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The municipality is now reportedly unable to meet its February salary bill, estimated at R4-million.
The cash-strapped municipality - serving Bothaville, Wesselsbron and surrounding farming areas - has confirmed that it has not been generating revenue for the past 20 months because it had installed a R6-million billing system that does not work.
"The Nala municipality has not been billing for the past 20 months resulting in a cash-flow problem," acting municipality manager Chris Mokomela said.
The municipality hit a snag when a new financial management system was installed more than a year ago. It is this malfunctioning system that Mokomela partly blames for "failing" him in a letter in which he is asking for assistance from the provincial government.
Provincial spokeswoman Senne Bogatsu told Sowetan the request had been turned down, but the workers' salaries would be paid from March through a new financial recovery plan.
Nala municipality came under the spotlight last year when a KPMG forensic exposed a scam in which employees were fraudulently claiming for their fuel expenses. The report revealed that between 2007 and 2009 there were fraudulent claims amounting to R160,477 involving 207 privately owned vehicles.
Two Nala municipality employees, William Tsatsilebe Masisi and Dikotsi Koos Tsholo, are out on a warning for allegedly filling their vehicles using the municipality's fuel account.
The two men were arrested after a whistle-blower alerted the filling station employees in that the men were defrauding the council's account.
Further investigations have revealed that the scam still continues. Sowetan has seen documents showing that between January 22 and 27 the municipality has been defrauded of another R15,000.
Still under investigation are reports that the municipality has been defrauded more than R92,000 this month.
Some of the fraudulent claims include:
R11,406 claimed for fuel using forged signatures.
In 2009, the municipality was placed under administration after failing to keep its financial books and administration in order.
Employees defrauded about R705,423 in a salaries scam.