Thabo Mofutsanyana District Municipality, and Masilonyana, Nala, and Naledi Local Municipalities; progress report by Free State Province Department of Cooperative Governance and Traditional Affairs

Committee: NCOP Co-operative Governance and Traditional Affairs

Chairperson: Mr M Mokgobi (ANC, Limpopo)

Date of Meeting: 26 Jul 2010

Summary

The Department of Cooperative Governance and Traditional Affairs, Free State Province, briefed the Committee on interventions implemented in terms of Section 139(1) (b) and 139(1) (c) of the Constitution in the Thabo Mofutsanyana District Municipality; the Masilonyana Local Municipality; the Nala Local Municipality; and the Naledi Local Municipality.  The Thabo Mofutsanyana District Municipality had ceased to function effectively as a district municipality to render services to its local municipalities. The Masilonyana Local Municipality’s overall financial management was in disarray. It was unable to pay salaries of personnel and third parties, and had incurred debts escalating to R129m at the end of October 2009. At Nala Local Municipality the Auditor-General had been unable to access documentation for audit purposes. At Naledi Local Municipality an administrator had been appointed until a new council had been declared elected by the Independent Electoral Commission. The Department reported on progress.  

 

Members felt strongly that the briefing did not provide enough detail. Members wanted to know what actions had been taken against individuals guilty of fraud and other criminal offences. Specifics were what Members expected. Members felt that the Department’s responses seemed to provide more information than the briefing itself. Another concern was that the interventions were suggested towards the end of 2009 and yet six to seven months later the progress made seemed delayed. Members found the briefing to be unacceptable, asked the Department to return in a week or two with a more comprehensive briefing providing more specific detail, and noted that the Committee’s oversight duty covered every aspect.

 

 


Minutes

The Department of Cooperative Governance and Traditional Affairs, Free State Province, briefed the Committee on Interventions implemented in terms of Section 139(1) (b) and 139(1) (c) of the Constitution in the Thabo Mofutsanyana District Municipality; the Masilonyana Local Municipality; the Nala Local Municipality; and the Naledi Local Municipality. A special report on the status quo of municipalities had been made available to the MEC for Cooperative Governance, Traditional Affairs and Human Settlements at the beginning of November 2009.  In the absence of the Mr Mosebenzi Zwane, Member of the Executive Council (MEC), on account of illness; the Department’s delegation was led by Mr Kopung Ralikontsane, Head of Department, who undertook the briefing and responded to Members’ questions.


Thabo Mofutsanyana District Municipality intervention, 04 November 2009
The report submitted to the MEC had highlighted challenges at the Thabo Mofutsanyana District Municipality. From the contents of this report, it was evident that the Municipality had ceased to function effectively as a district municipality to render services to its local municipalities; and most of its Section 57 posts were vacant. It did not attend to current municipal financial and other administrative challenges experienced. The council was failing to execute obligations due to the failure of the Municipality to function properly. Conflict existed between the then Municipal Manager and the Chief Financial Officer (CFO). Progress since the intervention was that the annual performance report for 2008/2009 had been finalised and tabled before a Council sitting. The Service Delivery and Budget Implementation Plan for the 2008/2009 and 2009/2010 was in place. It was expected that the performance management system would be implemented as soon as the other four Section 57 managers had been appointed. The Municipal Manager had already been appointed. The Integrated Development Plan (IDP) and Budget Process Plan for the period 2010/11 to 2012/2013 had been developed and adopted during the sitting of the Special Council Meeting. Progress on service delivery was reported (slide 7). Progress on financial management and visibility was reported; a service provider under the “Operation Clean Audit Project” implemented by the Department of Cooperative Governance and Traditional Affairs (COGTA) was assisting the Municipality to address all past audit queries after having drawn up a financial recovery plan. The Municipality was currently carrying out this recovery plan in an attempt to obtain a clean audit report within the next three years (slide 9). The Municipality had begun to comply with the provision of Section 71 of the Municipal Finance Management Act (slide 9). Progress on good governance and public participation was reported (slide 11). The Department was fast-tracking the appointment of Section 57 managers as interviews had already been held in the last week for Corporate Manager and the Chief Financial Officer; there was a possibility of withdrawing the intervention by the end of August 2010 (slide 14).   


The Masilonyana Local Municipality intervention, 08 December 2009
The overall financial management of the Municipality was in disarray given the inability of the Municipality to pay salaries of personnel and third parties. The inability to collect revenue had resulted in debts escalating to R129m as at the end of October 2009. The Municipality had never complied with the Municipal Systems Act by submitting Section 46 reports for two consecutive years. There was a failure to develop and adopt a performance management framework to regulate the performance of staff.  Progress to date was that the Municipality had through the support of the District developed a Performance Management System Policy and hence compiled Section 46 reports for 2006/07, 2007/08 and 2008/09. Budget and Integrated Development Plan (IDP) consultations had taken place with stakeholders. Together with all relevant policies the Budget and IDP had been approved. It was believed that the intervention might continue up until 31 December 2010.

Nala Local Municipality intervention, 08 December 2009
The Municipality had never complied with the Municipal Systems Act by submitting Section 46 reports for two consecutive years. There was also a failure to develop and adopt a Performance Management Framework to regulate the performance of staff. The Municipality was also unable to spend the Municipal Infrastructure Grant funds as it was supposed to. The overall financial management of the Municipality was in disarray given the inability of the Auditor General to access documentation for audit purposes. The Municipal Manager had been recently suspended and a non-Section 57 manager had been appointed as Acting Municipal Manager. Progress to date was that the Municipality had developed annual reports for 2006/07, 2007/08 providing an account on the municipal performance for those years under review. The Municipality had adopted its Integrated Development Plan and corresponding Service Delivery and Budget Implementation Plan for 2009/10 financial year. An employee had been appointed to act as IDP manager whilst the placement process was unfolding. Placements were at 95%.


Naledi Local Municipality intervention, 05 May 2010
On the 5 May 2010 the Executive Committee intervened in the Municipality by dissolving the Council in terms of Section 139(1) (c) of the Constitution. An administrator had been appointed until a new council had been declared elected by the Independent Electoral Commission (IEC). Progress to date was that it was clear that the Administrator had full responsibility to unite employees and give direction so that service delivery was not compromised. Certain staff Members had either been suspended or put on special leave and a charge sheet had been issued and dates of hearings had been set. An audit committee had been appointed. The Motheo District Municipality’s audit committee had been made available to the Municipality.

Discussion
Mr A Watson (DA, Mpumalanga) referred to page 42 of the  presentation and stated that the numbers of seats held by the ANC, DA and COPE in the new Council differed when the hard copy of the briefing was compared to the electronic version. He stated that there had been a Municipal Manager who had acted as a Chief Financial Officer as well. When he was placed on leave what position had he been filling at the time? The Committee had recommended that the individual concerned should have criminal charges brought against him for cheque fraud. Had it been done? There had also been allegations that municipal staff were checking in for work in the mornings and thereafter going home. He asked if the allegations had been investigated and whether action had been taken.

Mr Ralikontsane said that the figures expressed in the electronic version of the presentation were in fact correct. He stressed that it was not in the interest of the Department to be seen to be covering up crime. Investigations should be factual and the Department acted on it as such. The Municipal Manager being referred to was the CFO before he was appointed as Municipal Manager.


Mr A Matila (ANC, Gauteng) stated that the interventions had been suggested in December 2009. Recommendations had also been made by the National Council of Provinces (NCOP). It was currently July 2010. What had happened in the meantime? The Committee had asked the Department to take criminal steps in Nala Municipality. Why had it not been done? What was the delay in implementing a forensic investigation?

Mr Matila also pointed out that in Thabo Mofutsonyana District Municipality there was a great deal of maladministration. There was no report back from the Department on the recommendations that the Committee had made in this regard. What had happened to date? The community in the area had made accusations against the MEC. An investigation should have taken place urgently. The briefing document did not say much. It did not speak to what actions had taken place thus far. It spoke more about what had still to be done. Seven months had passed since the interventions had been put in place. What was the delay in taking action? The delay gave the impression that the provincial Government was covering up for the misdeeds that had had taken place. Guilty parties were still receiving full salaries. The Briefing Report was not good enough.

Mr T Mofokeng (ANC, Free State) stated that the alleged crooks had to prove their innocence in a court of law. He asked what the relationship was between the Thabo Mofutsanyana Municipality and Podbielski Mhlambi Inc. What type of contract existed between the two?   

Mr Watson said that the Briefing Report gave an impression that there was a cover up.

Mr Matila said that workers at Nala Municipality wished to engage in protest marches because of non-action on the part of the Department. Concern was raised that the Committee was given different explanations at different points in time. He was sceptical of the report-back given to the Committee.

The Chairperson, referring to Thabo Mofutsanyane Municipality, said that the Committee had asked for an investigation into its Municipal Manager for fraud and corruption. What had happened? More detail was needed. What assurances did the Committee have that actions would be taken? It was concerning given that six to seven months had already passed with not much action having been taken. The Department needed to explain. The Briefing Report did not say much and could be seen as window dressing. The case in Nala Municipality regarding cheque fraud was open and shut. A police docket should have been opened. What was the delay? Why was a forensic audit by the Auditor General still required?  

The Chairperson asked how the interventions in terms of Section 139 of the Constitution could be allowed to continue beyond what was allowed without an application being made. The period for interventions was six months. He was not aware that the interventions were going to continue beyond what was allowed. The briefing by the Department should have been a closure report in terms of what had been achieved by the interventions for the period that they were in place. The Department should consider reviewing its briefing report. Much detail was lacking. Cover ups should not take place because of political allegiances. This did not however necessarily mean that a cover up was taking place. A comprehensive report was what the Committee needed. The Chairperson suggested that the Committee not accept the Briefing Report in its current form.

Mr Ralikontsane accepted the various views raised by the Committee. The Department had considered its brief and had reported on matters that it could report on. The comments by the Committee were noted.


Referring to the Nala Municipality Municipal Manager and the cheque fraud issue, it was agreed that the Administrator would open up a case with the South African Police Service (SAPS). It had been done. Mr Ralikontsane noted that it was a case of Government.


Mr Ralikontsane said that the process of the Department was a forensic investigation of the three municipalities. The first step in the process was a scoping report. Afterwards a forensic investigation would take place. The Department had a scoping report that was compiled by KPMG. The scoping report had been forwarded to National Department. He stated that there were various matters of financial misadministration in Thabo Mofutsanyana Municipality. The National Department had to continue with a forensic investigation. The scoping reports had already been done by the Department. The investigation of the Municipal Manager at Thabo Mofutsanyana Municipality was contained in the Department’s scoping report. Before the expiration of the 180 day intervention period the Department had applied for an extension.

The Chairperson stated that the Committee understood the interventions only to be valid for a certain period.

Mr Ralikontsane agreed to make an application to the NCOP for an extension.

Mr B Nesi (ANC, Eastern Cape) agreed with Members that indeed the Briefing Report had fallen short of what was expected. The Report did not state that the forensic investigations were now in the hands of the National Department as was explained by Mr Ralikontsane. The Department needed to be more explicit in its Report. Inferences could be drawn where there was silence. The Report was inconclusive and could not be adopted by the Committee.

Mr Matila said that the specifics of what had been done thus far had not been included in the Briefing Report. The crux of the matter was the misappropriation of public funds. In order for the Committee to assist or intervene, Members needed to know where the process of investigations was.

Mr Watson agreed that the Committee could not react without knowing the facts. Specifics were what were needed: for example at what police stations matters were reported and what the relevant case numbers were.

Mr Ralikontsane wished to clarify that the Municipal Manager at Masilonyana Municipality was placed on special leave for a month. The Municipal Manager had been suspended by the Council illegally, hence he was reinstated. In order for a forensic investigation to take place the Municipal Manager was placed on special leave.

The Chairperson reiterated that the Committee could not accept the Briefing Report in its current form. The Report needed to be reviewed and a more consolidated report containing specifics would be considered by the Committee. The scoping reports should also be included in the consolidated report. The Committee was obligated to peruse the scoping reports. The Department was given a week or two to compile a consolidated report. He pointed out that oversight covered every element. 

The meeting was adjourned.