REPORT
OF THE SELECT COMMITTEE ON CO-OPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON INTERVENTION
IN
1. Background
and Overview
1.1 The
Select Committee on Co-operative Governance and Traditional Affairs, having considered the request made by the National Council of
Provinces (NCOP) on 03 November 2010 to consider and report on the intervention
notice invoked in terms of section 139 (1)(b) of the Constitution at Msunduzi Local
Municipality by the KwaZulu-Natal Provincial Executive Council (PEC), reports
as follows:
1.2 The Office of the
Chairperson of the NCOP referred the notice of intervention in the affairs of
2. Purpose and Objectives
2.1 The main objectives
of the oversight visit was to determine whether procedural requirements had
been met and to verify whether the PEC
had used its discretion appropriately, before the Committee could recommend
approval/disapproval of the intervention to the NCOP. Through the deliberations and interaction with internal and external
stakeholders, the Committee wanted to determine how the PEC was intending to
restore the fulfilment of the relevant obligations and ensure fulfilment in the
long term. The aim was to ensure intergovernmental checks and balances aimed at
guarding the integrity and efficiency of the intervention process.
3. Delegation
3.1 The delegation of the Committee was composed
of the following Members of Parliament and Officials: Hon MH Mokgobi, Limpopo
(ANC); Hon AG Matila, Gauteng (ANC); Hon TMH Mofokeng, Free State (ANC); Hon A
Watson, Mpumalanga (DA); Mr NA Mfuku, Content Adviser (Committee Section); Mr
MC Mbebe, Procedural Officer (NCOP); Ms V Makubalo, Stand-in Committee
Secretary (Committee Section) and Ms A Nkwandla, Administration Assistant
(Committee Section).
4.
Introduction
4.1
On 22 October 2010, the
KwaZulu-Natal MEC for Co-operative Governance and Traditional Affairs tabled a
notice of intervention in
5. Problems Identified by the Provincial Executive
Council (PEC)
5.1 On
06 October 2010, the Executive Council of the
5.2
The PEC has authorised
the MEC for Co-operative Governance and Traditional Affairs to approach the
Chairperson of South African Local Government Association (SALGA) to release Mr
Johann Mettler, a local government expert employed by SALGA, for appointment as
the Administrator of the
6. Appointment and Functions of the
Administrator
6.1 The
Administrator, amongst other functional responsibilities, was appointed to undertake
the following functions:
·
devise a turn-around strategy
for the
·
ratify all decisions taken by
Municipal Manager and Managers reporting to the Municipal Manager in terms of
delegated or original authority;
·
ensure implementation of
Council resolutions and the administration;
·
implement a system to control
and approve all expenditure recommended by the intervention support team;
·
implement all governance
systems and procedures including appropriate councillor-oversight mechanisms;
·
ensure implementation of
financial systems, policies and procedures; and
·
approve a strategy for
addressing the municipality’s financial problems, including a strategy for
reducing unnecessary expenditure and increasing the collection revenue.
7.
Oversight Visit to
7.1
On
09 November 2010 the delegation of the Committee had interactive and robust
engagements with the internal and external stakeholders of the Municipality. The
main internal stakeholders the delegation interacted with in the Municipality included
the Speaker, Executive Mayor, Chief Whip, Councillors, Ward Committee Members,
Administrator and the representatives of the South African Local Government
Association (SALGA). The main external stakeholders the delegation interacted with
included members of the community, the business forum and non-governmental
organizations.
8. Presentation by the MEC for
Co-operative Governance and Traditional Affairs
8.1 The
MEC indicated that the report of the Auditor-General
reflected major problems in finances of the Municipality, in which the
Municipal Council has condoned irregular, fruitless and wasteful expenditure.
This was evident from the Auditor-General's report on the 2008/09 financial
year. The Municipal Council has dismally failed to exercise an oversight role
over the municipality's administration. Despite several interventions by the
Provincial Department, it has gone from one disaster to another.
8.2 In providing
support, the MEC has sent three experts, two accountants and an auditor to look
at the expenditure and supply chain management of the Municipality. The
deployed financial experts have reported that there was a lack of co-operation
from certain Senior Managers of the Municipality who have issued instructions
to staff not to provide urgently required information, on the basis of which a
comprehensive financial recovery plan would be developed. Following this lack
of co-operation, the provincial government was forced to introduce tougher
measures. However, significant progress has been recorded and all the
allegations of corruption are being pursued.
8.3 For the purpose of this report, the
submissions made by both internal and external stakeholders are structured on
the basis of the key strategic performance areas of the Local Government Strategic
Agenda which are: Municipal Transformation; Basic Service Delivery; Municipal
Financial Viability and Management, as well as Good Governance and Public
Participation.
(A).
Municipal Transformation and
Organisational Development
8.4 Municipal Council: It was appealed that the Provincial
Intervention Team (PIT), which was appointed to assist in turning around the
financial crisis of the Municipality and to develop an overall business plan,
should not be removed, as there are still huge challenges ahead. There has been
a lot of infighting amongst politicians. The municipal workers were not
discharging their work appropriately, as people who were not qualified were
appointed. Furthermore, the Municipal Management has misled the Council in
terms of their reports.
8.5 The
Office of the Premier has set a new unit to expedite cases of investigations in
the Province’s municipalities. The Municipality will engage with the Office of
the Premier to take advantage of this new unit. Mr Mike Tarr, the current City
Mayor, has since resigned from the Legislature to serve as the Mayor.
8.6 Administrator: The Administrator reported that the current political
structure of Msunduzi was not supportive of overall corporate governance. As a
result, a structure that will be embrace performance-based outcomes of all
strategies has been implemented. The senior staff members that were alleged to be involved in fraud and
corruption have been suspended, with civil and criminal charges pursued against
them. However, certain current positions cannot be filled as a result of
outstanding prosecutions.
8.7 Organised
Labour: Both the South African Municipal Workers
(B). Basic Service Delivery
8.8 Municipal Council: Basic service delivery had deteriorated to a
state of almost non-existence. However, this has been re-established to a
semblance close to normality. It must be noted, however, that there is still
some way to go before service delivery is fully functional and operational on
an ongoing basis. It was reported that the sudden termination of the service
delivery systems and processes would result in a disintegration of the efforts
of the PIT, as the hand-over process to the relevant municipal officials was
far from complete.
8.9 Administrator:
In terms of infrastructure
development and strategy, there were challenges on the poor running of fleet
management. In rectifying this challenge, maintenance plans and tracking systems
have been introduced to ensure vehicle availability. In terms of commercial and
industrial waste collection, a new waste collection process was introduced in
order to enhance waste collection. A process has been implemented that
addresses water distribution and sanitation management, which was previously
inadequate. Although 30 000
units for housing have been delivered since 1994, there are still challenges of a high demand
for housing, shortage of skilled staff, missing beneficiaries and illegal occupation
of units.
8.10 Ward Committees: There are high levels
of unaccounted water losses in Msunduzi. The consumers, especially the poor,
were paying for the loss of water at the reservoir. It was reported that water
and electricity readers were not monitored, with rates being estimated.
8.11 Pietermaritzburg Chamber of Business: Waste
management was an unmitigated disaster in the Municipality, as management has
yielded its authority to the workers. The airport almost lost its licence,
because the Council had prevaricated over the question of who should manage the
facility. The Chamber was in support of the intervention continuing, because,
if the process was ended prematurely, serious flaws would remain, and it would
only be a matter of time before the Municipality found itself in deep distress
again.
8.12 Built Environment Support Group: The
Municipality is faced with a chronic backlog in housing delivery and access to
basic services. The Support Group has provided support to communities, who were
evicted 14 years ago, to go to a transit area that is still awaiting
development. Another 1 200 households had to share two standpipes while their
eviction was on hold, because no land could be found for them. The Support
Group acknowledged the progress made by the Administrator and PIT in the short
term in saving the City from bankruptcy.
(C). Municipal
Financial Viability and Management
8.13 Municipal Council: The finances of the
Municipality reflected a net surplus of R58 million for the first quarter of
the 2010/11 financial year, taking into consideration a deficit of R522 million
in the 2009/10 financial year. However, the turnaround must be maintained and
well managed by ongoing adoption of stringent financial controls, until the end
of the current financial year. The control measures introduced by the
Administrator have to be maintained to ensure continuity of the positive trend.
In cases where capacity reflects a challenge, local FET colleges should be
engaged in this regard to provide training.
8.14 Administrator: It was reported that
apart from redesigning processes and implementing certain policies and
procedures by the PIT, the following ongoing issues were still a major
challenge confronting the Municipality:
·
cost containment
across the board;
·
revenue enhancement processes;
·
management accounting;
·
performance management
processes; and
·
risk analysis.
8.15 On cash flow, projections were showing
signs of recovery, as is reflected by a positive cash flow position of R18, 4
million by the end of October 2010, and an expected upward movement of R3
million at the end of November 2010. However, this requires diligent monitoring
to keep the cash flow status in the positive. Furthermore, there is a need for
staff training in management accounting, since this is a specialised section
where all transactions and operating performance are tracked, traced and
analysed. It stands to reason that if this function is aborted and/or does not
get the attention it desperately needs, it will come to a standstill.
(D). Good Governance and Public Participation
8.16
Built Environment Support Group: The Support Group reported that the largest
single problem in keeping the ratepayers and the public on board with the
turnaround measures, has been the lack of communication and public
participation. Public engagement has been non-existent, and the IDP/Budget
process held on 27 June 2010 was reduced to a single, poorly publicised
meeting.
8.17 Ward
Committees: The Ward Committees reported their dissatisfaction with resource
allocation for their activities, since there was no budget for ward committees.
9.
Committee Observations and Opinion
9.1
Where Municipal staff
members have been implicated in cases of fraud and corruption, the Hawks should
be brought in for the successful prosecution of those cases. This matter should
be speeded up.
9.2
The approach on
forensic investigation should be suspended as, in most cases, it does not lead
to immediate arrests. The Hawks should be approached instead, since there was
no time for complacency in the fight against crime, and the Hawks would leave
"no stone unturned" in fighting organised crime.
9.3
It was observed that
some Councillors were irresponsible and not disciplined, since 70 Councillors
should have been present during the meeting, but less than 50% were present.
This raised questions of the seriousness in their commitment in providing
leadership to the Municipality. The Mayor and Chief Whip should summon those absent
Councillors, in order to understand the reasons for their absence.
9.4
The
Committee is of the opinion that the lack of support and oversight by the
Msunduzi Council points to the failure to provide an enabling framework to
build the institutional strength and functionality of municipalities.
9.5
There are capacity
constraints in the Municipality, especially with regards to financial
accounting and management. This matter needs urgent address, otherwise all
efforts to stabilise the Municipality will fail, with the real possibility of
reverting to a worse situation than the Municipality was in at the commencement
of the intervention.
10. Recommendations
10.1 Having conducted the oversight visit to Msunduzi
Local Municipality and interacted with all relevant stakeholders, the Select
Committee on Co-operative Governance and Traditional Affairs recommends as
follows:
10.1.1
The
NCOP approves the intervention in terms of section 139 (1)(b) of the
Constitution in Msunduzi Local Municipality for a period of six months.
10.1.2
The
Minister for Co-operative Governance and Traditional Affairs should approach
the Hawks to pursue criminal investigation in all cases of financial
irregularities and fraud in Msunduzi Local Municipality, as a matter of urgency. A progress report in this regard should be
forwarded to the NCOP within one month.
10.1.3
The
Administrator should fast-track the process of appointing skilled personnel, in
order to facilitate the transfer of skills and to ensure continuity and
stability.
10.1.4
The
KwaZulu-Natal MEC for Co-operative Governance and Traditional Affairs should table
quarterly progress reports to the NCOP and the Provincial Legislature on the
status of the intervention in the Municipality, including the challenges
encountered.
Report to be considered.