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City Power Procurement Under Scrutiny Amid R500 Million Corruption Probe

A major corruption investigation is underway targeting procurement irregularities at City Power Johannesburg, with allegations of financial mismanagement and inflated contract values totaling over R500 million. The developments have drawn significant public attention and raised serious concerns over governance, internal control systems, and the financial sustainability of one of Johannesburg’s most critical service providers.

Formal Visit Sparks Public Interest

Contrary to some public perceptions, the recent action by law enforcement authorities at City Power’s headquarters was not a raid in the traditional sense. The Directorate for Priority Crime Investigation—commonly known as the Hawks—conducted a scheduled procedural visit to City Power’s main offices to issue a formal request for information. The company has since confirmed that the interaction was cooperative, no property was seized, and no staff members were detained or interrogated.

The purpose of the visit was to gather documentation and contractual records linked to various procurement processes currently under investigation. The event, however, has amplified existing scrutiny of City Power’s management practices and placed renewed focus on issues surrounding its spending patterns and service delivery performance.

Focus of the Investigation

According to internal sources familiar with the matter, the investigation centers around three major contracts executed between mid-2022 and early 2024. All three projects were authorized under the leadership of the company’s current CEO, whose tenure began in June 2022. These contracts include:

R335 million in material procurement reportedly linked to maintenance operations. There are claims that some materials were either not delivered, were substandard, or were not aligned with the original specifications.
A high-voltage infrastructure project initially budgeted at R8 million, but ultimately costing the company nearly R100 million—a more than twelvefold increase that has raised red flags regarding project scope and supplier pricing.
A consulting contract valued at R55 million for services that many insiders argue could have been performed by the company’s existing internal teams.

The Hawks are believed to be assessing whether procurement policies were properly followed, if tender processes were manipulated, and whether any officials benefited improperly from the award of contracts. Preliminary findings suggest that some deals may have involved possible collusion between suppliers and decision-makers within the utility.

Management Accountability and Internal Response

The City Power executive team has acknowledged the existence of internal reviews and has pledged full cooperation with the ongoing investigation. According to company statements, internal disciplinary actions have already been initiated against several staff members, including operational supervisors, procurement officers, and middle managers.

It has also been confirmed that City Power has referred certain internal audit findings to law enforcement for further action. These findings reportedly relate to issues ranging from procurement violations to asset mismanagement and fraudulent invoicing.

In line with principles of good governance and transparency, the utility has affirmed its commitment to corporate ethics and the rule of law. More broadly, City Power has indicated alignment with national anti-corruption efforts and frameworks. For context on how such frameworks operate, the S outh African Anti-Corruption Strategy outlines key national principles to guide ethical public procurement and institutional accountability.

The company’s leadership has stated its commitment to “corporate integrity and institutional transparency” and emphasized that decisive action will be taken against any employee found to have participated in unethical conduct.

Financial Background and Organizational Risk

City Power’s recent financial performance has further complicated its current crisis. In its most recent audited financial year, the utility posted a staggering operational loss of approximately R2.8 billion. This result contributed to a growing fiscal shortfall that has pushed the company’s liabilities to an estimated R16.3 billion, prompting questions about its long-term sustainability.

Analysts argue that such financial instability may have led to a lax oversight environment, where irregular expenditures and cost overruns became more difficult to monitor effectively. Furthermore, the entity’s high dependency on external service providers for both technical and advisory services is now under reevaluation.

With more than five million residents depending on reliable power supply from City Power, the ramifications of continued dysfunction in the utility’s operations are not merely financial—they are deeply societal.

Historical Patterns and Structural Challenges

The investigation comes at a time when City Power has already been grappling with several long-standing operational issues, including:

Cable theft and vandalism, which cost the utility millions annually in repair and replacement expenses.
Delayed response times to outages, particularly in vulnerable communities.
Inconsistent procurement policies, including irregular short-term tenders and last-minute contract extensions.
Overreliance on external consultants, which has created capacity issues internally and added significant cost burdens to the company’s balance sheet.

City Power has also been subjected to multiple rounds of political and administrative oversight, including inquiries by the Auditor-General and internal risk committees. These previous reviews had already flagged procurement inefficiencies and recommended the strengthening of internal audit capabilities.

However, little progress appears to have been made in implementing structural reforms. With the latest developments, the pressure is mounting for more decisive executive leadership and a full forensic audit into past financial decisions.

Governance and Leadership Under Scrutiny

At the center of the controversy is the current Chief Executive Officer, whose leadership tenure has seen both ambitious reforms and a growing list of controversies. While supporters point to infrastructure modernization efforts and aggressive attempts to reduce energy theft, critics have voiced alarm over bloated consultancy fees, executive decision-making without proper board approval, and an erosion of institutional accountability.

There is increasing speculation that board-level action may be imminent, including potential suspensions or dismissals depending on the outcome of both internal reviews and the ongoing Hawks investigation.

The company’s human resources committee is believed to be reviewing performance contracts and compliance reports dating back two years to determine whether executive accountability measures need to be invoked.

What’s at Stake for the Public

The outcome of this investigation will have deep implications—not just for City Power as an institution, but for Johannesburg’s entire power delivery ecosystem. If systemic weaknesses are identified and go unaddressed, the consequences may include:

Increased electricity tariffs to compensate for lost revenue and cover inflated supplier contracts.
Service disruptions, especially in low-income communities that are already underserved.
Reduced investor confidence, making it harder for City Power to secure funding for infrastructure renewal projects.
Long-term reputational damage to the city’s governance structures and public institutions.

Public trust is already in short supply. Surveys indicate that a growing number of Johannesburg residents view local utilities as inefficient and corrupt. If City Power is to reverse this perception, it will require a clear, transparent response and demonstrable corrective action—soon.

Transparency as a Way Forward

There are now growing calls from within government, civil society, and the business sector for the establishment of an independent oversight panel to examine City Power’s procurement records. Stakeholders argue that such a panel should be empowered to:

Audit procurement contracts from the last five years.
Review supplier relationships and payments made under emergency conditions.
Recommend criminal referrals where wrongdoing is uncovered.
Propose structural reforms to prevent future abuses.

Internally, City Power has pledged to publish summaries of its procurement audits and disciplinary outcomes. However, public interest groups maintain that more needs to be done to rebuild institutional trust.

A Broader Crisis of Procurement Culture

This case reflects a broader national concern about the state of procurement in South Africa’s public institutions. Irregular and wasteful expenditure remains a recurring issue across municipalities, utilities, and state-owned enterprises.

Common features of these problems include:

Lack of competition in bidding processes.
Non-disclosure of conflicts of interest.
Weak contract management, resulting in scope creep and budget overruns.
Delayed disciplinary procedures, often undermined by legal loopholes or union resistance.

Experts believe that solving these problems requires not just legal reforms but also cultural change. This includes better training for procurement officers, clearer accountability chains, and more robust whistleblower protections.

Conclusion

The unfolding investigation into City Power’s procurement practices marks a turning point for accountability in Johannesburg’s public sector. Whether the utility can emerge stronger from this crisis will depend on the integrity of the investigative process, the courage of its leadership, and the vigilance of the public.

The next few months will be critical. As more details surface and as disciplinary outcomes are finalized, stakeholders—ranging from ratepayers to policymakers—will be watching closely. For City Power, this is not just a legal or procedural challenge; it is a test of institutional character and public legitimacy.