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
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.
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.
Mr Kopung Ralikontsane, Head of Department for Cooperative Governance and Traditional Affairs in the
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
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.
The Department requested permission from the National Council of Provinces to continue the interventions in the three municipalities.
Mr A Watson (DA,
Mr Ralikontsane responded that the Thabo Mofutsanyane District head office was situated in Qwa Qwa in the
Mr T Mofokeng (ANC,
Mr A Matila (ANC,
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,
Mr D Bloem (COPE,
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:
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,
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?
Mr 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.
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
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.
- PC Traditional Affairs: Briefing by: The MEC of Free State Department of Cooperative Governance
- SC Traditional Affairs: Briefing by: The MEC of Free State Department of Cooperative Governance
- SC Traditional Affairs: Briefing by: The MEC of Free State Department of Cooperative Governance
- We don't have attendance info for this committee meeting