South Africa: Security Company Found Guilty of Defrauding Limpopo Municipality Now Under Administration

A Gauteng High Court judgment has laid bare how some service providers siphoned off millions of rand from troubled Mogalakwena municipality in Limpopo.

A civil matter between two security companies over a R2.3m unpaid debt ended up revealing how inflated invoices were sent to the municipality for payment.

The municipality is now under administration with a deficit of more than R2bn.

The judgment was delivered by Judge Neil Tuchten in a matter between Global Strake Security and Mahlatsi Security Services. Global Strake Security was owed more than R2.3m by Mahlatsi Security Services.

It all started when the municipality needed the services of bodyguards for municipal officials.

This was after ANC factionalism in the municipality degenerated into violence and the house of the council speaker was torched.

At the time, Mahlatsi Security Services was contracted by the municipality, but could not provide bodyguards known as "bouncers".

The municipality could not directly procure the services.

It was then that Mahlatsi Security Services illicitly subcontracted Global Strake Security to provide bodyguard services.

Evidence led in court showed that Mahlatsi Security Services sent invoices inflated by over 40% of the rates agreed upon. The matter came to a head when Mahlatsi Security Services failed to pay Global Strake Security and the municipality started to investigate.

In the judgment, Tuchten found that Mahlatsi Security Services developed a scheme to defraud the municipality and to evade the law.

Raised invoices

He found that the one member of the company, Thabo Mashishi, who gave evidence in court, was untrustworthy, dishonest and avaricious.

"The plaintiff (Global Strake Security) raised invoices on the first defendant (Mahlatsi Security Services). The first defendant then raised its own invoices on the municipality.

"The plaintiff was not party to a scheme to defraud the municipality. Mashishi conceded that he did not tell [Mmusi] Tsebe (director of Global Strake Security) about his private arrangement with the municipality.

"Nor did Mashishi ever tell Tsebe that the first defendant was merely creating the illusion of contracting with the plaintiff and was not in fact contracting with the plaintiff," Tuchten said.

When the municipality eventually terminated the services of Mahlatsi Security Services, Mashishi failed to inform Global Strake Security.

"Perhaps he thought at that stage that by simply remaining silent in the short term, he could ultimately deny his way out of responsibility. This is a common tactic employed by dishonest people," Tuchten said.

Tuchten eventually ordered Mahlatsi Security Service to pay Global Strake Security the sum of R2 395 394.30 with interest.

Though he gave evidence in court on behalf of the company, Mashishi denied ever owning the company.

However, a Companies and Intellectual Property Registration Office (Cipro) disclosure certificate seen by News24 shows that the ownership has been revolving around Mashishi, Modisa Jack Mashishi and Ditshele Mercy Mogase.

Tsebe indicated that he was pursuing the matter with Mahlatsi Security Services. "I can confirm there is such a judgment and trying to make Mahlatsi Security Services to abide by the court order."

Earlier, News24 reported how the municipality was milked of millions of rand by service providers that included companies owned by senior political leaders in the province.

Source: News24

See What Everyone is Watching

More From: News24Wire

Don't Miss

AllAfrica publishes around 800 reports a day from more than 140 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.