News Article

Former Executive Director must pay back R11.3m after misleading Municipal Council

Published: April 14, 2021

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In a ground-breaking judgement, the Port Elizabeth High Court ordered Lindile Petuna, former Executive Director of Human Settlements to pay back R11.3 million after the municipality overpaid for a Seaview property in 2015 on his recommendation.

He also withheld critical information from the Executive Mayor and the Municipal Council regarding the market value (R3 million) of the land and the findings of a feasibility study, obtained two years earlier by his own department.

Petuna also made history when he was ordered to pay more than R550 000 in October last year for misleading the municipality regarding rezoning applications.

In the latest case, Petuna stated that he cannot be held accountable as he is not a current municipal official and that he acted on reports by the Department of Human Settlements. He left the municipality after a settlement agreement with the institution in November 2015.

Acting Judge Lisa Ntsepe dismissed Petuna’s defence and ruled: "…the defendant’s denial appears to be nothing short of a desperate and unintelligent attempt to evade the consequences of the breach of his duty of trust, good faith and further his duty to prevent irregular, fruitless and wasteful expenditure”.

Nelson Mandela Bay Municipality Acting City Manager, Mandla George, said the judgement in favour of the municipality, is a major step in the right direction to remind senior officials of their legal responsibility.

"Section 32 (1) d of the Municipal Finance Management Act states clearly that any political office bearer or official of a municipality who deliberately or negligently made or authorised a fruitless and wasteful expenditure is liable for the expenditure incurred by the municipality.

"I am therefore happy that the court found in our favour and steps will now be taken to recoup the taxpayers money wasted as a result of Petuna’s actions.

"It also demonstrates consequence management, which is a critical component if we would like to ensure that sound and ethical recommendations are made to our Municipal Council in future

"The fact that the municipality sought justice not only illustrates how other municipalities can go about addressing these matters as this judgement creates a model for other municipalities to follow,” Mr George said.

In February 2015, Lindile Petuna recommended that the Executive Mayor and the Nelson Mandela Bay Municipality Council approve the purchase of portion 10 of the farm Seaview 28, Clarendon Marine, for R14 385 741 to develop low cost housing.

He stated in the report that 9,6 hectares of the property is developable in the immediate term and 17,55 in future, whilst a feasibility study from his own department stated clearly that only 5,08 hectares of the land is suitable for human settlements development.

In addition, the seller of the property, bought the land in December 2013 for R2.4 million and the market value of the land was R 3 million in February 2015.

Acting Judge Ntsepe found that Petuna would have advised Council not to purchase the property in the circumstances, if he "exercised reasonable care and performed his duties…. in good faith and in accordance with the terms of his employment contract”.

Second historical misstep

This is the second pioneering judgment emanating from the High Court in Port Elizabeth against Petuna in which the courts have ordered the enforcement of a municipality’s statutory obligation to recover fruitless and wasteful expenditure from a senior official and make him liable for it.

In the earlier judgment, Judge J M Roberson found Petuna liable for legal costs of R559 306.25 incurred by the municipality and that he was negligent and obdurate in rezoning three properties owned by the Georgiou family in circumstances where he was advised by senior counsel that the rezoning was unlawful due to restrictive title deed conditions not being removed.

In both cases, Petuna, currently a senior official at the Knysna Municipality, was ordered to pay the Nelson Mandela Bay Municipality’s legal cost with interest as well.

Ends

Issued on behalf of the Nelson Mandela Bay Municipality by Media Management Officer Kupido Baron (082 780 2726 / 041 506 1500 / kbaron@mandelametro.gov.za / @kupidobaron).

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