South Africa’s richest city lost R3.5 million when airtime and data loaded onto SIM cards went to waste. It decided to get the money back.
The City of Johannesburg lost R3.5 million due to wasted airtime and data loaded onto SIM cards, and then stopped paying the service provider to make back the money.
This was revealed in the City of Johannesburg’s 2024/25 Integrated Annual Report, which provided an update on the conflict.
The debacle began in 2019, when the city paid for airtime and data loaded onto SIM cards that were never used.
“Resources of the municipality were not used economically, as airtime and data loaded on SIM cards were not used between April 2019 and August 2019,” the report stated.
The annual report explained that using the resources the city pays for is required by section 62(1)(a) of the Municipal Finance Management Act (MFMA).
“The municipality is likely to suffer a material financial loss if the amount paid for airtime and data loaded on SIM cards is not recovered,” it said.
The financial loss was disclosed in the City of Johannesburg’s separate financial statements for the period ended 30 June 2021.
“The accounting officer was notified of the material irregularity on 5 August 2022,” the city said in its report.
The accounting officer launched an investigation in September 2022 to determine the officials responsible, which was expected to be finalised in December 2022.
However, due to new information emerging in the case, the investigation was not finalised until July 2023.
The investigation concluded that the municipality suffered a financial loss of R3.467 million due to the unused airtime and data.
The accounting officer recommended that any acts of financial misconduct be reported to the council, where applicable.
The City of Johannesburg fights to get the money back
In April 2024, the municipal public accounts committee recommended to the council that the financial loss should be recovered from the service provider.
“In assessing the possibility of recovering the financial loss, the accounting officer obtained a legal opinion in June 2024,” it said.
This legal opinion confirmed that the municipality has reasonable prospects of success in pursuing a contractual claim against the service provider.
In July 2024, the City of Johannesburg council approved the resolution to recover the financial loss suffered from the service provider.
An independent service provider was appointed in August 2024 to investigate whether there were any elements of financial misconduct.
The outcome of the preliminary investigation, finalised in November 2024, indicated that there were elements of financial misconduct.
It was recommended that a full investigation be conducted to determine the appropriate consequence management to be taken.
A letter of demand was issued to the service provider in October 2024, and the service provider responded in November 2024.
The service provider indicated that it does not accept responsibility for the financial loss suffered by the City of Johannesburg.
Summons were issued to the service provider in November 2024. However, the accounting officer realised that the legal costs would be too high.
“The accounting officer decided against pursuing the legal process but opted not to pay invoices due to the service provider,” the city said.
The accounting officer stopped the processing of invoices submitted by the service provider from February 2025 to offset the R3.4 million.
He instructed the attorney to formally notify the service provider that the city would not process its invoices, including the reasons for this decision.
The service provider was notified that the municipality would not process its invoices due to a dispute with it.
As at 21 March 2025, invoices amounting to R4.3 million submitted by the services provider remain unpaid.
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