Damning report against corruption-accused CFO of vital South African municipality

The Council of the City of Matlosana Local Municipality is scheduled to convene this Thursday to deliberate on a scathing disciplinary report concerning its corruption-accused Chief Financial Officer, Mercy Phetla.

In documents seen by Newsday, the municipality’s disciplinary inquiry, finalised in late December 2025, has recommended Phetla’s dismissal following a guilty verdict on all five charges of gross misconduct, dishonesty, and dereliction of duty.

The disciplinary hearing, chaired by Advocate S. Sethene, delivered a ruling that did not mince words, characterising Phetla’s actions as not merely negligence, but intentional malfeasance.

“The conduct of the CFO, construed in full, does not appear to have been a negligent conduct. It was a calculated act designed to defraud the municipality,” the report states.

Looking at the five specific charges, she pleaded not guilty to all of them, but was found guilty on every count:

• Charge 1: Unauthorised payment of R2.9 million:

Phetla was charged with gross misconduct for authorising a payment of R2,901,000.00 to a company named Variegated (Pty) Ltd for electrical material.

By approving the purchase requisition and the subsequent payment in January 2024, the report said she acted in direct contravention of Section 81 of the Municipal Finance Management Act (MFMA) and failed to perform her duties in the best interest of the municipality.

• Charge 2: Exceeding delegated authority:

This charge focused on her alleged failure to adhere to financial thresholds. Phetla was charged with transacting outside her delegated authority, which stipulates that only the Municipal Manager can authorise amounts above R1.5 million.

By approving the R2.9 million transaction without the Municipal Manager’s approval, she prejudiced the administration and discipline of the municipality.

• Charge 3: Wasteful expenditure of R528,000:

Phetla was charged with causing “unauthorised, irregular, fruitless and wasteful expenditure” amounting to R528,000.

This payment was made to Variegated (Pty) Ltd for goods that were never delivered.

The charge alleged she failed to act with fidelity and honesty by permitting payment for materials not received, thereby exposing the municipality to financial loss and fraud.

• Charge 4: Irregular acceptance of gratification:

This charge related to the allegation that Phetla solicited or received a motor vehicle worth R1.4 million (a VW Amarok) from a municipal service provider, GMHM Construction and Projects.

The charge stated that accepting this gift constituted “gratification” under the Prevention and Combating of Corrupt Activities Act (PRECCA) and a breach of the Code of Conduct, amounting to gross dishonesty.

• Charge 5: Bringing the municipality into disrepute:

The final charge stemmed from the public fallout of her arrest. It cited the joint media statement released by the Hawks and the National Prosecuting Authority regarding her arrest for corruption.

The charge alleged that the wide reporting of her accepting a vehicle from a service provider, and the subsequent criminal charges, damaged the public’s confidence in the municipality and brought its integrity into disrepute.

Addressing the breakdown of trust, the report emphasised that Phetla is “unrepentant about her conduct.”

Phetla’s defence

Throughout the proceedings, Phetla pleaded not guilty to all five charges. Her defence relied heavily on procedural arguments and claims that the allegations were politically motivated.

During the hearing, Phetla argued that the municipality could not charge her regarding the vehicle allegations because the matter was currently under judicial consideration in her criminal trial.

She claimed the council had resolved to leave the matter to the courts.

However, the Chairperson dismissed this, noting Phetla provided no evidence of such a resolution and ruling that a criminal trial does not bar an employer from disciplining an employee.

The ruling also highlighted the weakness of Phetla’s defence, noting she “dismally failed to challenge the evidence” presented by municipal witnesses.

The report concluded that “Ms Phetla cannot be left anywhere near to the Municipality’s purse or any public or private office for that matter”.

The report asserts that “for gross dishonesty, it should be the end of the road for her”.

The legal scandal and “travesty of justice”

While the council considers the disciplinary outcome, the inquiry’s findings have fuelled the broader legal scandal enveloping the municipality.

The report went beyond employment sanctions, urging the municipality to pursue civil and criminal action.

Advocate Sethene remarked that “it would be the travesty of justice [if] criminal charges of fraud are not instituted against Ms Phetla and implicated service providers who illegally syphoned millions from the Municipality.”

Central to the scandal is the allegation that Phetla received a VW Amarok worth R1.4 million as a bribe from GMHM Construction and Projects.

During the hearing, Phetla claimed she purchased the vehicle with her own funds but failed to provide proof of payment or an affidavit from the dealership.

The Chairperson found her defence regarding the vehicle to be incredulous.

“The CFO’s conduct defies logic,” the report states, questioning why she would allow the police to confiscate a vehicle she allegedly paid for without launching a legal application for its return.

The inquiry also placed on record a startling admission by Phetla: her R35,000 bail money following her arrest was paid by the son of the GMHM director, the very service provider alleged to have gifted her the luxury vehicle.

Widening corruption probe

The disciplinary report lands amidst a widening corruption probe by the Hawks.

Beyond the Amarok, investigators have linked Phetla to other luxury assets, including a Porsche, Range Rover, and Maserati, which were allegedly purchased using funds diverted from the municipality.

The Asset Forfeiture Unit has already obtained preservation orders for several of these vehicles, yet Phetla has denied that she owns these vehicles.

Phetla has repeatedly denied any wrongdoing on all fronts, calling the charges “politically motivated.”

Despite the “ferocious” nature of the report, opposition parties remain sceptical that the ANC-led council will implement the recommendation.

DA caucus leader Gerhard Strydom previously told Newsday that while the law requires the municipality to implement the sanction if found guilty, he predicts the majority “will illegally try to act as an appeal committee on behalf of the CFO” to protect her.

The municipality, currently under mandatory administration, faces over R11 billion in unauthorised, irregular, and wasteful expenditure.

Newsday contacted Phetla for comment, but did not get a response by the time of publication. Comment will be added if received.

Corruption-accused CFO of vital South African city set to face the music