Johannesburg - Transfers of money to the Nala municipality in the Free State has been stopped due to financial irregularities, the Treasury says.
The National Treasury said on Friday it had stopped any further transfers of money to the Nala municipality in Free State.
"Nala municipality was allocated R203.9m for the 2012/13 financial year. So far, R82m has been transferred to the municipality and the Section 216(2) action will affect the remaining R122m," spokesperson Phumza Macanda said in a statement.
The section allows for the Treasury to stop the transfer of funds to an organ of state in cases of persistent breaches of financial management prescripts and alleged mismanagement of public funds.
The municipality's non-compliance dated back to the 2008/09 financial year and included, among others, failure to submit the 2009/10 and 2010/11 annual financial statements, and the 2009/10 and 2010/11 annual reports.
"Forensic investigations conducted by KPMG during the 2010/11 financial year unearthed serious incidences of maladministration, flouting of procurement processes, fraud and corruption at the municipality."
Macanda said the municipality was warned as far back as August last year to implement the findings of the KPMG report.
While the municipality had made some progress a number of "serious issues" remained.
She said the municipality had failed to submit a list of all service providers or contractors that had, over the years, been paid by the municipality for work not done or completed.
It had also not submitted measures it intended taking to recover all money unlawfully paid to those service providers.
The municipality had further failed to indicate how it intended repaying conditional grants that it had unlawfully used to finance its daily operations.
She said eight other municipalities had failed to compile or submit their annual financial statement to the Auditor General and were at risk of Section 216(2) of the Constitution being invoked against them.
Five of them were in the Northern Cape - Renosterberg, Joe Morolong, Kai !, Gariep, Kgatelopele and Mier, and two in Western Cape - Kannaland and Swellendam.
The last municipality was Bela-Bela in Limpopo.
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