December 8, 2003
By Thomas Thale
AN investigation by PricewaterhouseCoopers Forensic Services has cleared the CEO of City Power, Kenneth Mohlala, of allegations of fraud and corruption.
However, the forensic report, which was released on Friday, raises concerns over "a number of inconsistencies, errors and procedural breaches in respect of procurement and administrative procedures" at City Power, the city's electricity utility.
Niven Pillay, Chairman of City Power, said in a statement that the findings of PricewaterhouseCoopers are that no one obtained personal gains from these administrative flaws.
"Having had access to all available records and interviewed all relevant parties, PricewaterhouseCoopers could find no evidence to support the fraud and/or corruption allegations against the CEO," Pillay said.
Still, said Pillay, the company is to issue written warnings to the three managers implicated in these administrative lapses, including Mohlala.
The auditor's report recommends that internal disciplinary hearings be instituted against two other senior managers who attempted to conceal administrative errors. "The two had made administrative lapses in the normal course of their duties, but they were dishonest in attempting to cover this up," said Pillay.
The company's CEO has now been instructed to tighten up on the weaknesses uncovered by the auditors in the company's policies and procedures.
In October, The Star newpaper reported allegations that a company co-owned by Mohlala's wife, Melita, had been awarded a tender worth R2,8-million to supply the electricity utility with furniture, raising concerns over nepotism at City Power. Allegations of nepotism, fraud and corruption were also leveled against Mohlala through the City Power "tip off" line.
The board of City Power then appointed PricewaterhouseCoopers to probe all accusations made against senior managers at City Power. The report by the auditors exonerates Mohlala of the main charges leveled against him. Pillay said the auditors found nothing procedurally wrong with the contract.
"Mohlala had declared his wife's 20% stake in the company and he had no influence in the awarding of the tender. They got the contract simply because they gave us the best price."
Pillay welcomed the auditors report, saying it has brought finality on the matter and helped to clear the air, allowing the company to move on. "These allegations had impacted negatively on the morale of staff," Pillay said. "It was useful having the investigation. The exercise has helped to highlight gaps in our processes."
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