Ekurhuleni's municipal building's R46m budget skyrockets beyond R300m

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10-07-2025
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Sowetan Live
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It will cost metro extra R39m to complete project

After eight years, five contractors and more than R300m paid to the City of Ekurhuleni to renovate a municipal building, the structure in Germiston remains unfinished.

The project launched in 2017 with a completion date set for 2021, still needs additional R39m to complete. The plan was to ease severe office space shortages for the municipality but the project has turned into a drawn-out financial nightmare.

When Sowetan visited the SAAME building earlier this week, there was no contractor on site. Rubble surrounded the 10-storey structure, unused building materials including cement lay scattered around and there was no sign of any ongoing work. The building remains barricaded with only security guards stationed at the premises.

A 71-page forensic report tabled in council in March 2025 outlined a damning paper trail of irregularities, inflated prices for material which cost the city over R136m and defective workmanship which the municipality had to fork out R4.8m for. The council also lost R70m to unauthorised payments to some of the contractors. The total financial value of these irregularities amounted to R272m.   

The investigation into the refurbishment of the building was requested by the city manager after noticing “potential red flags and substandard service from contractors". 

According to the report, the Development Bank of Southern Africa (DBSA) was hired to manage the project and was paid more than R8.1m. Themane Management Consultants (TMC) was paid over R163m, while Anita Building Construction, which later renamed itself FM Infrastructure, was paid R94.1m. 

Lesedi Technical Engineering (LTE) was paid over R25.7m while Snaap Consortium received over R23.5m. 

The project was originally meant to cost about R46m but its budget kept ballooning, with phase 1, managed by DBSA, TMC and LTE, later costing over R119m. Phase 2, which included FM Infrastructure and Snaap Consortium, cost the municipality over R196m. 

The contracts were later terminated due to poor performances.

"How can the mayor justify injecting more funds into this 'bottomless pit' as this is fiscally irresponsible and undermines public trust."

- Sihle Molebatsi, DA spokesperson for real estate in council

"The collective impact of these issues resulted in a staggering financial toll of R272,079,243.49. More critically, these compounded irregularities and missteps led to prolonged time delays, pushing the project well beyond its projected completion date and causing significant budget overruns. The SAAME building project, once a beacon of urban renewal, became mired in a quagmire of delays and cost escalations," read the report. 

"The irregularities collectively have not only imposed a significant financial strain on the project but have also led to substantial delays, compromised quality and undermined confidence, highlighting the essential need for rigorous management and oversight in large-scale public sector projects."

Illustrating the overpricing, the report noted that DBSA charged R550 to install each mirror while FM Infrastructure charged between R2,158 and R8,903 for the same item. 

"The reconciliation of the BOQs [bill of quantities] revealed significant variances, with certain items showing discrepancies of over 400%. Closer scrutiny indicated that these variances could be attributed to possible inflated material prices charged by FM Infrastructure, resulting in a potential excess expenditure of R136,772 for specific items and giving rise to fruitless and wasteful expenditure," the report read. 

Some of the recommendations included the recouping of funds overcharged by companies and to initiate legal action against DBSA if warranted. The city was also instructed to revise contract termination policies and procedures and investigate potential theft and embezzlement and investigate potential fraudulent and misrepresentation by contractors or officials. 

Municipal spokesperson Zweli Dlamini said the findings of the report were concerning. "However, investigations are still ongoing and we wouldn't want to pre-empt or comment further."

FM Infrastructure director Inkululeko Raisibe Mashishi confirmed she received Sowetan's request for comment but was not willing to talk about the report. 

DBSA and Snaap did not respond to our media inquiries while TMC and LTE could not be reached on the landline numbers listed on their websites and social platforms. 

DA spokesperson for real estate in council Sihle Molebatsi said his party was opposed to the proposed additional R39m for the project.

"We unequivocally opposed the allocation as we viewed it as a reward for failure. How can the mayor justify injecting more funds into this 'bottomless pit' as this is fiscally irresponsible and undermines public trust. The people of Ekurhuleni are not only victims of failed service delivery, but also of a government that treats their money as a personal piggybank," he said. 

Freedom Front Plus caucus whip Rudolf Herbst said the party demands answers and that officials and contractors involved should be held accountable.

"We welcome the report’s recommendations that the matter be referred to the police and the Special Investigating Unit. The party further insists that internal disciplinary action against guilty officials be expedited and that, if found guilty, they face criminal prosecution," said Herbst.