Section 139 intervention: Thabo Mofutsanyane District, Masilonyana, Nala and Nokeng Municipalities

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Meeting Summary

The Free State provincial department requested permission to continue the interventions in Thabo Mofutsanyane District Municipality, Masilonyana Local Municipality and Nala Local Municipality which were under provincial administration in terms of Section 139(1)(b) of the Constitution.

The Committee was displeased that the province’s report separated the administrators from the politicians. They were incensed that the current MEC had been the mayor of Thabo Mofutsanyane District Municipality during the very period that there were problems. The Committee was of the opinion that the MEC had not taken responsibility for the problems nor had he been accountable. The Committee expressed a lack of confidence in the MEC’s ability to correct the situation, as he had not done so whilst he was still mayor. The Committee was extremely concerned at the fact that the report had serious implications of corruption and yet there were no investigations and no one had been arrested. The report had failed to mention what role the politicians had played in correcting the situation. All three reports were cited for lack of information and were not adopted by the Committee.

Prior to this, the reasons for the interventions were explained. There had been financial maladministration, mass vacancies and ghost workers, they were incapable of providing service delivery; there was a breach of various municipal management systems legislation and one of the municipalities had ceased to function completely. Thabo Mofutsanyane District Municipality experienced serious problems when the Chief Financial Officer and Municipal Manager resigned at the same time. The escalation of debtors had amounted to R129 million in the Masilonyane Municipality. The major issue with the Nala Municipality was that the dismissal of the Municipal Manager had caused a division amongst council members, with some wanting him to return. This rendered it very difficult for the council to convene and cooperate. All three municipalities were found wanting by the Auditor General, they had received disclaimers and qualified opinions at some stage.

The Nokeng Municipality had been put under administration by Gauteng province using Section 139(5)(a). This was because of poor internal control; poor collection of debt, poor cash flow management and risk management. The budget balance was also very poor. The Department had put a team together that was responsible for Financial Management, Risk, Internal Control, Legal, Governance and Institutional Reform. The municipality had received a disclaimer from the Auditor-General for 2006/07 and 2007/08. This had improved slightly to that of a qualified opinion for 2008/09 as a result of the work of the team.

The Committee was satisfied with the provincial report. At least there was an effort from the Department using Section 139(5)(a). It was concerned that the municipality had lost to its Ratepayers Association, which had refused to pay rates to the municipality due to poor service delivery. The Committee was most unhappy about the Mayor who was using a rental vehicle costing R25 000 per month, the illegal use of funds, the poor cash flow, the non-alignment with the Integrated Development Plan plus the overdraft of R8 million.

Meeting report

Mr Kopung Ralikontsane, Head of Department for Cooperative Governance and Traditional Affairs in the Free State, briefed the Committee on the three municipalities under administration in accordance with Section 139 of the Constitution.

Intervention in
Thabo Mofutsanyane District Municipality

The province took over the Thabo Mofutsanyane Municipality on 4 November 2009 and was administering it. In November the MEC (Member of the Executive Committee) had commissioned that the municipalities needed to be assessed to ascertain whether they were able to carry out their responsibilities, deal with governance matters and execute service delivery. The Thabo Mofutsanyane District Municipality was found to have ceased to function completely and was unable to render services to its local municipalities. When the District Municipality was taken over, all of its Section 57 posts were vacant save for the position of Community Services Manager. The Chief Financial Officer and Municipal Manager were both leaving when the municipality was taken over. The council could not make any decisions and the CFO and Municipal Manager were at each other’s throats.

The intervention was urgent and was a necessary step. The Integrated Development Plan (IDP) figures were weak and did not provide a framework for the District Municipality. Reports were difficult to obtain from the District Municipality. The Local Economic Development (LED) status of the municipality was outdated and had not been reviewed. The 2009/10 performance agreements were nowhere to be found, this included the agreement between the executive mayor and the Municipal Manager. The municipality had had to present a report to the MEC according to section 46 of the Municipal Systems Act (MSA); this had not been done. The Performance Management System was not practiced and adopted properly by the council. The IDPs had to be submitted in terms of the law and this had not been done. Out of all the districts in the province, Thabo Mofutsanyane was the only that was still dealing with the Municipal Infrastructural Grant (MIG) for the 2008/09 financial year. R13 million was unspent and contracts had been granted only in October 2009. The Administrator was presently trying to ensure that by March 2010 the grants would have been spent.There
were indications that there was no dedicated Public Participation Officer (PPO), this made the work of the Speaker a challenge. The Department was unable to receive the necessary cooperation from the municipality and especially from the Municipal Manager. The municipality did not even assist in dealing with basic issues or supply information; letters from the Auditor-General were not receiving any attention. The Department had made recommendations to the Provincial Executive to invoke Section 139(1)(b).

The council was currently stabilising and cooperating with the Administrator. The intervention would hopefully end in June 2010. The vacant posts had been advertised. Funds were disbursed in order to stabilise the financial capacity of the municipality.

Intervention in Masilonyana Municipality

Mr Ralikontsane explained that when the Department was compiling its reports in November 2009 it realised that the municipality had come to its knees. The municipality was unable to pay for its staff and third parties. The municipality was unable to collect its revenue and the figure for debtors had escalated to R129 million at the end of 2009. For a reasonably small municipality, the figure of R129 million was a lot. Money owed by the municipality to creditors had escalated to R10 million. The Municipal Finance Management Act (MFMA) could not be complied with as the finances were in disarray and no quarterly reports had been compiled. The Mayor and Municipal Manager were constantly in court defending legal action that had been instituted against the municipality. Spending of the MIG was at 12% whereas the target was 50%, by the time the Department intervened the municipality was in danger of losing the grant. The municipality sought financial assistance from the MEC in accordance to Section 137 of the MFMA. A Performance Management Framework (PMF) had not been adopted. Of the R10 million due to creditors, R4.3 million was for water expenses. The Water Board had threatened to cut off the water supply of the municipality. In 2007/08 the municipality had received a disclaimer from the Auditor-Genral. The Department had stabilised the budget of the municipality, it had also pumped in R4.5 million in the last three months. This was to bring financial integrity, pay staff and enable the municipality to collect from debtors. A team had been brought in to work with the Development Bank of Southern Africa (DBSA) on a Municipal Infrastructural Plan (MIP).

Intervention in Nala Local Municipality

The Department went through a similar process with Nala as critical issues had emanated from the municipality’s inability to perform. The spending of the MIG was at 25% whereas the target was 50%. The Auditor-General found that the financial records were in complete disarray and he could not even access any documents. Basic documentation on expenditure was not produced when requested by the Auditor-General. The municipality had to be summoned to the Provincial Public Accounts Committee. The council suspended the Municipal Manager; this caused a big problem. Some council members felt that the Municipal Manger should be suspended while others did not. This led to the council being unable to convene. The treasury department had insufficient staff. The IDP was not properly co-ordinated and there was not a proper IDP manager. There was no PMF. The Municipal Manager was not getting along with the Mayor of the municipality. Evidence of a prudent financial management system could not be produced. The debtors journal had escalated to R177.4 million and the municipality owed R32 million. The Water Board was owed R12.7 million. The municipality received a disclaimer from the Auditor-General in 2007/08. Since the Provincial Department had taken over the council it was stabilising and all council members were attending meetings. The Municipal Manager had been reinstated so as to engage with him in the process of the forensic investigation.

The Department requested permission from the National Council of Provinces to continue the interventions in the three municipalities.


Mr A Watson (DA, Mpumalanga) asked for the geographical position of the municipalities.

Mr Ralikontsane responded that the Thabo Mofutsanyane District head office was situated in Qwa Qwa in the Eastern Free State. The municipality constituted six other municipalities. Masilonyana’s head office was in Theunissen close to Welkom. It was in the Gold Fields area, this made it a local municipality. The Nala Local Municipality head office was in Bothaville.

Mr T Mofokeng (ANC, Free State) alerted the Committee to the fact that the MEC was previously the executive mayor of Thabo Mofutsanyane District Municipality. For how long had the vacancies existed to the extent that the municipality was rendered to be ineffective? What was the role of the Department in terms of governance and assistance to municipalities before Section 139 was invoked? One assumed that the vacancies did not occur at the same time or were there mass resignations?

Mr A Matila (ANC, Gauteng) added to the point made by Mr Mofokeng. The report did not have details as to what the present situation was like. There was no sense in asking how far the municipalities had come and inquiring about the present situation. Section 139(c) should be invoked thus collapsing the municipalities.

Mr Watson expressed alarm at the fact that the MEC had been the previous executive mayor. The MEC owed the Committee an explanation as what he did to correct the situation before he became an MEC. The problems did not happen rapidly, what did the MEC do to prevent these problems during his tenure.

Mr J Gunda (ID, Northern Cape) said that the MEC could not sit and be proud of what had just been presented to the Committee. Problems like these did not happen overnight, there were serious implications that were contrary to the municipal laws. The annual reports for 2005/06, 2006/07 and 2007/08 had not been adopted by council nor submitted to the MEC as required by legislation. If the present MEC was the mayor before the 2009 elections, he would not be able to sort out this problem now. He was mayor back then and he could not solve it. The people suffering were the ordinary majority who could not receive services because of individuals who did not know their work nor the law. The MEC sat here in this meeting knowing that nothing had been done for the people of the Free State. The Department did not point out exactly what they had done so far. What had the Department done to solve the problem?

Mr D Bloem (COPE, Free State) commented that the vacant posts had not come into existence after the elections but during the MEC’s tenure as the mayor. How many individuals were charged with corruption in the area? Had anyone been arrested for corruption and misused taxpayers funds? The Auditor-General was also to blame, as one could not continue to pump money into a municipality or department where the money had not been accounted for. What were the names of the six other municipalities?

Mr Watson referred to page 10 of the report and asked what had been finalised in terms of the ‘ghost workers’ as per the report, who received the money and had these individuals been charged with corruption?

Mr Matila said that it was important that the Department should take the Committee into its confidence in dealing with this issue. The report was empty. The Department needed to explain to the Committee how far it was, before an oversight visit by the Committee was conducted. The municipalities were useless and should be collapsed. What had the politicians been doing to correct these problems? Lastly, why was the municipal manger brought back since he was useless?

The Chairperson suggested to the Committee that questions should be made according to each municipality in order to correctly capture the recommendations that would be the basis of any decisions taken.

Mr Gunda referred to page 10 and asked how much was left of the balance comprising the R13.5 million figure that was to be spent by 28/02/2010. Would the balance be spent within the time frame, who would benefit and what projects would be initiated using this money?

Mr Mosebenzi Zwane, MEC of the Free State Province, Department for Cooperative Governance and Traditional Affairs, responded by saying that the two local municipalities were not part of the district municipality. The municipalities that fell under the district were: Phumelela Local Municipality, Dihlabeng Municipality, Setsoto Municipality and Nketoana Municipality. There were five municipalities and the district was the sixth one. The appointment to the position of executive mayor was made in 2006 for the Thabo Mofutsanyane District Municipality, not the other municipalities. During the last two years there had been two municipal managers in the district municipality. Some of the municipal managers had left because there was a serious concern at the rate of service delivery by the municipality. Some of the staff contracts had come to an end and it was decided that they would not be renewed due to the state of affairs at the municipality. The council had come to a resolution that a new municipal manager should be appointed as the then incumbent’s contract had not been renewed. The municipal manager who had just left enjoyed working alone, it would take time for the post to be filled. The mayor demanded that the council should see the report. Things were not normal but if one went to the council then one would find that the politicians had taken all the necessary steps.

Mr Ralikontsane added that the vacancies were over a certain period. The CFO and municipal manager had left at the same time and this had resulted in only one manager being available. Attempts to get any cooperation from the municipal manger were futile. The Minister had indicated that provincial governments were expected to render support to municipalities. Invoking Section 139 was a last resort. An organogram between the administration and the council had to be developed. This had happened and the vacancies were advertised and some had already been filled. The municipality was facing a lot of litigation and the Department was handling this now. The Department was working with the Administrator in order to compile the necessary reports according to Section 46 of the MSA; this included the oversight reports. The financial and human resources issues had been reported to both the Department and National Treasury. Information concerning the figure of R13.2 million will be made available later to the Committee. The monitoring process had not been fully dealt with. The main problem that they were grappling with was that staff contracts were coming to an end. The situation was made worse when the municipal manager and CFO resigned at the same time.

The Chairperson commented that the report was essentially a reflection of the administrative officials. There was nothing about the politicians and the political leadership of the council.

Mr Watson said that despite the MEC saying that the politicians did all they could, the report actually contradicted this and one was looking at total failure. The executive functions and obligations were in the hands of the executive mayor and politicians. The report highlighted the failure of the politicians whose stewardship was in the hands of the mayor. The report stated that the executive mayor and the municipal manager had no performance agreement. This task was the mayor’s not the municipal manager. The report also indicated that the politicians who left the running of the municipality to the administrators did not do their work properly. The oversight of the Performance Management System (PMS) was the responsibility of the politicians. The IDP was supposed to be enforced by the politicians. The work of the Department was appreciated, but the fact that the politicians did not do their work must not be sidelined because the mayor at that time was now the MEC. The Committee must acknowledge the fact that the politicians failed.

Mr Mofokeng said that the report would not assist the Committee in coming up with a resolution. It lacked detail. An example of this was the conclusion of the summary background. The summary background had concluded that there was conflict between the municipal manager and the CFO. The real question would be what had caused this conflict, as the two functionaries were separate and distinct. The new appointees should be cautioned in order to avoid such conflicts.

Mr Matila pointed out that the Committee had not been informed about what the Province had done in the form of assistance before 2006 when the problems started to escalate. The Committee had to have details and until that time had come to pass the report was dismissed. The HOD should not play with words and rather provide details.

Mr B Nesi (ANC, Eastern Cape) added that the report was indeed silent. The report only informed the Committee on what the administrators had failed to do, but not the politicians. The fact that posts were advertised was not very convincing. The report missed a lot of information, the Committee needed time frames, and did the municipality have enough capacity? The issue was the ability of the municipality to deliver services and not whether officials were employed or not. The report was misleading.

Mr Gunda concluded that the politicians had failed the people on the ground. When the report concluded that the municipality had failed, this also meant that the elected leaders had failed. A lack of the IDP was an indication of a lack of service delivery. The fact that the report had no details meant that the Committee would dismiss it. The Department had to provide more facts. The Department should not come to the Committee and assume what they should be made aware of; the Committee was there for the people.

Mr Bloem referred to page 9 of the report and read out a paragraph that stated:
Section 46 Municipal Systems Act - The annual performance reports for 2005/06, 2006/07 and 2007/08 had not been adopted by council and not submitted to the MEC as required by legislation. During the period 2006/07 and 2007/08 the MEC was the mayor, he had to respond to this. Page 11 referred to the failure of the submission of reports, this only happened where individuals were trying to hide malpractice. Money could not be injected into a municipality that could not account for funds.

The Chairperson referred to page 4 of the report where it stated that the ‘municipality had ceased to function’. Why was Section 139 invoked only when the municipality had ceased to function? Section 139 had to be reviewed, so that municipalities were given directives by the Department before a takeover of administrative functions. What happened prior to the report? At the level of local government one could not separate the administrators from the politicians, they were two sides of the same coin. The Committee would not adopt the report. The MEC and his delegation had to redraft the report. The Committee would also visit the area and meet with all stakeholders as the municipality belonged to the people. A fact-finding mission would be conducted in order for the Committee to be able to express an informed and evidence-based view in the NCOP House and not just that of the report. The Committee would not go on a witch-hunt but only to try and rebuild the institution.

Mr Zwane, MEC, supported the idea of an oversight visit by the Committee. Resolutions had been taken at the council meetings. One was only as good as one’s administration, decisions that were made had to be implemented, if not then the view would be that you had failed. The report did not seek to paint a picture that the politicians were holier than the administration. The report only sought to inform the Committee of the state of the municipality. If the Committee went to the municipality they would be able to make up their own minds. It was difficult for the Department to get information as the Municipal Manager met them with resistance. The one weakness of the council was that it took time for them to replace the Municipal Manager. The Department had not anticipated that the Committee would need details. Once the municipality had a willing administration, it would begin to find its footing. The deadline of 30 June might be too ambitious. Vacancies were measured in terms of service delivery. The correct level of efficiency would not be reached if the correct managers were not found. Service delivery had collapsed, as there were no managers. The MEC concluded by saying that he was not distancing himself from the problems of the municipality, the needs of the community in terms of service delivery were important hence the invocation of Section 139. His actions therefore were an indication of his willingness to sort out the problems of the municipality. He would carry the blame if he had to.

Mr Bloem asked how many people had been arrested for corruption in the municipality?

Ralikontsane replied that there had not been an investigation yet. The Department was still dealing with the litigation and demand for payment requests. The Auditor-General’s management letter had been analysed for 2008/09. One of the Chief Directors from the Department had been sent to Thabo Mofutsanyane. This was an indication of the Department’s willingness to deal with the matter.

Mr Matila asked how the Department could inform the Committee of ghost workers at the municipality and then say that there was no corruption. Individuals that were not in the employment of the municipality had been paid, how could the Department give the Committee such a response?

Mr Bloem fully supported the oversight visit but also requested that the Committee should initiate a forensic investigation.

Mr Nesi asked how the issue of ghost workers had been finalised and more information was needed. The report should not be adopted as it lacked a lot of information.

Mr Bloem supported the proposal and moved for a non-adoption. The fact-finding mission had to conducted.

Mr Watson asked how the Department could allow the municipality to have debtors owing R129 million and yet creditors were only at R10 million. The figure for the debtors was exorbitant. If the creditors had been paid then the municipality would have R119 million in the bank. Their service would have been the best in the country if only they had collected the debt owed to them. How could the province allow such a small municipality to accumulate so much in debt owed to it? A debt collection system should be put in place.

Mr Matila complained that the question of what the province had done to assist the municipalities had not been answered. The reports for the 3 municipalities would not be adopted until the Committee had more information. What support did the province give to the municipalities? The HOD was avoiding this question.

The Chairperson re-iterated the question raised by Mr Matila and asked if the Committee was closing the matter.

Mr Bloem responded that the Committee was closing the matter.

Mr Ralikontsane responded that he thought that the Department had already highlighted what it had done.

Mr Matila interrupted and called for order in the meeting.

The Chairperson thanked him and asked Mr Ralikontsane to withdraw, as the response should come from the MEC, he should not utter an expression that will cause the atmosphere to be emotional in the meeting.

Mr Ralikontsane withdrew unconditionally and proceeded. The figure for the debtors was increasing because the municipality did not have water meters. The Department applied a flat rate in five towns whilst installing water meters.

Mr Matila interrupted and called for order. He explained to Mr Ralikontsane that the Committee wanted to know what the Department had been doing before the Section 139 interventions.

Mr Ralikontsane responded that the information he had provided was before the Section 139 interventions.

Mr Nesi asked for order and said that the exercise was wasteful as the information had to be in written form. The Department should prepare the information.

The Chairperson asked if the House was in agreement with the request

Mr Bloem responded in the affirmative.

The Chairperson thanked the departmental delegation for its skeleton information. The Committee would only express a view when all the information was available.
The Chairperson thanked him and asked Mr Ralikontsane to withdraw, as the response should come from the MEC, he should not utter an expression that will cause the atmosphere to be emotional in the meeting.

Nokeng Local Municipality: progress report on Section 139(5)(a) intervention

Mr Mongezi Mnyani, acting HOD for the Gauteng Department   of Local Governemnt Housing, introduced himself as well as his colleague Ms Nelisiwe Nlthola, Acting Director in the Gauteng Department of Local Government and Housing. He apologised for the MEC’s absence and informed the Committee that a written apology had already been sent.

The Chairperson expressed his disappointment at the fact that only two members comprised the delegation that was going to brief Parliament.

Mr Matila agreed with the Chairperson and commented that the MEC was accountable to the Committee, not the HOD.

Mr Bloem agreed and asked for reasons why the MEC was not available.

Mr Mnyani replied that when the letter to appear before Parliament arrived the MEC had prior commitments.

The Chairperson said that it was preferable to see the MEC face to face, the Committee should not be taken for a ride but he would allow the presentation.

Mr Mnyani informed the Committee that the Department had initiated a programme whereby the financial capabilities and capacity of all municipalities in Gauteng were being analysed. The billing integrity of many municipalities left a lot to be desired, they did not collect as much as they were supposed to. The Department had to intervene in terms of revenue collection
Mr Mnyani said that the report was based on the progress of Nokeng since it had been placed under provincial administration. The recovery had already been put in place; the team comprised the Gauteng Department of Local Government and Finance. Qualified accountants from South African Institute of Chartered Accountants (SAICA) had been deployed at the municipality. The Department had a long way to go concerning the intervention. The team was responsible for Financial Management, Risk, Internal Control, Legal, Governance and Institutional Reform. These areas were identified as lacking for the municipality. The problems were poor Internal Control; there was poor collection of debt, poor cash flow management. Poor cash flow management resulted in the municipalities being unable to collect revenue and pay its creditors. The budget balance was poor, this meant that the municipality had no idea when and how much it would collect. It was overdrawn by R8.9 million. The cash position of the municipality had been negative for the last two financial years. The municipality had used the MIG for expenditure. This was unacceptable as the grants were meant for specific services. Credit control had not been applied vigorously.

The municipality had received a disclaimer from the Auditor-General for 2006/07 and 2007/08. There was a qualified opinion for 2008/09 which was as a result of the work of the team. There was a non-alignment of the IDP to the budget. The municipality was unable to implement effective credit control measures; this was largely due to the dispute with the Dinokeng and Cullinan Land Owners Association. As a result, assessment rates revenue at 30/01/10 amounted to R56,172,912. There had been a long legal battle with the association. The municipality had lost the case; however it was currently trying to pursue further legal action. The council’s oversight had been insufficient. There were a lot of squabbles amongst the politicians and this had reflected on the officials. The council did not assist the Department in implementing the recovery plan. The Department had tried to do as much as it could from a provincial perspective. The budget adjustment process was underway. It would be presented to the council for approval on 25 February 2010. The new budget was based on the realistic collection of revenue. The Department would ensure that expenditure and unnecessary costs would be cut by 50%. An enhancement of revenue strategy would be implemented. This would increase the revenue of the municipality whilst decreasing money owed to it. The municipality could recover more VAT; the Department was assisting in this matter. It was important to have the correct billing evaluation so that those being billed were being billed correctly. The municipality was engaged in a 50-50-debt write off scheme in order to increase its collection. The top 100 debtors had been identified and the collection team was focusing on them. A plan was being put together to decrease water and electricity losses.

 A cash flow model had been developed which was aimed at constantly reviewing the municipality’s cash flow. The municipality had not made use of this model; expenditure had increased even though there was no money. This was a serious issue for the Department. The Department was reviewing the municipality’s service contracts and was trying to get them out of those where there was no value for money. The Department was trying to settle out of court with the Ratepayers Association. The Department had deployed one of the Deputy Directors General to act as a Municipal Manager because it was of the view that without a core team the decisions made would not be implemented properly. The remaining challenges were lack of cooperation from some managers; this had resulted in delays of plans that were due to be implemented. Therefore the timelines of the recovery plan had to be adjusted.

Mr Watson was not sure if the report informed the Committee on how the financial problems had come about. Two mayoral vehicles were purchased despite the cautions from the opposition parties; this was an Audi A4 and a Mercedes Benz. The Audi was intended for the use of the Speaker, this was totally illegal. The Mayor used the Mercedes and the Speaker used the Audi until they had a disagreement and the Speaker was barred form using the Audi. The Mercedes was written off in an accident and the Mayor had refused to use the Audi as the Speaker had driven it. The Audi was now used for delivery purposes. The municipality was renting a vehicle for the mayor, which cost “R30 000 a month”. The Department had said that it was conducting an investigation yet it had not brought this abnormal situation to the Committee’s attention. Politicians were involved in wilful and illegal expenditures, could the Department explain this misappropriation of funds to the Committee. Had the Department asked for the views of the opposition during their inquiries? Why was there a dispute between the municipality and the Ratepayers Association, how had the Department resolved the matter? Section 139 had no provision for a Department to appoint an acting Municipal Manager, this could only be done by the council. Could the Department explain this?

Mr Matila asked if the presenter had said that the problems started almost 10 years ago.

Mr Gunda asked for an explanation as to what the Department had been doing since the report stated that the municipality had had a cash flow problem for the last two financial periods. What was the Department doing about the non-alignment of the IDP? If the Mayor was driving around in a “R30 000 a month” car then one had to ask who was more important: the officials or the ordinary people? Could the Department show the Committee the poor cash flow of the municipality?

Mr Bloem asked what the Department was doing about the overdrawn R8 million. Could the Department also explain what the municipality did with the funds withdrawn from the unspent Conditional Grants?

Mr Mnyani replied that the illegal use of funds had been picked up by the Department. The measures put in place by the Department would correct this. The team had implemented financial control measures. The Department had asked the municipality to discontinue using the Audi and for an alternative vehicle to be sought for the Mayor. As already mentioned in the presentation, the Department was trying to get the municipality out of such contracts through the expertise of the legal team. The Department had recommended that the Mayor should downgrade and a suitable vehicle could be found within the Department. Hiring a vehicle for R25 000 was a lot of money. A suitable car was being sought via G Fleet.  The Department had formulated what needed to be investigated and an investigative team was being put together. There was no comment on the opinions of other politicians as one did not sit in the chamber. Issues that needed to be raised would be brought to the Mayor and Executive’s attention, as they were the ones who informed the council. The dispute with the Ratepayers Association had been a long-standing one. The appointment of the Municipal Manager was seconded by the Department, which was still paying the salary. The appointment was a council resolution and the incumbent would remain in office until 2011. The debtors list was old, the Department had cleansed it in order to have credible data. The Department had discovered that the IDP alignment was there however the budget was all of a sudden discovered not to be in line with the original alignment. The team was currently working with the IDP unit to correct this. The cash flow was slow as there were individuals who were not skilled working in the municipality. The team was busy training them. The finance division was the first area of intervention. The Department had put it to the Mayor that the entire finance department needed an overhaul starting with the CFO.

Ms Nlthola added that the Department could only do so much, especially since some managers would not come to meetings.

Mr Bloem asked what the politicians were doing?

Mr Nesi agreed and expressed his approval concerning the report. The one concern was that there was a difference in the figures quoted for the mayoral vehicle. The Department said it was R25 000, but Mr Watson said that it was R30 000. The information should have been provided. It was important for the information to be provided up front.

Mr Watson said that there was no transparency on the issue of the vehicle. The politicians had a difficult time extracting information from the executive. It was not necessary for the Mayor to have an alternative vehicle just because the Speaker had driven in the Audi. The overdraft account, which was R1 million and then R9 million, was illegal for a municipality to have. The report of the Auditor General had mentioned that no documents were found as they had been destroyed in a fire. The MMFA required that backups should be kept of all documents. Where were these backups?

Mr Matila asked if there was any confirmation that the problems facing the municipality were older than 10 years. When did the problems start? The DA had controlled the area. It would be easier to know when the problems started so that the information could be extracted from the politicians themselves.  External forces could have influenced the Ratepayers Association. The Ratepayers Association comprised farmers; the rural population was paying for the rates.

Mr Watson responded that the problems went further than ten years. The farmers of the association fought with the DA as well as the ANC. It was not a political fight.

Mr Bloem asked if the Department was going to pay for the accounts, and how was their legitimacy was going to be verified.

Mr Mnyani responded by saying that the interventions were throughout the province. Municipalities did not have credible billing systems. The data for debtors was cleansed so that it could be loaded on the municipality’s system. Outstanding accounts from government departments were identified and payments were duly made to the municipality.

Mr Bloem asked if the municipality did not owe any money?

Ms Nlthola responded that the municipality did owe some money but the creditors list was not as old as that of the debtors. The Department would look at the list of debtors to ascertain whether or not they were able to pay for their other accounts. If so then that person would be encouraged to pay the municipality. The 2008/09 overdraft was approved by the National Treasury.

The Chairperson commented that at least there was an effort from the Department. It had tried to correct the situation using Section 139(5)(a). The issue of the car had to be resolved as well as that of the Ratepayers Association.

The Chairperson adjourned the meeting.


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