R483m in payments to IT firm under scrutiny as Ekurhuleni corruption investigation deepens

Investigators are examining nearly R483 million in payments made by the Ekurhuleni Metropolitan Municipality to IT service provider XET Solutions, amid allegations of inflated invoices, ghost employees and procurement irregularities that have widened an investigation into governance failures at the metro.

The latest revelations, first reported by the Sunday Times, suggest the payments form part of a broader pattern of alleged financial misconduct that extends well beyond claims that the company funded former city manager Imogen Mashazi‘s R3.35 million private jet trip to London in 2022.

Financial records reviewed by the newspaper reportedly show that XET Solutions received R483 million through several municipal contracts over recent years. Investigators are probing whether some of those payments were supported by legitimate invoices and whether the company billed the municipality for employees who never worked on the projects in question. About R18 million of the total payments allegedly cannot be linked to processed invoices.

The records also raise questions about how some payments were processed. According to the investigation, one payment of R4 million was released while Mashazi was travelling to London on a private jet whose charter was allegedly financed by XET Solutions. The report further alleges that seven invoices worth R48 million were settled on the final day of the 2021/22 financial year, with five of those invoices only submitted on the same day.

The payments have drawn renewed attention to the municipality’s procurement and financial controls, particularly after allegations that XET Solutions became central to the implementation of an electricity meter reading and billing system that later contributed to a revenue crisis.

According to internal correspondence cited in the investigation, officials within the municipality’s energy department had warned against transferring responsibility for the automated meter reading contract to the information and communications technology division. Those concerns were reportedly overruled, allowing XET Solutions to assume responsibility for implementing the new system.

The project allegedly struggled from its inception. Large electricity users were billed on estimates rather than actual consumption during the first months of implementation, contributing to substantial revenue losses for the metro. Investigators estimate that failures within the billing system ultimately formed part of a wider scandal that cost the municipality more than R2 billion during the 2023/24 financial year.

A subsequent forensic investigation by OMA Chartered Accountants found that cybercriminals, allegedly working with municipal insiders, compromised the municipality’s IT infrastructure. Investigators reported that malicious software and stolen login credentials were used to manipulate electricity accounts, erase municipal debts and fraudulently generate rates clearance certificates.

The fallout from the scandal has already resulted in the suspension of the municipality’s chief information officer, Moloko Monyepao, who is facing disciplinary proceedings. Mashazi has also come under increasing scrutiny. This week, reports emerged that she had been instructed by investigators to present herself to police as part of an expanding corruption investigation involving former senior municipal officials.

Neither XET Solutions nor individuals implicated in the allegations responded to questions from the Sunday Times before publication of its investigation. The municipality also did not respond to requests for comment at the time.

The investigation is likely to intensify pressure on law enforcement agencies to determine whether the alleged procurement irregularities, questionable payments and failures in municipal oversight amount to criminal conduct, while residents continue to bear the cost of one of the country’s most significant local government financial scandals.