Hundreds of employees of the Eastern Cape health department have been issued with final warnings aft.
It is understood that part of the money was supposed to have been allocated to the bucket eradication programme, which has yet to yield positive results.
There are vast areas where sewerage has gathered in the open areas, especially between houses, threatening to be a serious health hazard.
In some areas of Monyakeng raw sewage has even formed dams, mostly due to poor excavation work, and has overflowed into manholes.
It runs down streets between houses, blocking whole streets in most areas.
Residents have complained that the bucket eradication process was a failure and waste of money.
Worse still, the sewerage plant is non-functional, is uncovered and unsecured, with no visible fencing, which has led to criminals taking advantage of the breach.
Enerst Moholoholo and Masabata Lekone are among the residents who are still using the old bucket system despite the government's promise to phase out the system.
The two neighbours have complained that it took the municipality about two months to remove the filled buckets.
They have dug holes in their yards where they tipped the mess.
Lindiwe Boneni is among those who have used their own money to connect their toilets to the sewer pipes that had been left incomplete.
Malehlonolo Mokhashane lives in one of the streets that are flooded with sewerage. She complained that, since 2010, her family had been suffering from tuberculosis.
"Last year my pregnant daughter was lifted over a neighbour's fence in order to be taken by ambulance to hospital," Mokhashane said.
"We are living like animals. If you want to go somewhere, you are forced to cross through neighbours' yards."
A KPMG forensic report has revealed massive corruption and maladministration in the municipality.
The report also revealed that some companies were paid large sums of money despite failing to honour their contracts.
To date the municipality had not retrieved a cent from the companies appointed to complete the project.
Eight consultants were paid a combined fee of R38206251. The municipality also spent R25588712. 25, on material supply.
The municipality incurred an over-expenditure of about R35-million. In some instances large sums of money cannot be accounted for.
Some payments were made without proper supporting documentation.
Department of cooperative governance and traditional affairs spokeswoman Senne Bogatsu said, while acknowledging some of the sanitation installation was not done correctly, they were in the process of addressing the issue holistically.
"To this end the matter has been addressed through the highest office in the province," she said.
"The implementation of the KPMG resolutions regarding non-performing service providers is an ongoing process."
She said these two companies' process had been completed and any other company that did not deliver services would be summoned to account and would have to give the municipality a refund.