eThekwini to foot legal bill for city manager accused of fraud

eThekwini city manager Sipho Nzuza, who earns about R3.6-million a year, is being represented in a fraud case involving nearly R500-million by seasoned advocate Griffiths Madonsela SC and instructed by Strauss Daly Attorney’s Andile Khoza and Dinesha Deeplal – who are being paid via the City’s legal fee budget. 

Nzuza’s legal team have all been involved in politically linked matters before. Khoza and Deeplal for several years handled Police Minister Bheki Cele’s review application of the presidency-appointed Moloi Commission of Inquiry.

That report found him to be “dishonest” and “conflicted” and led to his firing as National Police Commissioner in 2012. Incidentally, Cele had the report set aside in April 2019.

Madonsela also represented Cele at the Zondo Commission of Inquiry into State Capture.

eThekwini communications manager Mandla Nsele confirmed on Monday that the municipality would pay Nzuza’s fees, adding that he would need to pay back the money if found guilty. Furthermore, the City has provided no cap on how much it is willing to spend.

“The municipality will pay in the event that he is not convicted — this is in line with section 109A of the Municipal Systems Act. There is no specific budget for his legal fees. If they become payable, they shall be paid from the budget of legal fees, from where all other indemnity costs are paid,” Nsele told Daily Maverick.

Just how this matter meets the criteria for Section 109A of the act is unclear.

The act states that a municipality “may” pay the legal fees of a staff member or councillor only in circumstances “arising from the exercise of his or her powers or the performance of his or her duties”.

The leader of the opposition in the City, the Democratic Alliance’s Nicole Graham, said according to her knowledge of the Municipal Systems Act, the City was not obliged to cover Nzuza’s fees.

“It is a very worrying precedent that we will consider covering people’s costs when they’re involved in criminal matters,  as this doesn’t specifically speak to senior managers. It opens the floodgates. Nzuza earns over R3-million a year. He is perfectly able to pay for his own legal costs. There is no reason why the public purse should fund this,” said Graham.

Nsele told Daily Maverick that the decision to fund Nzuza’s legal costs was not taken by the political leadership.

“It is not the competence of the executive committee to take decisions of an administrative nature. An application for indemnity is made by an affected employee to the head of legal and compliance for his decision,” said Nsele.

He said Nzuza’s suspension was not imminent and that council had only taken a resolution on its intention.

“The council’s intention has to be conveyed to Mr Nzuza and he has to be given seven days to make representations on why he should not be suspended. After taking his representations into consideration, a decision will be made whether to place him on suspension or not.”

Nzuza appeared in court on 10 March on charges of fraud, before Judge Gareth Davis, at the Durban Commercial Crime Court. He was granted bail of R50,000 and will reappear on 16 April alongside erstwhile City mayor Zandile Gumede, former chairperson of the city’s infrastructure committee Mondli Mthembu, several city officials, as well as implicated private contractors.

They all stand accused of various criminal charges for their alleged role in the handling of lucrative waste-related contracts currently valued at R430-million. Nzuza, who is reported to be a state witness, told the court last week that he had been speaking to police investigators for nearly a year even though he was told he was implicated in the crimes.  

On Saturday the municipality granted Nzuza “special leave” for two weeks.  In a statement, the City said that “internal legal processes are unfolding”.

In 2019, a confidential report into the state of local governance, which included eThekwini Municipality and which has been seen by Daily Maverick, found that the City was involved in 399 cases of litigation – 124 instituted by eThekwini and 275 instituted against it.

Costly legal bills that diverted money from service delivery was one of the reasons cited by the KwaZulu-Natal African National Congress in August 2019 to justify its “deployment”  of Gumede from her mayoral position. 

eThekwini’s deputy city manager for governance and international relations, Sipho Cele – who is one of the longest-serving senior managers in the City – will act as city manager.

Nzuza did not respond to requests for comment. DM