the airtime and data, was still used by the municipality until February 2025, when it unilaterally stopped paying the company’s invoices. 

This was revealed by the Auditor-General (AG) in its audit opinion for the City of Johannesburg’s financial statements for the year ended 30 June 2025. 

These financial statements were severely delayed, resulting in trading in the city’s bonds being suspended earlier this year by the JSE. The city also had its ratings outlook downgraded by Moody’s-affiliated GCR. 

Following the publication of the financial statements, trading in the city’s bonds has resumed. However, the audit opinion does not paint a pretty financial picture. 

The qualified audit opinion was filled with examples of material misstatements and information that the AG could not independently verify. 

In particular, the AG flagged concerns around an overstatement of general expenses to the value of R398 million and misstatements regarding performance reporting. 

The performance reporting issues regard sustainable service delivery and infrastructure development targets. 

Most worryingly, the AG raised serious doubts regarding the city’s ability to continue as a going concern, with it facing significant liquidity challenges. 

It flagged issues with the fact that total borrowing exceeded 45% of total operating revenue. The city owes creditors over R25 billion, while only having R3.9 billion in the bank. 

The AG also noted that both debtors’ collection days and creditors’ payment days exceeded 30 days, which translates into severe cash-flow challenges. 

There were also high levels of irregular and wasteful expenditure, which coincides with non-compliance with relevant legislation and regulations. 

The audit opinion revealed that reasonable steps were not taken to prevent unauthorised expenditure of R2.4 billion, primarily caused by overspending. 

This was coupled with R2.3 billion worth of irregular expenditure, mostly from non-compliance with supply chain management regulations.

The R3.5 million lost on airtime and data

One such example of wasteful expenditure is the R3.5 million that was spent on airtime and data for municipal SIM cards that were never used. 

This was flagged as a material irregularity by the AG, with it being a clear instance of the city wasting taxpayer money. 

Between April and August 2019, the city bought airtime and data that were loaded onto municipal SIM cards. These SIM cards were never used, failing the requirement in legislation to use resources economically. 

That is not where the story ends, with this incident not being investigated by the city for the following four years. All the while, the service provider continued raking in millions from the city. 

An investigation was finalised in July 2023, which confirmed that the municipality suffered a financial loss of R3.5 million due to this issue. 

A subsequent independent investigation finalised in November 2024 found elements of financial misconduct, leading to a recommendation for yet another investigation into the matter.

This investigation will be done by the disciplinary board and will look particularly at the responsible senior management. It is unclear what progress there has been in this regard.

After the first round of investigations, the city was recommended to try to recover the funds from the service provider, with legal opinions indicating a good chance of success. 

Approved in July 2024, the city’s recovery resolution was unsuccessful. It issued a letter of demand in October 2024, but the service provider refused to accept responsibility for the loss. 

Their argument was that they lawfully sold the airtime and data to the city, which then decided not to use it. 

Although the city issued a summons to the provider, the accounting officer decided that pursuing a legal battle was not the most cost-effective solution.

Instead, the city chose to offset the R3.4 million loss by withholding payments for new invoices submitted by the service provider. 

As a result, the city stopped processing the provider’s invoices from February 2025 onwards. As of the end of March, R4.3 million worth had been left intentionally unpaid. 

The city has since established a contract management committee to monitor all municipal contracts and ensure the goods and services procured are being used.