CASE LAW ANALYSIS: Public official jailed for procurement irregularities

Advocate samantha martin, afsa, arbitration south africa, arbitration foundation south africa, association of arbitrators, construction law, environmental law, procurement law, water law, energy law, mining law, construction agreements, construction adjudication, tender disputes, water disputes, water tribunal, stormwater management, disaster management law, JBCC, NEC, FIDIC, GBCC, advocate south africa, advocate africa

CASE LAW ANALYSIS: Public official jailed for procurement irregularities

Procurement: Martin Noel Pietersen v the State

Cliff Dekker Hofmeyer report that in an appeal judgment handed down on 6 February 2019 the Western Cape Division of the High Court imposed a sentence of two years’ imprisonment on a former municipal manager of the Oudtshoorn Municipality for “…deliberately failing to implement the Oudtshoorn Municipality’s supply chain management (SCM) policy by not taking reasonable steps to prevent irregular expenditure arising from the irregular appointment of a service provider and the authorisation of irregular payments to the same service provider (amounting to R2,082,093).”

In the court a quo, the Oudtshoorn Regional Court, Mr Pietersen was convicted on five counts of contravening several provisions of the Local Government Municipal Finance Management Act 56 of 2003 (“MFMA”) in respect of actions he carried out during his tenure as the municipal manager and accounting officer of the Oudtshoorn Municipality. Mr Pietersen was sentenced to five years’ imprisonment, all counts being taken together for purposes of the sentence. Mr Pietersen appealed against his conviction and sentence with the leave of the court a quo.

On appeal, the High Court found that the service provider was not appointed because of its expertise, but rather because the political office-bearers had instructed Mr Pietersen to make the appointment. Further, the appointment lacked urgency as Mr Pietersen could have proceeded with the appointment of the service provider by way of an expedited tender, and, in any event, the reason for the urgency was that the political office-bearers and Mr Pietersen wanted the tasks completed before the next election.

The High Court held that a “self-imposed urgency based on political expedience does not amount to the sort of urgency or exceptional case contemplated in regulation 36”. As the deviation did not meet the requirements of regulation 36, the deviation was invalid and the expenditure incurred in respect of the service provider was incurred in contravention of the Municipality’s SCM policy. The payments made to the service provider were thus held to constitute irregular expenditure for purposes of the MFMA.

The High Court found Mr Pietersen guilty of two of the five counts brought against him. Specifically, Mr Pietersen was found guilty of deliberately breaching the requirements of s62(1)(f), read with s173(1)(a)(i), of the MFMA, which inter alia require a Municipality to implement a SCM policy, and of deliberately failing to take all reasonable steps to prevent irregular expenditure, in terms of s173(1)(a)(iii) of the MFMA. The High Court stated that Mr Pietersen committed a serious offence by deliberately breaching the SCM policy and the MFMA, and thereby failed to take reasonable steps to prevent irregular expenditure, in order to accommodate the political office-bearers who wanted him to appoint the service provider to assist them in achieving their political objectives for the Oudtshoorn Municipality.

This case indicates that the MFMA has teeth and that municipal officials not only face potential civil liability for incurring irregular expenditure, but also criminal liability for deliberately, or even grossly negligently failing to take reasonable steps to prevent irregular expenditure.

The High Court found Mr Pietersen guilty of two of the five counts brought against him. Specifically, Mr Pietersen was found guilty of deliberately breaching the requirements of s62(1)(f), read with s173(1)(a)(i), of the MFMA, which inter alia require a Municipality to implement a SCM policy, and of deliberately failing to take all reasonable steps to prevent irregular expenditure, in terms of s173(1)(a)(iii) of the MFMA.



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