Section 139 interventions: Thaba Chweu, Mohokare & Sunday's River Valley Local Municipalities; Xhariep District Municipality

Meeting report

Intervention in Thaba Chweu Municipality Mpumalanga
Mr David Mahlobo, Head of Department: Co-operative Governance and Traditional Affairs, Mpumalanga, extended the apologies of the Member of the Executive Council (MEC) who was unable to attend due to other commitments but had promised to attend future interventions.

Mr Terrence Mokale, Administrator, Thaba Chweu Municipality, provided a progress report of the intervention. Due to corruption, maladministration, nepotism, lack of public participation and the problems with service delivery the relationship between the community and the municipality had deteriorated. The community had handed in a memorandum containing allegations regarding the problems in the municipality.  The Municipality’s failure to respond to the memorandum had lead to civil unrest in the form of violence, the loss of life and the destruction of municipal and councillor’s private properties.

Besides the problem of poor cash flow management, Supply Chain Management and evaluation of properties were also defective. Also an indigent register was lacking, and there were incorrect consumer accounts and incorrect rates.

Corruption was mostly in procurement and nepotism regarding appointments. The corruption involved an alleged theft of R3.2million where an exchange of passwords had occurred, but more than half of this money had been recovered. Disciplinary hearings had been instituted regarding the remainder. The other issues of corruption related to service delivery regarding projects in the community where for example infrastructural projects had not been completed. Communities were also angered by the slow responses to their problems, as they suspected that there were cover-ups taking place. The Municipality had experienced a problem regarding provision in terms of systems of local governance for public representatives. This reflected a gap in policy, but an attempt was being made to deal with it. The Municipality was also unable to pay service providers as the management of cash flow was a serious problem.

In terms of governance, it was reported that ten councillors from the African National Congress (ANC) were recalled, including the Executive Mayor and the Speaker, and this had resulted in the Council not forming a quorum and therefore being unable to sit in Thaba Chweu since September 2009.

A recovery plan had been submitted to the Department on 20 November 2009 and the Municipal Manager has been suspended with disciplinary charges instituted against all officials implicated. The Department was in the process of assisting the Administrator with investigations on additional allegations.

Discussion
Mr A Matila (ANC, Gauteng) said that there was a clear indication that a political problem existed and expressed uncertainty as to how the Municipality could function if this problem was not resolved. Instability was prevalent and clarity was needed on this matter.

Mr Mokale responded that the challenges were political and as an Administrator he could not deal with them. The ANC had dealt with problematic councillors by dismissing them. These councillors had then decided not to resign and therefore technically remained as councillors: this had become a problem. 

Mr Mahlobo said that with regard to the support of councillors, he had called a meeting with them and was shocked to realise that they did not realise the seriousness of this intervention, and continued bickering and arguing about the problems, without seeing that the Municipality had actually collapsed. It was clear that there was no support for councillors and this was reported to the MEC. The community wanted this Council disbanded. A meeting was then called with the councillors and all relevant stakeholders, calling for them to respect the rule of law and create stability. The situation had since calmed down.

Mr T Mofokeng (ANC, Free State) asked for clarity on the alleged theft of R3.2 million.

Mr Mokale said that action was taken on the matter of the R3.2 million.  The Chief Financial Officer (CFO) and the other official involved had been charged, but then the Municipal Manager decided to become a State Witness and took responsibility for the exchange of the pin codes. The case could therefore not proceed. These charges had been subsequently reinstated.

Mr D Bloem (COPE, Free State) asked for an explanation about the amount of money that was already recovered of the missing R3.2 million, how this money was recovered, and if any action was taken against those people who were responsible for the loss.

Mr Mahlobo explained that with regard to the R3.2million, the CFO had take leave during Easter, and in this period an official had called him to say that there was a payment outstanding. The CFO told the official that because he was not at work, the official could proceed with the payment as he had authorisation, and he would double check it. The official then told the CFO that he too was not at work but the Internal Auditor was available. The CFO then gave his pin code to the official to give to the Internal Auditor, and asked the official to give his own pin code to the Internal Auditor as well. The Internal Auditor then had two pin codes and within two hours R3.2 million disappeared. It was discovered that a syndicate existed, which opened accounts all over Pretoria and Mpumalanga, and siphoned off the money. The Banks had queried these transactions and realised that a scam was being carried out and managed to recoup about R2.3 million.  The CFO and the officials involved were on suspension and the possibility existed to lay criminal charges against them. 

Mr Bloem asked why the Council was not disbanded and taken over by the Provincial Executive because it was not a functional body, and why was Section 139(a) not implemented. This situation involved the tax payers’ money.

Mr Mokale responded that disbanding the Council was not an easy decision to make because it was a political decision. Most of the protests were about removing councillors or the Mayor under the guise of service delivery problems. The demand to remove councillors was not the responsibility of the MEC for CGTA, unless there were real grounds in terms of misconduct and an investigation would have to be done in terms of Section 106. Dissolving the Council was an option that has been considered. Communities were so well connected and making unreasonable demands. The situation had calmed down. Interactions with communities had been very useful.  

Mr Matila said that he was not convinced from what was said that the situation had stabilised. He asked the Department to indicate its fall-back position.

Mr Matila asked how long the problem of people being paid salaries while on suspension would remain with Council, as it seemed to be a general problem in Government that people on suspension for long periods were being paid and wasting the taxpayers’ money.

Mr Mokala said that these individuals have to be subject to the law, and better and faster ways needed to be found to deal with these situations, because municipalities had to provide services even when people were on suspension. These decisions did come at a cost sometimes, but the Department was hoping to conclude investigations as soon as possible.

Mr J Bekker (DA, Western Cape) said that a distinction should be made between the responsibility of government and the responsibility of a political party. It appeared that most of the problems in the Municipality were political.

The Chairperson asked for more information about the Councillor who had refused to resign, and if it was a Ward Councillor or a Political Representative (PR).

Mr Mahlobo responded that it was a combination of the two, as there were five Ward Councillors and two PR Councillors. The other three had resigned.

The Chairperson noted that it was then a party issue.

Mr Mokale agreed with the Chairperson and said that it was a party matter, because the Councillor would have to resign voluntarily. The party could recall someone, but if the person chose not to resign, then technically, in term of the law, that person remained a Councillor.

The Chairperson said that parties should not hold the Government to ransom, and if a party matter was at stake then the Minister should take it up.

The Chairperson emphasised legislative compliance as Parliament required, and discouraged the use of certain technical issues which caused confusion. The Minister should do as Parliament instructed, the Administrator should comply with the law and Councillors should not have any discretion in executing the management of the Council.  With regard to Councillors who have been dismissed or have resigned, their salary payments should be discontinued.

Terminations of the intervention in terms of Section 139(1) (b) in the Xharieb District Municipality and the Mohokare Local Municipality in the Free State
The Chairperson stated that the briefings on the Xharieb District Municipality and Mohokare Local Municipality of the Free State had changed to Terminations of the Intervention in terms of Section 139(1)(b) of the Constitution. The meeting would therefore merely ascertain if there had been compliance in terms of the requirements.

Mr Mosebenzi Zwane, MEC, Corporate Governance, Traditional Affairs and Human Settlements, Free State, said that all that needed to be reported was that the Executive Committee (EXCO) approved the termination of the Section 139(1)(b) intervention in Xharieb on 28 May 2008, and had also approved the intervention in Mohokare on 14 May 2008. What necessitated this level was captured in the Report and would not be discussed in this meeting. Progress had been achieved by changing the systems in Xharieb Municipality by dealing with corruption and the by-passing of systems. Participation was ensured in Mohokare as the Council there failed to meet to execute the day-to-day running of the Municipality.

Discussion

Mr Matila asked for clarity how the two municipalities had progressed so far.

Mr Zwane said that the issue of financial constraints was a problem with most of the small municipalities.

Mr L Nzimande (ANC, KwaZulu-Natal) said that it was interesting that the MEC had chosen an entourage of EXCO members.

Mr B Nesi (ANC, Eastern Cape) said he was comfortable with the report.

Report on Municipal performance for the year 2007/08 in the Eastern Cape
The Chairperson said that the Department of Local Government and Traditional Affairs, Eastern Cape, would present the report of the Municipal performance for the financial year 2007/2008 and the Notice of intervention in terms of Section 139(1)(b) of the Constitution in Sunday’s River Valley Local Municipality.

Mr Sicelo Gqobana, MEC, Local Government and Traditional Affairs, Eastern Cape, expressed appreciation for the opportunity to provide an update on performance, and said that a decision had been taken to monitor the municipalities and ensure they that they were on course in terms of fulfilling responsibilities.

Mr M Mangcotywa, Deputy Director-General, Department of Local Government and Traditional Affairs, Eastern Cape, stated that when comparing the report of 2007/2008 with the report of 2006/2007, there had been a slight improvement of nine percent in the submission of reports, in that 44 reports out of a total of 45 were submitted. In terms of authenticity of reports, 30 were signed by both the Municipal Manager and the Mayor. The reporting format used to guide Municipalities was had undergone thorough review in workshops and had promoted uniformity in following the guidelines of the Department.

Five Key Performance Indicators were used to assess institutional transformation and organisational development: the vacancy rate for all approved posts; the filling of Section 57 positions; Performance Management Systems; the percentage of staff with disabilities; the percentage of female staff and the percentage of staff aged 35 years or younger. There was an 85% improvement in the vacancy rate for all approved posts. A Performance Management System was developed and adopted by the Council but only 11% of municipalities met the expected standard. There was at least two percent of staff with disabilities against the total staff complement.

Most municipalities had made progress with regard to the delivery of basic services in 2007/08. The best performing municipalities were all in the urban areas and therefore support regarding local economic development was focussed on the rural municipalities. Nelson Mandela Bay Municipality, Amathole and Alfred Nzo District Municipalities were the best performing municipalities. With regard to good governance and public participation, all Ward Committees were established and fully functional, while only 26% of them met the expected standards. No municipality met the expected standard with regard to Intergovernmental Relations Policy. The worst performing Districts were OR Tambo and Ukhahlamba districts.

The challenges in the process of municipal performance assessment included the late submission of reports by municipalities to the Department; lack of co-operation by some municipalities regarding preliminary assessment feedback; the lack of uniformity in the reporting format; and that some reports were not signed by either the Mayor or Municipal Manager.

Discussion
Mr Nesi said that a serious problem existed with regard to Community Development Workers (CDW), and asked if an example of a report was available from CDWs that could be used in other areas to show how best to access services. 

Mr Matila asked for an update on the situation in the province to see if there were improvements in the municipalities.

Mr Mangcotywa said that there were some areas that had improved dramatically in terms of compliance, reporting and audits. 18 municipalities had improved in terms of audits.

Mr Matile expressed concern about basic services and asked if there were improvements in this regard.

Mr Gqobana said that in terms of a hierarchy of accessibility of basic services, the Eastern Cape was second to Limpopo. One of the reasons that the management of electricity was not doing well was because in some instances Eskom and the municipality provided electricity; hence there were different service providers and different service level agreements. There were also problems with service operators for water as they did not all have the capacity to deliver water. Steps had been taken in the province to ensure that each municipality had water tanks to alleviate the problem.

The Chairperson expressed difficulty in engaging with the Report, as it was a 2007/2008 Report, which was supposed to have been engaged with by Committees in that period. This Report had therefore been dealt with before in many ways. The Reports for 2009/2010 would have allowed for more robust engagement as Parliament had adopted a new strategy to deal with these reports, and all the questions had already been asked for the 2007/2008. The Chairperson proposed that this report be adopted.

Intervention in the Sunday’s River Valley Local Municipality Eastern Cape
Mr Gqobana reported that the Sunday’s River Valley Local Municipality had been ravaged by political and administrative instability, financial mismanagement and service delivery protests. The political instability prevalent had caused serious divisions in the Council and paralysed decision-making. The suspension and dismissal of the Municipal Manager had exacerbated divisions in the council, as these divisions played themselves out at the community level; and this issue dominated council meetings. Opposing resolutions on this matter had thwarted the earlier intervention by the MEC to appoint an Administrator. Serious protests had taken place in Addo and Paterson, which had rendered Paterson inaccessible to the Mayor. There was no clarity on who the accounting officer of the municipality was.

Ms Vuyo Zitumane, Sunday’s River Administrator, reported that one of the biggest challenges for the Municipality was the non-payment for services. Currently the debt of the Municipality was R65 million, and 80% of the R65 million debt was for rates and excluded a number of properties that were not in the billing system for this jurisdiction. The collection rate was at 40% and hence the Municipality was not surviving financially. A shocking revelation was that the Municipality had been subsidising the community on electricity for the past five years. In the budget and treasury department, there has been no CFO for the past eight months as she had been suspended. There was a serious crisis with regard to financial management capacity. Records have been missing in the institution and there has been a series of disclaimers because auditing of the Department was not possible. There was a serious misunderstanding in terms of the role of Councillors, as there were no rules because they were outdated. All Councillors had been subsequently trained on the new rules. The structure of the whole organisation has been reviewed to ensure alignment with the IDP. The focus was now on infrastructure and finance where serious challenges existed. One of the most significant challenges with regard to governance was around the audit environment as there were no risk management plans in place. There were no internal audit procedures and looting was prevalent in the Municipality.

Mr Matila asked what the purpose of the CFO’s suspension was.

Mr Gqobana responded that at the time when the Municipal Manager was reinstated politically, he demanded to be paid the money he alleged was owing to him at the time of the dismissal. The CFO refused to sign anything that had not been approved by a Council decision, and this was the reason for her suspension as charges were then put regarding her insubordination.  A new CFO was appointed who then agreed to sign for the money owed.

Mr M Mokgobi (ANC, Limpopo) asked how much money was owed to the Municipal Manager.

Mr Gqobana said that initially the Municipal Manager had said that R3 million and when the attention of the political party who had reinstated him, was drawn to this matter, the amount was reduced to approximately R100 000.

Mr Mokgobi asked what had happened to those who had misused the funds.

Ms Zitumane said that there were two investigations currently underway and these were close to completion. The disciplinary processes were going to be dealt with internally and if criminal elements existed the law would be allowed to take its course.

Mr Gqobana added that the Special Investigations Unit has been commissioned to investigate all those allegations and other issues regarding the remuneration of councillors.

Mr Matila asked how staff were being paid currently.

Ms Zitumane responded that currently an equitable share received was being used, and also from funds that were collected from rates and services.

Mr Gqobana said that R1.3 million had been paid to Eskom who had threatened to cut off electricity. Discussion were also taking place with other service providers who were owed money, to attempt to establish a uniform way forward.

Mr Mokgobi asked how the political and administrative interface was doing and if councillors were forthcoming in their interactions with the community.

Ms Zitumane said that currently it was safe to say that relations were relatively good, but the same could not be said for other Section 57 managers.

Mr Nesi referred to the violent service delivery protests, which called for Councillors and Mayors to vacate their portfolios. What were the demands in these violent protests and were these protests related to service delivery or were they political problems?

Mr Gqobana responded that there were two dominant problems. The one was political and the other was related to corruption. The undertones regarding corruption were that there were local businesses that had expectations of access to tenders. Some councillors were implicated in the housing projects and had their own companies who were receiving tenders to which the local businesses were objecting. Hence a protest resulted at Sunday’s River. The Department of Housing, Eastern Cape, had instituted a forensic audit, which revealed that certain councillors owned companies that had received tenders. The Department of Local Government and Traditional Affairs, Eastern Cape, had declared that it had no business dealing with councillors of certain political parties, because the political parties should deal with the issues. Political interference was creating instability in the administration across the province.

Mr Mokgobi asked if housing was the function of the Municipality and if there was a budget around which the Province could adjudicate to detect problems in good time.

Mr Gqobana responded that the problems were detected a long time ago when the Department was attempting to move into the situation, and for a year this municipality was allowed not to sit because of the political cynicism that had developed.
 
Mr Mokgobi asked about the status of Intergovernmental Relations (IGR) regarding the co-ordination of premiers, and how often did meetings take place to enable the timely detection of some of the problems before they became serious.

Mr Gqobana said that the IGR met quarterly.

The Chairperson recommended that a comprehensive report should be drafted to simplify matters to allow the Committee to engage constructively when doing oversight work. It was further recommended that the Department engage with the Provincial Executive to ensure that councillors were not operating above the law. Administrators should realise that the law had given them executive powers and these powers should not be used humbly, Councillors must just comply.

The meeting was adjourned.