The Sekhukhune district municipality has found that some of its officials were negligent after the institution paid R12m into unauthorised bank accounts.

Mayor Stan Ramaila said their preliminary findings had revealed that the bank details appearing on the correspondence do not belong to the Compensation Fund.

"There is prima facie evidence of negligence on the part of our officials," he said.

"Had reasonable care been taken, the municipality would not have lost this money. This is a scam that possibly involves more than one person or institution."

Ramaila said the R12m was meant to be their contribution, in terms of the Occupational Injuries and Diseases Act, to the Compensation Fund, from which workers who get injured or contract diseases while at work could claim.

"On April 24 2018, the municipality received a letter, purportedly from the Compensation Fund, reminding us of the R12m owing to the fund," the mayor said.

"That letter, which was marked as a final warning, gave the municipality 21 days to settle the amount or else the fund would resort to court action. This letter had bank details which payments had to be made into."

Ramaila said as a result of the letter, the municipality had made payments of about R1m a month in 12 instalments.

"It was only after the last instalment that the official from the Compensation Fund informally told our municipal official [at] a workshop that the municipality still owed the fund R12m and the debt had increased to R16m as a result of cumulative interests.

"Upon a subsequent formal enquiry, the Compensation Fund denied ever receiving the payments," he said.

According to two independent sources close to the situation, the money was siphoned off by fraudsters who presented fake letters purporting to be from the National Treasury and department of labour seeking payment for the workers' fund.

"It looks like the municipality has turned to be a play ground for fraudsters as the investigations into R5,4m is still under way and no one has been arrested," said a source.

Another source said council was to meet yesterday to deliberate on the matter.

"We applauded the mayor for quick action in making sure that over R4,7m of the R5,4m was recovered but no one has been arrested," said the source.

The source said a case was opened with the Hawks on Wednesday but Hawks spokesperson Brig Hangwani Mulaudzi said they had not yet received the docket from the police yet.

The municipality announced yesterday that a criminal case had been opened with police.

Municipal spokesperson Moloko Moloto said Ramaila had called for a special council sitting to be briefed on the matter yesterday.

"Council has resolved to delegate the executive mayor to approach the premier's office and request for support in the forensic audit and further request the premier's office to direct provincial treasury to provide such audit capacity.

"That the premier be requested to advise the minister of labour and employment, involving National Treasury, to institute forensic audit of the Compensation Fund commissioner in respect of this matter in question," Moloto said.