REPORT ON THE INTERVENTION OF OUDTSHOORN LOCAL MUNICIPALITY
Local Government and Administration Select Committee
11 September 2007


A delegation of the Select Committee on Local Government and Administration consisting of Mr S Shiceka, Mr N Mack, Mr L Fielding and Mr M Mzizi conducted a visit to the Oudtshoorn Municipality in the Western Cape on the 03 - 04 September 2007.

Section 139(2) (b) (ii) of the Constitution says that the Council disapproves the intervention within 180 days after the intervention began or by the end of that period if it has not approved the intervention.

Delegates conducted meetings with relevant stakeholders, including the Councilors, Administrator, the Management Team, Municipal employees, the Ward Committees, the business community and organised labour.

Background to the intervention
In terms of Section 106 of the Municipal Systems Act, the Provincial Minister responsible for Local Government (MEC), realized that the Oudtshoorn municipality did not fulfill its statutory obligation and that there was maladministration, fraud, corruption and some other serious malpractices in the municipality. The MEC for Local Government and Housing, Mr R Dyantyi, instituted an investigation in the Oudtshoorn municipality after receiving a number of complaints. In terms of section 106 of the Municipal Systems Act, a commission was appointed. It consisted of Adv Joey Moses, and Mr Meko Magida with Mr Desmond Grootboom as secretary.

Terms of Reference
The Commission’s Terms of Reference was to investigate:
allegations of instances of maladministration
non-compliance with statutory obligations
and serious malpractice.

The outcome of the investigation was detailed in a report released on 2 March 2007.

Matters arising from the Briefing by the MEC on the 19 June 2007
The alleged offences were ascribed to political instability and inexperienced political leadership. There were also instances of dereliction of duty, breaches of statutory prescriptions and administrative deficiencies. The general findings of the commission were that there were internal strife and conflict in the Municipal Council and within the administration. There was also an acute and destructive sense of distrust permeating the political and administrative structures of the Oudtshoorn Municipality.
The commission concluded that the situation was serious and that the municipality was in crisis. It was therefore suggested that sections 105 and 106 of the Municipal Systems Act, 2000, read with section 139 of the Constitution, provided the legislative framework to address the crisis situation.
Based on the findings of the commission, the provincial cabinet intervened in terms of section 139 of the Constitution. Section 139 provides for provincial supervision of local government. The result was that the executive powers of the Oudtshoorn Council and all the powers of the Municipal Manager were revoked, and that such powers were vested with an Administrator (Mr. Louis Scheepers) under the supervision of the Provincial Executive. The Council was however not dissolved, but councillors were retained as ordinary members in an advisory capacity to the Administrator.

The purpose of section 139 was to assist municipalities to become sustainable and self-sufficient. The intervention was to last for six months and commenced on the 19 March 2007. At the commencement of the intervention there was an initial threat of legal action against the department, but it did not materialise. Due to the enormous administrative challenges facing the municipality, it was necessary to perform a thorough diagnostic exercise by way of a management audit. It pointed the way for a well thought through and credible recovery program to be devised.
Even though the intervention was only to last for six months, the recovery program would have to go beyond this timeframe in order to be sustainable. The municipality was unable to fund the recovery program on its own. Funding was sourced from the municipality itself, Eden District Municipality, Provincial Government, the Development Bank of SA and Ilima Trust.

Administrator’s Assessment
The initial high level assessment by the Administrator indicated that the problems were actually more severe than initially thought.
Some of his findings indicated that:
Crucial policies, procedures and processes were non-existent in the municipality;
There was a high vacancy rate in the senior management echelon;
The organisational structure was not based on proven best practice models;
There was a lack of ability, experience and knowledge throughout the administration;
The municipality was not able to meet the requirements of ensuring that draft budgets were adopted 90 days before the new financial year;
The CFO and Head of Expenditure positions were vacant for a long time, which meant that the municipality operated without Senior Financial Managers;
The Head of Planning resigned and the position has been vacant since 1 May 2007;
Outstanding debts grew from ± R32 million to ± R50 million in past two years;
Current recovery rate at 84%, predicted to be well below 80% at end of year;
The Head of Housing position was declared redundant by Council in 2006. The Housing section currently only has 1 permanent official (on long- term sick leave) and 1 temporary official;
The municipality does not have the ability to perform the housing function with this current scenario.
The above are just a few examples, as identified by the Administrator, of the administrative challenges facing the municipality. In order to devise a well thought through and credible Recovery Program it was necessary for the Administrator to perform a thorough diagnostic exercise through a management audit.

Diagnostic Exercise
The challenges that the management audit addressed include:
A dysfunctional organizational structure;
A general lack of adequate and acceptable processes, procedures and systems;
A lack of implementation of Batho Pele principles in the interaction of especially the administration with the community;
High vacancy rate amongst the senior posts of the municipality;
An unsustainable budget;
Payment rate of 84%, resulting in an unexpected income shortfall of R24 million at the end of the 2006 / 7 financial year;
Inability to meet the statutory requirements in respect of the tabling of the draft budget ninety days before the beginning of the financial year;
Complaints by the environmental health officers of the Eden District Municipality that the Oudtshoorn municipality was discharging raw effluent into the Olifants River;
Suspicion about the adequacy of the bulk infrastructure of the municipality;
Chaos and disarray in respect of the planning and implementation of human settlement projects;
Insufficient capacity and inability to deal with the town planning functions of the municipality and its negative impact on the financial sustainability of the municipality;
A general lack of managerial responsibilities;
The absence of policies required in terms of legislation;
A gap between the skills, experience, qualifications and abilities of some officials and what is required of them;
Lack of readiness to comply with GAMAP/ GRAP; and
Distrust between different sectors of the community.
The Administrator did an audit of the total administration of the municipality to determine the nature of administrative deficiencies in the municipality. He noted that “No doubt exists that the municipality was mismanaged to the extent that it is now faced with serious difficulties that will require time, money and skills to resolve, both in the administration as well as the political terrain. The functioning of corporate and financial services have collapsed to such an extent that these services cannot be turned around without external intervention and assistance.”

Recovery Program
The Administrator drafted a Recovery Program that is based on a strategy and planning exercise that is: sustainable, measurable, attainable, resourced and time-framed. Although the intervention ends in September, the Recovery Program will go beyond this date to ensure that it is sustainable.
The purpose of the S139 intervention is to assist a municipality to become a sustainable and self-sufficient local government, able to:
Perform the functions assigned to it by the Constitution and other legislation efficiently and effectively;
Involve people in their own governance through structures such as ward committees and other community participation mechanisms;
Has the ability to raise the revenue due to it;
Provide a safe net of free basic services to ensure that the poorest of the poor have access to the minimum level of service;
Make sure that all its actions have human wellbeing, economic success and ecological responsibility as their aim;
Ensure that short-term actions are aligned with medium- to long-term planning.
The Administrator concluded that the municipality does not possess the financial ability to fund the recovery process on its own and will need funding from the Eden District Municipality, Provincial Government, Development Bank of Southern Africa and the Ilima Trust.

Meeting with Councilors, the Municipal Manager and the Administrator
The Municipal Manager noted that Council had a session in which councillors were requested to work together as a collective and to show respect to one another. The municipality is working on putting the necessary legislation and policy frameworks in place to ensure that the Recovery Plan is achieved. The municipality is currently working on finalizing the budget as well as the IDP. Staff have been trained on service values to ensure that communities get services delivered and are treated equally.
The Administrator highlighted the fact that there was political instability before, and that relations between councilors and the community were strained. There is however political stability now and councillors pledged to keep this positive momentum going. A co-ordinating committee, represented by a representative of each party was formed, to function as an intermediary between the council and the administrator. This allowed councillors to work together and it was not based on party lines. The Municipal Manager and two outstanding Section 57 managers were appointed recently and Council was unanimous in the selection process. The Oudtshoorn municipality will request assistance from stakeholders to assist in building capacity. Ward committees have been constituted and should be brought on par to assist councillors in servicing communities.

There were thirteen (13) councillors present from the political organizations in the area i.e. Independent Democrats, Democratic Alliance, African National Congress and the newly-formed National Peoples Party. They admitted that problems in the municipality were due to in-fighting in the Council. According to them, the administration did not function and there were no policies in place in the municipality. Part of the problem was that 17 of the councillors were new and needed time to adapt to their roles in council.
Councillors agreed that the co-ordinating committee that was formed by the Administrator had the desired effect, as they were then forced to work together for the betterment of the community and not for their individual ideologies. They were also taken on a workshop on 15-16 August 2007 where training was provided and the roles and responsibilities clarified. They are currently working on ensuring that the Recovery Plan and Management of the municipality can run in parallel.
Councillors indicated that they owe the Oudtshoorn community an apology for mistakes that were made by them. Within the community there are some concerns around full integration and the fact that huge pieces of land still do not belong to the majority of people in Oudtshoorn. Job creation should be given urgent attention, as a large portion of the community was unemployed.
Councillors had two views on the intervention:
They supported the intervention by the Province and reiterated that the intervention brought normality but should now be revoked.
That the administrator stay on to assist the newly-elected municipal manager by finalizing the outstanding issues and allowing the municipal manager and elected / appointed people to continue with the day-to-day running of the municipality.

Observation by Members
Councillors should ensure that they work for the betterment of the community and should refrain from going back to their errant ways;
Communication should be improved and regular feedback sessions should be held with communities to ensure that they participate fully;
The committee would consult various stakeholders to ensure that the municipality is assisted financially to complete the Recovery Program;
Now that appointments have been made there should be stability in the municipality and councillors should ensure that they play a positive role;
The municipality should receive some assistance from the province to deal with the backlogs and outstanding issues that were identified and allow the new leadership to carry on with service delivery.

Meeting with the Municipal Manager, other managers and the Unions (IMATU and SACTWU)
The Municipal Manager and his team reported on their challenges and current state of affairs. It should be noted that the Municipal Manager has only been in the post for a month and the corporate services manager only resumed duty on 03 September 2007.
The Municipal Manager gathered facts and evidence during his first week to ascertain the status of the municipality and whether policies were in place. A workshop was then organized to create a corporate identity for the municipality, as well as amplifying the vision and values of the municipality. Work was also done to establish a Councillor Charter. The outcome of the meeting was that people pledged to work together to turn things around in the municipality.
A committee was established to ensure that some projects were still on par. Some policies are there, but it seems as if the execution of them is problematic. Currently there are no service delivery budget implementation plan and performance agreements, but this is receiving getting attention.
Financial statements for 2005 / 06 were not handed over to the Auditor-General as council did not have the benefit of working through them. The Municipal Manager indicated that financial statements would be handed over after ensuring that they met requirements. Council agreed to this.
The current human resource structure of the municipality is heavily loaded and skewed, and will have to be addressed by a number of interventions that the municipality is considering. The municipality is almost complete with filling the senior managers and middle managers vacancies. The municipality made offers for the Head of Expenditure and Financial Office Support positions and is awaiting a response from the candidates. The Municipal Manager indicated that the offers were made to females to get representivity in the higher echelons.

Current Challenges
Some policies are absent and with the appointment of the corporate manager this issue can now get attention;
The municipality is working on ensuring that the Supply Chain Management Policy is in line with the MFMA and that the necessary reporting structures are in place;
There is no anti-corruption strategy, but this will get attention;
The audit committee is not functioning as it should and there is no risk profile to ensure good corporate governance;
There are some backlogs in water and electricity provision and about 200 bucket systems are still in use;
The roads are in a reasonable condition, but might not be up to standard. Maintenance of roads was neglected, but the challenge is to balance building new roads and doing maintenance within a tight budget;
the municipality’s financial system is not operating as it should and thus a manual system is used;
The post of Financial Officer and Head of Expenditure have been vacant for ± 10 months;
There is a lack of procedural manuals / guides and internal control measures with regard to finances.
The municipality did indicate that most of these challenges are being addressed and that they are receiving assistance from the Eden District municipality, the Ilima Trust and the Development Bank of Southern Africa (DBSA).
Both IMATU and SAMWU reported that they have become involved in the municipality after the Labour Forum was established. There was no Recognition Agreement before the intervention. The unions were part of the structuring of the municipality, but they felt that more should be done to bring disabled people on board. They expressed a view that the Administrator should stay on to deal with the outstanding challenges, and that the new Municipal Manager should then focus on the future.

Observation by delegates
The Local Economic Development (LED) should get special focus so as to allow the broadening of the tax-base of the municipality.
It is imperative that performance agreements are signed with all managers.
The town planning capacity needs to be beefed up.
Departments should consult with the municipality to ensure that their plans are part of the municipality’s IDP.

Meeting with Staff of the municipality
Staff of the municipality raised the following concerns:
The Municipality must look at its Employment Equity Plans and ensure that people with a long service history are able to be assessed and promoted. Currently there are no performance evaluations done;
Since the intervention projects have been brought to an end;
It was difficult to employ people whilst the intervention was happening;
Workers are unable to do their work effectively as they are required to work with defective equipment. The process of getting tools is cumbersome and delays workers in completing their work;
Some people that acted in positions were still acting whilst permanent appointments were made;
Workers complained that they are on standby but that the allowance is not sufficient. They are called late in the evenings and then need to get to the sites without transport being provided. They are provided with raincoats of a poor quality;
They requested that the salary gaps between general workers and managers should be looked at;
some workers complained that they have been on contract for some time, without knowing that they will become permanent;
The community hall in Bongalethu is dilapidated. Money has been set aside by the province, but no maintenance has been done;
There is no computer system in the Dysseldorf library and manual processes are used.
The workers were of the opinion that things have stabilized in the municipality and that the Administrator should focus on the Recovery Plan whilst the new management continues with the day-to-day running of the municipality.

Observation by the delegates
The Municipal Manager should ensure that women are empowered and that they are represented at all levels in the municipality;
Any person that victimizes people should be dealt with;
Regular meetings should happen between managers and workers;
Junior staff should be involved when senior managers’ performances are assessed;
The committee will raise the concern around the houses with the MEC for Local Government and Housing;
The Municipal Manager was tasked to deal with the human resource issues that were raised.

Meeting with Ward Committees and other stakeholders
The ward committees and other stakeholders reported as follows:
There was political and administrative instability before, but the administration brought some normality;
The Youth Development Forum noted that youth development did not benefit from the intervention. They requested that youth development should get more attention;
The Municipal Manager was requested not to get involved with politics and to focus his energy on building the municipality and the community;
Oudtshoorn has many tourist attractions, but it is not used optimally by the municipality and people are not getting enough opportunities in tourism;
Most people in Oudtshoorn are unemployed and jobs should be created through the Expanded Public Works Program (EPWP);
Officials who were allegedly corrupt should be brought to book;
Training should be provided to municipal staff for them to deal with the community more effectively;
The community to be informed of the findings of the Moses Commission, the PriceWaterhouse report and the NCOP report.
The overwhelming view was that the intervention should be revoked and that the Administrator should remain in an advisory capacity to assist the municipality to deal with the outstanding issues. There was a strong feeling that the new leadership should be allowed to govern.

Observation by delegates
The appointments of the senior leadership should bring stability to the municipality, especially since there was a thorough selection process involving competency testing;
the municipality does not have sufficient finances to deal with all its challenges, but this matter will be taken forward by the committee;
service delivery should continue and people of Oudtshoorn should feel part of the area and not live in silo’s;
ward committees and community development workers should be trained to assist councillors. Offices should be created where these structures can meet and do their work;
the community should be patient as they have huge challenges that cannot be addressed all at once, considering the municipality’s financial constraints.

Recommendations
Based on the information gathered during the fact-finding mission, the Select Committee of Local Government and Administration is of the opinion that the intervention was necessary and supports the steps taken by the Province.
The MEC should however ensure that assistance is given to the Municipality in terms of section 154 (1) of the Constitution, which states that “the national government and provincial governments, by legislative and other measures, must support and strengthen the capacity of municipalities to manage their own affairs, to exercise their powers and perform their functions.”
Funding should be sourced from the Eden District Municipality, Provincial Government etc. to ensure that the municipality is able to implement its Recovery Program.
Capacitation of ward committees in the form of training, financial support and office infrastructure.
Intensive training is required for councillors.
The Local Economic Development (LED) and Growth Development Strategy needs to be developed and all spheres of government have to play a role. Therefore the MEC should convene a meeting with all concerned departments, nationally, provincially as well as the district municipality, focusing on the DPLG profiling exercise of economic nodes.
The MEC should ensure that national, provincial department and state- owned enterprises participate in the development of the IDP.
The Municipal Manager should ensure that women are empowered and that they are represented at all levels of the municipality, and when vacancies arise, first preference should be given to internal potential candidates.
Regular meetings should happen between managers and workers.
The Municipal Manager should deal with the human resource issues that were raised.
The MEC should decisively deal with all the housing issues in and around the municipality

Report to be considered