Intervention in Mtubatuba Local Municipality: briefing by Mayor and Member of Executive Council

Meeting report

Chairperson’s opening remarks

The Chairperson welcomed everyone and stated that the purpose of the meeting was to get briefings from the Mayor of Mtubatuba Local Municipality and the MEC for the Provincial Department of Cooperative Governance and Traditional Affairs (DCGTA) on the intervention made in the area. This intervention came after there were discussions about the dissolution of a municipal Council and the appointment of an administrator. The reasons cited for the dissolution of Council included financial and service delivery difficulties and a lack of commitment to the Municipal Recovery Plan.

Briefing by the Mayor

Mr Sigoga Mkhwanazi, Mayor at Mtubatuba Local Municipality, indicated that he would brief the Committee on the procedural, substantive and the constitutionality of the notice of the intervention issued in terms of section 139 (1) (c) of the Constitution to the Mtubatuba Local Municipality. The dissolution of a Municipal Council and the appointment of an administrator must be warranted by exceptional circumstances and whether these circumstances exist was objectively determinable. The onus was on the Provincial Executive to show the existence of such circumstances and in the absence of the existence of exceptional circumstances, it may not be appropriate for the Provincial Executive to dissolve the Municipal Council.

Accordingly, this presentation sought to present and argue against the validity of the grounds presented by the MEC, Ms Nomusa Dube-Ncube, as reasons for the dissolution of the Council. Ms Dube-Ncube, in her letter dated 5 Novemeber 2014, had presented the reasons for the dissolution of Council and these included financial difficulty, service delivery difficulty and a lack of commitment to the Municipal Recovery Plan and lack of Council oversight. At its meeting of 29 January, the Council had approved the audit action plan to address issues raised by the Auditor-General (AG), and had further approved the 2013/14 annual report. The financial position of the Municipality had improved tremendously from what it was three years ago. As at June 2012, the Municipality had a R6 million bank overdraft, while at June 2013, the Municipality had R1.6 million in the bank -- and R894 000 at the end of June 2014. The bank balance as at 31 January 2015 was R23 million.

The Municipal Council had approved its 2014/15 budget as per legislative requirements on 3 June 2014. The Mtubatuba Municipal Council had also approved its 2014/15 Integrated Development Plan (IDP) review on 3 June 2014. This had been was submitted to the MEC of COGTA for her comment and input. The Mtubatuba Municipality was heavily reliant on the Municipal Infrastructure Grant (MIG). In the financial year under review (2013/14), Mtubatuba Municipality had been provincially rated to be in the top three for performance and expenditure on the MIG. All of the grant for a capital project aimed at accelerating service delivery was spent, as per the IDP. The Mayor found it peculiar and rather difficult to understand anyone who could argue that there were challenges regarding service delivery.

The Recovery Plan had been presented to the Municipal Council on 27 June 2014 and had been adopted at that meeting. The items on the Progress Reports of 20 October 2014 and 12 December 2014 had been presented. In line with the terms of reference regarding the duties and functions of the Ministerial Representative (also known as the Administrator), the Administrator has to ratify all decisions of the Municipal Council and its committees, prior to implementation. The Administrator of Mtubatuba who is, by virtue of his appointment, the eyes and ears of the MEC of COGTA, had continuously been submitting reports to Council regarding the Municipal recovery plan and these plans had received cooperation from the Municipal Council. The most recent report (November 2014), tabled by the Ministerial Representative, gave a detailed account of progress made insofar as the recovery plan was concerned. Regarding the matters raised by the MEC versus her representative (the Administrator), the following could be noted as the Administrator’s summary: on leadership and oversight (56%), governance and compliance (56%), financial management (77%), service delivery (45%) and the overall performance of 59%.

The above figures presented by the Administrator gave a clear indication that of the “troubled municipalities in KZN”, Mtubatuba could not be amongst those which warranted the MEC invoking section 139 (1) (c) and dissolving the Municipality. It would seem to be in the best interest of the National Council of Provinces (NCOP) to further consult on the matter before ratifying the decision which the MEC had already declared. The Mayor refused to believe that the NCOP would blindly rubber-stamp decisions without applying its own collective wisdom on such matters.

In conclusion, the Mayor believed that it would be in the best interest of the NCOP to consider conducting its own working visit to Mtubatuba. There were other political matters at play which could not be brought to the dignified house, and he reiterated that there were absolutely no reasons to dissolve the Mtubatuba Municipality.   

Discussion

Mr D Ximbi (ANC, Western Cape) welcomed the presentation from the Mayor but wanted to wait for the MEC to present her side of the story so as to make comparison of the two presentations to get further clarity.

The Chairperson reminded the Members that the purpose of the meeting was merely fact-finding and clarity-seeking, therefore not mediating or taking any sides between the Mayor and the MEC. 

Ms T Wana (ANC, Eastern Cape) also accepted the report that was presented by the Mayor, but wanted further clarity on the structural parameters in the Mtubatuba Local Municipality, as this had not been presented in the report. Was there an audit committee in the Mtubatuba Municipality that would focus on clean audit and the handling of finances? She wanted to know whether the R23 million was in the current budget and included the MIG.

Mr M Khawula (IFP, Gauteng) wanted to know the relationship between the political armour of the Council and the Administration. The presentation had also omitted to tell the Members about the operation of the Municipality in terms of service delivery and financial management.

Mr L Nzimande (ANC, KZN) sought clarity about governance in Mtubatuba, as this was critically important in the decision on whether to dissolve the Municipality or not. It was concerning that there had been chopping and changing of leadership in the area. The current Mayor was still less than five days in the office and this affected stability.

Ms T Mokwele (EFF, North West) asked about the political relationship among political parties in Council, as the matter could be politically motivated. What were the issues that had been raised by the Department regarding the intervention in Mtubatuba Local Municipality?

Mr G Michalakis (DA, Free State) said according to the letter that had been sent by the MEC, it referred to section 49 of the Municipal Property Rates Act (MPRA), and claimed that due to the Municipality not publishing the evaluation role in accordance with section 49 of MPRA, the Municipality may not be in a position to raise the full revenue budgeted for property rates in part of the 2014/15 financial year. However, it was just strange that the bank balance of Mtubatuba went from R1 million to R894 000 in 2014, and then suddenly jumped to R23 million in 2015. What was the recovery rate of the Municipality, taking into consideration the evaluation role mentioned by the MEC? He also requested the Mayor to provide the breakdown of the R23 million.

Mr M Chetty (DA, KZN) mentioned that the issue of political disagreement was playing a part in the conflict in Mtubatuba Municipality and this needed to be taken into consideration.

Ms G Manopole (ANC, Northern Cape) also raised the issue of the breakdown of the municipal budget, as this was important to ascertain whether money was being used effectively to bring services to the people. She reiterated that the reason the Committee had called both the Mayor and the MEC had been based on section 69 of the Constitution and not the rules of the NCOP, and the purpose was merely clarity-seeking.

Mr M Mhlanga (ANC, Mpumalanga) asked the Mayor to provide further details on the financial performance and stability of the Municipality since 2011. How many Mayors had been in place since 2011, as this was of critical importance for continuity? How many Municipal managers and Chief Financial Officers had been in place since 2011?

The Chairperson questioned whether the Mayor was aware of his designation and responsibilities, as this had not come up clearly in the presentation. Where had the Municipal manager been when the letter was written to the Committee? Why was the Municipal manager not part of the delegation? The presentation claimed that the MIG expenditure for 2013/14 had been 100%, but the financial statement in the AG’s report was representing something contrary to that claim.  

Mr Mkhwanazi said that when he came into Municipality in 2011 as a deputy Mayor, there had been no Municipal Manager, Chief Financial Officer (CFO) or Director of Planning. The Municipality had no funds at all, and was operating on an overdraft. It was also patently clear that section 56 of the Constitution was not being applied. The position of Municipal Manager was advertised in 2011 so as to assist in the implementation of section 54 and 56.

The Chairperson interjected and asked the Mayor to respond specifically to questions posed by the Members, rather than giving full background information on the Municipality since 2011.

Mr Mkhwanazi proceeded and highlighted that the Municipality had just appointed a new audit committee in January 2015, as the previous audit committee had been ineffective in dealing with financial management. There were four members in total. The bank balance of the Municipality had remained the same, with R23 million as at January 2015. The Committee could be provided with a breakdown of the budget as soon as that information became available from the CFO.

The Chairperson asked about the status of service delivery in the area and whether there were any backlogs, considering the amount of money that was in the bank and unutilised

The Mayor responded that basic services like water and sanitation were the responsibility of the District Municipality. There were backlogs in the area of water and sanitation, as in Mtubatuba there was no water at all and this had been the case for the past 15 years. There were pipes that had been laid four years ago, but no progress had been made. There had been a meeting on 28 January, initiated by the MEC, to build a relationship with Umkhanyakude District Municipality but nothing had been achieved.

The Chairperson said it was absurd that the Municipality had a surplus of R23 million but was still failing to provide the basic service delivery to the people in Mtubatuba. This looked like the Municipality was being turned into a money-making concern, than rendering services.

The Mayor reiterated that he was not in a position to provide a breakdown of the budget provided to the Municipality, but there were projects that would get under way very soon. He emphasised that he had been in office for less than five days and therefore had little information regarding the recovery rate of the Municipality and other complex questions.

Mr S Thobejane (ANC, Limpopo) interrupted and raised a point of order, indicating that it was pointless to further interrogate the Mayor on issues related to the Municipality, considering that the Mayor had had only five days in office.

Ms Mokwele concurred with Mr Thobejane, and said it was really pointless to interrogate the Mayor for the sake of interrogation and the Members should rather seek clarity through proper channels instead of making the new Mayor to feel incompetent.

The Chairperson said there was nothing wrong with seeking the clarity, as this was the main purpose of the meeting. The Mayor could indicate the questions where he was not in a position to respond.

Mr Khawula wanted to know about the percentage of the rate base, and whether there were small towns around the Municipality. This question was important in respect of the bank balance of R23 million.

Mr Nzimande said that due to time constraints, the Committee could only note the presentation by the Mayor and then proceed with the presentation by the MEC.

Mr Zakhele Nyawo, Speaker of the Mtubatuba Local Municipality, responded that it was difficult to communicate with the Municipal Manager, as they had been given letters of dissolution and they came to the Committee meeting at their own expense just to be afforded an opportunity to tell their own side of the story. The reason for the chopping and changing of leadership was rooted in the number of resignations of mayors and councillors in the past.

Mr Musawenkosi Mkhwanazi, Councillor, mentioned that the Municipality was doing well compared to other municipalities, hence the overall performance rating was 59%. He rejected the suggestion that there were squabbles at Mtubatuba.

Briefing by the MEC

Ms Nomusa Dube-Ncube, MEC, COGTA, said the purpose of the presentation was to brief the Select Committee on the constitutional intervention at the Mtubatuba Municipality, and to request the Committee to approve the intervention in terms of the of section 139(1)(c) of the Constitution. The overview of Mtubatuba Municipality showed that it was one of five municipalities within the Umkhanyakude District Municipality in KwaZulu-Natal, situated on the north-east coast of KZN. It had a population of 175,425 and was more urbanised than other municipalities within the district. 15% of the municipality fell under urban areas, with close to 34 905 households.

In June 2012 the Executive Council of KZN had resolved to institute a discretionary intervention at Mtubatuba Municipality in terms of sections136-138 of the Local Government: Municipal Finance Management Act No. 56 of 2003 (MFMA). The discretionary intervention had been in place for a period of three months, and there had been an extremely low probability of the intervention support team succeeding in respect of the financial recovery plan. There had been of a lack of political and administrative leadership, weak decision-making and poor service delivery at Mtubatuba Municipality.

 For these reasons the Executive Council had resolved on 19 September 2012 to intervene in terms of section 139(1) (b) of the Constitution, which resolution included the appointment of a representative of the MEC for COGTA, to assume certain executive functions of the municipal council. As a result of poor progress, on 4 December 2013, the Executive Council resolved to further extend the intervention until 30 September 2014. On 6 August 2014, the Executive Council had resolved to extend the intervention until 31 December 2014 and to extend the scope of the intervention by assuming the functions referred to in section 67(1) (h) and Schedule 2 of the Municipal Systems Act, read with any other relevant legislative provisions dealing with disciplinary matters and the function of preparing the Municipal valuation roll in terms of section 32(3) of the MPRA.

Although the scope of the intervention had been extended, the municipality regressed into a state dysfunctionality and on 30 January 2015, the Executive Council resolved to intervene in terms of section 139(1)(c) of the Constitution in order to dissolve the Municipal Council, and to appoint an Administrator until new elections were held.

In terms of section 139(1) (c) of the Constitution, if a Municipal Council was dissolved, the Provincial Executive must immediately submit a written notice of the dissolution to the Cabinet member responsible for local government affairs and the relevant provincial legislature and the NCOP. The dissolution takes effect 14 days from the date of receipt of the notice by the NCOP unless set aside by that Cabinet member or the NCOP before the expiry of those 14 days. It was clear that, based on an assessment of the finances of the Mtubatuba Municipality by COGTA in terms of section 131(2) (a) of the MFMA, as well as the assessment of the Provincial Treasury of the reports of the Municipality in terms of section 71 of the MFMA and the annual financial statements, the Mtubatuba Municipality was facing serious financial problems.

The MEC for COGTA, in consultation with the MEC for Finance, considered it prudent to commence the process towards a discretionary intervention by consulting with the Mayor of the Municipality in terms of section 136 of the MFMA. Following this consultation, an intervention support strategy would be implemented through the deployment of a suitably qualified financial expert as a financial administrator to support the Mtubatuba Municipality in managing and implementing a financial turnaround, in consultation with the MEC for Finance The Provincial Treasury would provide resources via the Municipal Support Program to undertake key operational activities in the treasury department of the Municipality. This had been accepted by the Mayor and Executive Committee of the Municipality. The Executive Council had then resolved to implement an intervention at the Municipality in terms of section 137 of the MFMA.

Ms Dube-Ncube said that the Municipality had failed to achieve its executive obligations, as the Mayor and Executive Committee, among others, had failed to exercise supervisory authority in relation to the implementation and enforcement of the municipality’s credit control and debt collection policy and by-laws, and had failed to take all reasonable steps to ensure that the municipality performed its constitutional and statutory functions within the limits of the municipality’s approved budget. The Municipal Council had also failed to fulfill the following executive obligations relating to the administration of the Municipality:

• Section 41 of the Systems Act, by not including measurable priorities, objectives and performance targets for certain functions, as reported by the Auditor-General;
• Section 46 of the Systems Act, by not providing adequate performance information in the annual report of the municipality for the 2010/2011 financial year, as reported by the Auditor-General;
• Section 32 of the MFMA, by not recovering unauthorised, irregular, fruitless and wasteful expenditure, and not informing the MEC responsible for local government and the Auditor-General of such expenditure;
• Section 54 of the MFMA, by not exercising budgetary control and early identification of financial problems over two consecutive years;
• Section 72 of the MFMA, by not conducting a mid-year budget and performance assessment of the municipality within the statutory deadlines for two consecutive financial years;
• Section 121 of the MFMA, by the exclusion of performance information in the annual report of the municipality; and
• Section 131 of the MFMA, by a failure to address issues raised in the Auditor-General report on the municipality for consecutive years.

The MEC highlighted that despite challenges, the intervention had achieved positive progress at its inception in respect of a number of matters in the recovery plan. The overdraft had been removed and the MIG deficit of R1.2 million had been addressed, as well as the R2.4 million for electrification. The collection for October 2013 was 128% (R3 358 827.79), and outstanding creditors amounted to R5.8 million as at 31 October 2013 (including R3.4 million for Rural Metro). An audit action plan had been developed, to address findings raised by the AG for the year ended 30 June 2012. All four top management positions had been filled, as suggested by the AG’s report. Adherence to policy had been monitored through the improved oversight role played by the relevant Portfolio Committees and Municipal Public Accounts Committees (MPAC). The role of the MPAC and Audit Committee was being reinforced through regular sittings thereof. The Council committees were functional and sitting as per their meeting schedules. A monthly municipal newspaper had been introduced to be distributed in all 19 Wards.

Based on the abovementioned challenges at the Mtubatuba Municipality, it had become clear that the intervention in terms of section 139(1) (b) of the Constitution was being frustrated by councillors and officials alike -- to such an extent that the Municipality would not recover. Minimal progress had been made with the implementation of the Recovery Plan and as indicated, councillors had openly indicated that they would not co-operate with the Ministerial Representative, and that any official who did would be dismissed once the intervention was terminated. For these reasons, on 30 January 2015, the Executive Council resolved to intervene in terms of section 139(1) (c) of the Constitution at the Mtubatuba Municipality.

The MEC for CoGTA had also been authorised to appoint an administrator, facilitate the election of a new Municipal Council and co-ordinate a programme of visits by all KZN MECs at the Municipality to fast-track service delivery challenges and restore public confidence in the system of local government.The Cabinet Member responsible for local government affairs, the NCOP and the KZN Legislature had been informed of the dissolution in keeping with section 139(3) of the Constitution.The National Minister had approved the intervention in a letter dated 6 February 2015.

Discussion

Mr Chetty said the MEC and the Department of Cooperative Governance had made a request to the Committee to extend the intervention to 30 March and asked whether there had been a reason for the decision to be made within the period 15 to 30 January 2015. The Council, by virtue of its majority, had the right to replace or “call a motion of no confidence” and vote in a new speaker. It was clear that there a meeting had been called, but the ANC members had decided to walk out. The MEC had mentioned that there had been six changes in the position of Mayor and three for the Speaker, and this surely had not taken place from 15 to 30 January, but had been happening since 2011.

Mr Khawula also highlighted that the change of leadership at Mtubatuba Municipality had been happening since 2011, and asked why the MEC was suddenly planning to implement section 139 (1) (c). He agreed that according to section 52 of the MFMA, the Mayor and the Executive Committee had failed to take all reasonable steps to ensure that the Municipality performed its constitutional and statutory functions within the limits of the municipality’s approved budget. The MEC had claimed that the Municipality had an Executive Council (EXCO) of six members -- the ANC and IFP, with three members each and one member from the NFP -- so in reality it had seven members and this could never result in a 50/50 balance of power.

He also refuted the claim that the meeting of 22 July 2014 could not proceed because the IFP Councillors had staged a walk out. The IFP had only 15 Councillors, and therefore the meeting could have proceeded without them. He found it to be an interesting coincidence that within two weeks after the resignation of the ANC Mayor, a new Mayor from the NFP had been appointed -- and then the Municipality was suddenly being dissolved.  

Ms Wana appreciated the presentation of the MEC, and wanted to understand the current situation of the audit outcome of the Municipality. The MEC had been silent about the quarterly reports that were supposed to have been submitted to her office. She asked the MEC to confirm whether the Municipality had a bank balance of R23 million. What was the plan of the Department on the draft framework of the supply management procedures, as there were allegations which the Department had investigated? What had been the reaction of the community of Mtubatuba regarding the dissolution of the Municipality? What was the reason for the five cars that had been taken by the Department?

Ms Mokwele said the MEC had already mentioned that there was political instability in the area and wondered if the decision to dissolve the Municipality would not heighten violence. She asked about the reason for the dissolution of the Municipality, considering that the AG’s report already showed there had been progress in terms of human resource and financial management in the area. Was the Municipality dissolved for political gain, as most of the EXCO members were not from the ANC?

Mr Thobejane indicated that it would always be difficult for the matter discussed to be separated from the political context. The Members were already alleging that the scenario that led to the dissolution of the Mtubatuba Municipality had been politically motivated. The MEC had made it clear that since 2012 the Municipality had been experiencing problems in terms of the stability of its leadership which had compelled the MEC to invoke section 139(1) (b) of the Constitution until the arrival of the final determination. It was not helpful for Members to politicise the matter discussed, and they should rather remain objective and listen to all the facts before taking informed decisions. He also pleaded with the Members to prioritise on the people, rather than on politics.

Mr Michalakis interjected and claimed that Mr Thobejane was out of order and misleading the Committee by claiming that the matter was not politically motivated, but about the people. He emphasised that if this was about the people, then the matter would have been resolved in 2012.

The MEC warned against putting forward political issues at the expense of a bigger picture, which was about rendering services to the people. It was problematic that most of the Councillors and Mayors hardly fought about service delivery, fruitless expenditure and corruption in municipalities, but always prioritized the political dimension. It was quite clear that people still did not fully understand the complexities and the importance of being in government and being given the responsibility to govern. She admitted that there had been dereliction of duty, and this had been caused by Councillors, as they worked as a collective. The decision to disband the Mtubatuba Municipality was supposed to have been taken last year, but had been delayed because of the assurance by the Mayor and the Councillors that they would improve the overall management of the Municipality. 

Progress had been made since the implementation of the intervention in terms of financial and human resource management. According to the AG, the Municipality had moved from a disclaimer in the 2011/12 financial year to a qualification in 2012/13 and an unqualified audit opinion in 2013/14 financial year. It had been clear that the Councillors were not willing to change and cooperate with the MEC and the fact that the leadership had been changed six times gave clear a picture of leadership instability.

The community of Mtubatuba must see that the people that they entrusted with their votes had failed to deliver on their mandate and there were no guarantees that political instability would continue or not after the dissolution. She proposed that the government should consider crafting legislation that would prevent Councillors who had previously been found guilty of bringing one municipality into disrepute to be elected to another municipality, as this resulted in a cycle of repeat offenders. The MEC had engaged with the communities and taken into consideration of the issue of service delivery. The five cars had been taken because the Municipality had failed to pay the creditors and had been unable to defend the matter when it went to court, and it had been decided that the officials should be charged.

The Chairperson asked for further clarity on whether there had been any progress in the forensic investigations that had been carried out.

The MEC responded that part of the progress in the forensic investigations had been the disciplinary action that had been taken against the Municipal Manager for failing in many instances. The challenge had been in the decisions that the Council had not wanted to take in relation to disciplinary action, The report had been taken to the police to lay charges on specific criminal areas.

The Chairperson asked the Members to vote in support of the intervention, issued in terms of section 139 (1) (c), in Mtubatuba Local Municipality.

All the Members supported the intervention.

The Chairperson also recommended that the Committee should receive a frequent report from the MEC regarding developments at the Municipality.

Ms Wana moved that the MEC must provide the Committee with a report on a quarterly basis, and Mr Thobejane seconded.

A decision was taken that the MEC must submit a quarterly report to the Committee.

The meeting was adjourned.