Report of the Select Committee on Local Government and Administration on oversight visit to Qaukeni Local Municipality, dated 28 June 2004:
The Local Government and Administration Select Committee conducted an oversight visit to the Qaukeni Local Municipality in the Eastern Cape from 19 to 22 June 2004, as part of the oversight and review function accorded to the National Council of Provinces by section 139(2)(c) of the Constitution. This section requires that, while an intervention is continuing, the NCOP must review the intervention regularly and may make any appropriate recommendations to the provincial Executive. The Select Committee delegation comprised of the following delegates:
_ Hon. S Shiceka, leader of the delegation.
_ Hon. B Dlulane.
_ Hon. B Mkhaliphi.
_ Hon. A Moseki.
_ Hon. Z Ntuli.
Having held discussions at the Municipality with the Strategic Support Team and stakeholders, the Select Committee reports as follows:
1. Terms of the intervention The Qaukeni Local Municipality has been mired in an ongoing political dispute that the conflicting parties have attempted to resolve by means of court action. The resultant political and administrative instability led to the Eastern Cape provincial executive launching an intervention in the Municipality in terms of section 139(1)(b) of the Constitution on 30 December 2003. The provincial executive was attempting, through the intervention, to restore peace and stability, as well as the continued provision of service delivery within the Municipality. The Council was
suspended with effect from December 2003, and an Administrator was appointed in the place of the Council. The Mayor and Speaker are presently suspended. The intervention was approved by the NCOP in February 2004.
The provincial Department of Housing, Local Government and Traditional Affairs initiated various actions at political, strategic and operational level in an attempt to restore order in the Municipality. At the political level the Department developed a support programme in terms of section 154 of the Constitution. At strategic level, the Member of the Executive Council (MEC) for Local Government and Housing suspended the Municipal Council and appointed an administrator. A Strategic Support Team was established to assist the administrator. At an operational level, the Administrator suspended the Municipal Manager and appointed an Acting
Municipal Manager.
The Strategic Support Team includes the Administrator, Mr R. Sodo, who, heads the Strategic Component as well as Adv. G Visagie (Special Investigative Unit). The Political Component includes Mayor Z Capa, the Executive Mayor of OR Tambo District Municipality and the Operational Component is headed by the Acting Municipal Manager, Mr Gashi.
The intervention by the provincial government has been focusing on four key areas:
_ Conducting the IDP review process.
_ Redesigning the Municipality organogram.
_ Implementing an Information Technology system.
_ Improving financial management systems and the provision of mentorship programmes.In each of these areas there has been considerable progress since the commencement of the intervention. However, concern was expressed that the province continually recalls members of the Strategic Support Team, which affects the work of the Acting Municipal Manager. The Manager has had to buy in support from the OR Tambo District Municipality. Other Managers of the Qaukeni Municipality have failed to co-operate with the acting Municipal Manager.
2. Visit to the Qaukeni Municipality During its engagement with stakeholders the Select Committee sought to verify the findings presented in the report to the NCOP by the MEC for Housing, Local Government and Traditional Affairs on the progress made on administrative and legal issues since the intervention, for the period ending 31 March 2004.
During this visit meetings were held with various stakeholders, which included the Executive Mayor (OR Tambo District Municipality), the Strategic Support Team (led by the Administrator), Traditional Leaders, 25 ward committees, representatives of organised labour as well as members of the organised business community and the South African National Civics Organisation (SANCO). The Committee noted the following issues during the course of these meetings:
2.1. Political instability The political instability in the Municipality appears to stem from the unclear demarcation between governance and political processes in the Qaukeni Local Municipality.Affected councillors have exploited loopholes and the absence of policies in the Municipality. Tax payers money is being
sapped by legal fees due to prolonged court action. In some cases money is being recovered but there are no penalties instituted where the funds cannot be recovered. Concern was raised about the theft and destruction of documents from the Municipality’s offices after the commencement of the intervention.
Councillors were permitted to sit on the Municipality’s tender committee and this often resulted in contracts being awarded to family and acquaintances of Councillors. There were many complaints from service providers about the manner in which contracts were awarded and the tender procedures followed. A problem was raised about the lack of mechanisms to verify that tender contracts were completed. Although the District Municipality tried to push for a verification process it was forced to pay the service providers due to demands for payment.
The Acting Municipal Manager will disband the tender committee with effect from 1 July 2004. In future, Councillors will no longer be allowed to sit on the tender committee so that the committee can be beyond reproach. In addition, there was no system to institute punitive measures for non-performance by contractors.
2.2. The financial state of the Municipality The Qaukeni Local Municipality has a very low revenue base and grants from other stakeholders have boosted the Municipality. The fact that the Municipality resulted from the amalgamation of four entities provided a challenge. Two of these entities, the Lusikisiki Transitional Regional
Council and the Flagstaff Transitional Regional Council, had their own problems. In 1996-97, for instance, financial statements could not be prepared for the Municipality due to a lack of documentation and relevant statements.
Prior to the intervention there was severe financial mismanagement in the Municipality. There were allegations that the equitable share was being used for capital works and not in the provision of basic services, for instance. The Municipality has no free basic services policy in place. Capacity for financial management remains poor. Although the Mayor’s powers in respect of financial delegations are now made clear in the Municipal Finance Management Act, the capacity of the Chief Financial Officer (CFO) remains inadequate. The CFO has also been implicated in a criminal matter and will certainly face a disciplinary hearing. A letter of suspension has been served on the CFO through the Sheriff, citing four charges.
The Municipality had lost most of the money that it should have recovered on VAT. However, a substantial amount will be recovered by the Special Investigative Unit from companies who claimed VAT but that are not registered for this purpose.
National Treasury has classified Qaukeni as a low capacity Municipality and the Acting Municipal Manager has acknowledged that the Municipality is not ready to comply with all the requirements of the MFMA.
The former Mayor, former Speaker and four Exco members are required to repay money which they were overpaid for about eighteen months. Summons have been issued to recover these substantial amounts.
2.3 Investigations by the Special Investigative Unit In its Interim Report, the SIU noted that substantial recoveries have been made including amounts for VAT. However, the exact amount is not clear because the money was not lost due to pure theft and fraud but in many cases due to maladministration. The acts investigated therefore, often fall short of criminal misconduct, falling under mismanagement and irregular conduct instead. This is particularly so in the area of tender processes.
Often successful tenderers do not have the capacity to execute the work. Or tenders are sold to non-qualifying contractors, which is contrary to the National Procurement Framework. Fronting has also become common. There are often close links between councillors and successful tenderers. The SIU will also make recommendations on a new tender policy and process for the Municipality.
Maladministration is wider than ‘‘bribery’’ and, although it may include criminal conduct, where such criminal conduct cannot be proved, it is easier to prove a charge of maladministration. For instance, with respect to tenders, there is often insufficient evidence to secure a criminal conviction, but it could be proven that there was no compliance with procedures and legislation. The process becomes more difficult where contracts have already been awarded and the work completed.
Criminal acts are referred to the South African Police Services and prosecuted by the NDPP. At the same time the SIU is pushing forward the internal disciplinary hearings. It was noted that the SAPS is not part of the operational team.
2.4. Service delivery The OR Tambo District Municipality expressed satisfaction with the present levels of service delivery in Qaukeni. Since the District Municipality shares its powers with the Qaukeni Local Municipality, this has allowed the projects run by the District Municipality in the area to continue. Large areas are now being serviced and there appears to be real opportunities for job creation in communities. In addition, there are now five schools in the area.
In terms of local economic development, the Executive Mayor argued that it must cut across municipalities, districts and wards. The Mayor’s view is that LED projects are either of an income generating or of a subsistence nature, for instance, providing food security. Once food security has been secured, the focus can shift to income generating projects, which in turn must be linked to the Provincial Growth and Development Strategy. OR Tambo District Municipality is a water service provider and has found itself overwhelmed by water needs and a lack of funding to meet these needs. AlthoughDWAF could only provide an allocation of R30 million for water provision, the Municipality has undertaken not to compromise service delivery in spite of the lack of funding.
2.5. Integrated Development Plan review and the Budget There were certain inherent difficulties in the Administrator having to interface with the public during the IDP review process. The Mayor and the Speaker were therefore reintroduced and they led the process of consulting with the wards.
The Municipality’s IDP has had to be completely redrafted as the previous IDP was largely inadequate. It is believed that the IDP is now ready to go through a public review process. Existing projects were reviewed during this process to assess whether they are all still viable.
In its meetings with stakeholders the Select Committee sought to establish, firstly, whether the process of reviewing the IDP was consultative.
Secondly, whether steps can be taken to fast track the delivery programmes envisaged by the IDP.
During the consultative stage of the IDP review process meetings were held with 23 out of 25 wards. Reasons were given for the lack of consultation with the two wards. These include the fact that, as a richer ward, the one does not attend meetings and that the second ward belongs to the ousted Speaker, who is difficult to work with. In addition, presentations were made to Community Based Organisations (CBOs) and communities in Lusikisiki, although the meetings were not always well attended.
All stakeholders, with the exception of the two wards agreed that they were fully consulted during the IDP review. However, complaints were expressed about service projects being awarded but the money not being provided for in the budget as well as the slow implementation of projects.
Ward committees raised problems with the lack of resources available for travelling within their wards, as their areas are vast. The funding needs of ward committees therefore need to be considered.
The Municipality has faced time constraints during this review process. The budgetary process was put on hold while the IDP was being reviewed. When the OR Tambo District Municipality requested the original budget of the Qaukeni Municipality, it was discovered that the budget was drafted by an external service provider. Benchmarking is therefore problematic because it is the first time the Municipality goes through a budget process. There was no relationship between the previous budgets and service delivery initiatives. Officials are not of the calibre and are without the skills or capacity to draft the Council budget.
The drafting of the current budget was not driven by the Chief Financial Officer at all. The Acting Municipal Manager prepared a budget that was considered by EXCO on 11 June 2004 and was well received. The draft budget has emanated from the IDP.
The Municipal Council met on 25 June 2004 and approved the revised IDP and budget.
On 9 June the Municipality’s 2003/03 financial statements were taken before Council and the 2003/04 statements must go before the Council in July. An external consultant has been brought in to achieve this deadline.
2.6. Human Resources There are no employment and performance management contracts for Municipal employees. It has been recognised that the performance management of staff should emanate from a performance management system of the Municipality as an institution.
There was no policy in place prohibiting Councillors from participating on interview panels. This resulted in acquaintances of Councillors being appointed at the Municipality. Employees were brought in to support the Mayor and the Speaker. Members of COSATU and SAMWU argued that staff members were not treated fairly and equally and were often subjected to harassment. There was no organogram in place and the structure of the institution was not consistent with the constitutional obligations of the Municipality. There was a violation of Treasury principles that only a certain percentage of the budget may be spent on salaries.
The redesign of the Municipality’s organisational structure has been inclusive but staff members are concerned about job losses. The redesign of the organogram should be followed by a placement process but it is unclear how this will be executed. It is important to place people correctly within the institution so that the objectives of the intervention can be sustained. Procedures to dismiss employees were not correct and this has had huge cost implications. There were no policies in this regard and these employees have had to be reinstated. Since the start of the intervention 17 HR policies have been drafted and put in place. A process for reviewing staff job descriptions has begun, with the co-operation of employees. All staff members should be regularly addressed by the Administrator and Acting Municipal Manager in order to allay their fears as well as mobilise staff to follow the programmes of the Municipality.
2.7. Capacity building The capacity of Councillors, especially in respect of financial management, must be addressed. Progress has been made with mentorship programmes especially around financial management and the OR Tambo Municipallity is a key partner in this regard. The Municipality also needs stronger political management especially as related to the conduct of some Councillors.
2.8 The attack on the Administrator An attempt on the life of the Administrator, Mr Sodo, took place on 24 March 2004 while he was in his vehicle driving to Kokstad. The former Municipal Manager was, allegedly, involved in the attempted murder. On the 5 May the former Municipal Manager was meant to appear at a
disciplinary hearing, which he has delayed numerous times. However, it is imperative that he appears before a disciplinary hearing before the Administrator completes his work. After this murder attempt, money was requested from the provincial government to provide security for the
Administrator and the Acting Municipal Manager.
3. Continuation of the intervention All stakeholders represented in the meetings, including the Traditional Leaders,Ward Councillors and representatives of organised labour and the business community agreed that the intervention was necessary and supported the continuation of the intervention. They were positive about the interim results but noted that many issues and problems still needed to be addressed by the Administrator. It was strongly felt that Councillors or officials who are guilty of any irregularities should be charged by a court of law.
The Executive Mayor of OR Tambo District Municipality argued that the dissolution of the Council should not be an option as the dissolution would leave a vacuum and punish the residents of Qaukeni. The Executive Mayor noted that a request should have been made to the MEC for an extension of the deadline for submitting the budget.
It was also suggested that there may be a need to reshuffle the Exco and possibly confer executive powers on the Mayor.
It was widely acknowledged that the dissolution of the Council and new elections will be costly. Stakeholders were concerned about the sustenance of the intervention after the withdrawal of the Administrator and his team. The NCOP supports the phasing out of the intervention, including the
re-instatement of the Mayor and Speaker.
4. Challenges ahead: _ To design a performance management system for the Municipality.
_ To do a spatial development assessment.
_ To address the ill discipline of certain Councillors.
_ Progress is being hindered by a lack of action against those alleged to have misused Municipal funds in spite of the fact that sufficient information and evidence has been gathered.
_ One of the major areas to be addressed is political discipline, which, for instance, would do away with the need for legal action to recover money from Councillors. Proper political direction
must be given to Council.
_ The court case challenging the MEC, Minister and NCOP on the suspension of Councillors is ongoing but needs to be speedily resolved.
_ Co-ordination of all spheres of government in relation to service delivery in the whole region, but particularly the eastern part.
_ Proper and adequate utilisation of the opportunity created by the declaration of the developmental node by the President.
_ Sustaining the gains achieved during the intervention.
5. Recommendations of the Select Committee The Select Committee is satisfied that the intervention has started the process of resuscitating the Qaukeni Local Municipality and restoring mandated levels of service delivery and local economic development. Staff placement should be finalised as a matter of urgency. Staff training and capacity building programmes should be put in place in anticipation of the termination of the intervention.
The Committee therefore agrees that the intervention in the Qaukeni Municipality by the Eastern Cape Government should continue.
Further:
_ That the Office of the MEC continues to submit reports to the NCOP, at least on a monthly basis, to enable the Council to monitor the intervention regularly. These monthly reports should
focus on the terms of reference for the intervention, the areas of concern raised in the forensic investigation report as well as the NCOP recommendations.
_ That the community, in particular ward committees, be included in the intervention process through regular interaction with the Mayor and Speaker as well as the representatives of the Strategic Support Team.
_ The MEC should ensure that members of the Strategic Support Team, particularly staff seconded from the Department of Housing, Local Government and Traditional Affairs, should
prioritise their deployment at the Qaukeni Local Municipality.
_ Appropriate disciplinary action should be taken against individuals who undermine the Administrator, the Acting Municipal Manager and their team.
_ Service delivery needs to be co-ordinated with all spheres of government in Qaukeni, particularly the eastern part.
_ The OR Tambo District Municipality should continue monitoring the consolidation and sustenance of the intervention until the next local government elections, particularly after the pulling out of the team.
_ The Council management should regularly hold staff meetings with all employees.
_ The law must take its course against all those who have embezzled Council funds.
_ In future, multi-disciplinary investigative teams should include SAPS and the National Prosecuting Authority.
_ In future provincial interventions in a Category C municipality, the District/Category B municipality should be taken on board during the initial stages of the process.
_ The province should seriously consider changing the Executive Committee into an Executive Mayoral System.’’.