The Mayor of UMkhanyakude District Municipality briefed the Committee on the resolution that had been taken by the Free State Provincial Executive in terms of section 139(1) (b) of the Constitution. There was a strong belief that the intervention would assist the Municipality in aaddressing a number of challenges such as a lack of capacity, inadequate budget and overall mismanagement within the Municipality. The Municipality had already lost three senior engineers through resignations and this showed that there was be a need to come up with a strategy to retain the skilled labour. Most of the skilled people within the Municipality had been complaining about difficult conditions they were working under, considering that the Municipality was located in a remote area. The Municipality had introduced a number of measures in place so as to stabilise the situation and these included the suspension of the Chief Financial Officer (CFO) and the introduction of a process of ensuring that employees who were 60 years and above were able to exit the system so as to deal with the bloated organogram.
Members expressed concern that the Mayor did not highlight the other additional challenges that had been flagged by the Minister in the Municipality - these included: huge financial irregularity, a bloated organogram and the non-existence of an Audit Committee. The Committee wanted more information on the use of the conditional grant and why there was such a huge amount of outstanding creditors. The Chairperson urged that the Municipality to expedite the process of disciplinary action that had been taken against the CFO as employees who were suspended were still earning an income. Some Members found it strange that the Mayor seemed to blame all the dire financial mismanagement in the Municipality to the three senior engineers that had resigned. A few complained about lack of public participation in the decision that is taken by the Municipality.
The Committee approved of the intervention in UMkhanyakude District Municipality in terms of section 139(1) (b) of the Constitution.
Chairperson’s opening remarks
The Chairperson welcomed everyone and indicated that the Committee had met last week. The intention was to get the delegates from UMkhanyakude District Municipality but it was unfortunate that only the speaker of the Municipality managed to appear before the Committee. The Mayor could not make it to the meeting due to prior arrangements. The Committee was compelled to invoke section 59 of the Constitution, where it is clearly stated that Parliament could summon anyone to appear before it. The Chairperson of the National Council of Provinces (NCOP), Ms Thandi Modise, always highlighted the importance of consulting municipalities before arriving at a particular resolution. The purpose of the meeting today would essentially be to ascertain whether the Mayor supported the decision that had been taken by the Provincial Executive to intervene in the Municipality in terms of section139 (1) (b).
Input by the Mayor of UMkhanyakude District Municipality
Mr Jeff Vilane, Mayor of UMkhanyakude District Municipality, firstly apologised for not appearing before the Committee last week and pointed out that this was not in any way a show of disrespect to the Committee. At the time, he was busy facilitating a meeting with the Minister of Agriculture, Forestry and Fisheries on the drought situation. The Member of Executive Committee (MEC) for the Department of Cooperative Governance and Traditional Affairs (COGTA) in KwaZulu-Natal (KZN) had already briefed the Municipality on the intervention that had been undertaken in terms of section 139(1) (b). There was a strong belief that the intervention would assist the Municipality in a number of challenges, which included lack of capacity, lack of adequate budget and the overall mismanagement within the Municipality.
Mr Vilane added that the Municipality had already lost three senior engineers through resignations and this showed that there would be a need to come up with a strategy to retain the skilled labour. Most of the skilled people within the Municipality were complaining about difficult conditions they were working under, considering that the Municipality was located in a remote area. It was high time that the Department was able to deploy skilled individuals in rural areas by offering them incentives as was done by the Department of Health (DoH). The Municipality was currently operating under the engineers that had been provided by National Treasury (NT) and COGTA. The Municipality had taken steps to remedy the situation and this included the suspension of the Chief Financial Officer (CFO)
Ms B Engelbrecht (DA, Gauteng) appreciated that the Mayor was able to appear before the Committee and accepted that the Municipality was facing numerous challenges like a lack of capacity, lack of adequate budget and the overall mismanagement. However, the Minister had indicated that there were other additional problems that had not been mentioned in the presentation and these included: huge financial irregularity, bloated organogram and the people that had been employed in non-core functions and the non-existence of an Audit Committee. The Committee should also get more information on the use of the conditional grant for the operation of the Municipality. It was also unclear as to what had caused such a huge amount of outstanding creditors. The current revenue collection of the Municipality was extremely low and was currently sitting at 44%. It was strange that the Mayor seemed to abdicate all the dire financial mismanagement in the Municipality to the three senior engineers who had resigned.
The Chairperson mentioned that there was a lack of public participation in the decisions that were taken by the Municipality. It was indeed concerning that the Municipality did not have an Audit Committee, especially when one considered that the Municipality had a monumental debt of almost R103 million. It was also concerning that the Municipality had adopted its budget with a deficit and this was the matter that the Mayor needed to respond to urgently.
Mayor Vilane acknowledged the concerns that had been flagged by Ms Engelbrecht, especially on the matters related to financial management. The Municipality had already suspended the CFO after realising that there was persistent problem of financial irregularity within the Municipality. The Audit Committee was in place at the moment and fully operational. There were instances where some of the meeting would be cancelled because of the unavailability of the councillor or lack of quorum. The Executive Committee (EXCO) and municipal council was now responsible for ensuring that these meetings were able to take place. The Municipality accepted the criticism that it was not performing well in financial management and this was one of the issues that was already being addressed. It was concerning that the expenditure on the allocated budget was sitting at less than 40% as it was expected to be sitting at around 60% by now.
Mayor Vilane stated that the Municipality still needed to fill in a number of vacant positions, especially the Head of Project Management Unit (PMU), the Head of Department (HOD) of the technical department and a post in the Office of Municipal Manager (OMM). In relation to the question on the use of conditional grant, it was indeed true that the Municipal Manager and the finance officer had spent the conditional grant on the operation of the Municipality.
The Chairperson interjected and wanted to know the exact responsibility of the Mayor in terms of the overall operation of the Municipality. The Mayor was responsible for ensuring that the budget was utilised for what it was allocated for and not the Municipal Manager or the finance officer.
Mayor Vilane admitted that he was playing the oversight responsibility in the Municipality but remained adamant that the day-to-day work in the office was done by both the CFO and the Municipal Manager. The Municipality had requested National Treasury to provide assistance in budget management and this was aimed at avoiding the possibility of adopting a budget with a deficit. National Treasury had recommended that the Municipality needed to cut-down on a number of non-core functions like catering for meetings and compensation on the expense for travelling. The bloated structure of the Municipality was a historical matter as the current Mayor took over from a Municipality that was already bloated. This was not to shift the blame to the predecessors but it was a fact that all the employees in the Municipality were unionised and therefore it would be a costly exercise to dismiss them as a way of reducing the organogram of the Municipality.
The Municipality had started a process of ensuring that those employees who were 60 years and above were able to exit the system. However, it was difficult to train and redeploy them to other strategic positions. There were important positions that still needed to be filled but it was impossible to do so precisely because of the current bloated structure.
Ms Engelbrecht wanted to know in what year the Mayor had assumed the current position as the blame seemed to be constantly shifted to the predecessors.
Mayor Vilane responded that he had assumed the current position in 2011.
Ms Engelbrecht said that it was disconcerting to hear that the Mayor had been in the current position for five years without solving the current challenges that were experienced by the Municipality. The process of exiting employees that were 60 years and above from the system could prove to be counterproductive as these were employees who were experienced-meaning the Municipality was losing institutional memory. The Mayor had four years to fix the challenges in Human Resource and financial management in the Municipality. Why did the Mayor not implement these measures in the period of four years in the office?
Ms T Wana (ANC, Eastern Cape) agreed with the Mayor that some of the problems in the Municipality were inherited from the predecessors as the legislative decision was taken in 2011 that the ward Municipality must now be under the district. The Municipality was essentially not capacitated enough to be under the district.
The Chairperson asked whether the Municipality had enough capacity on the side of the local council as the focus was mainly on the lack of capacity in the technical department side of the Municipality. It was also concerning that the Mayor seemed to spend more time dwelling on the problems instead of strategies that were in place to counteract those challenges. The Committee should also be provided with an update regarding the suspension of the CFO. The input by the Mayor did not indicate the measures in place to deal with the bloated organogram of the Municipality. The main concern of everyone was on why the Mayor waited for the damage to be done before acting and introducing remedial actions.
Mayor Vilane reiterated that the Municipality had started a process of ensuring that those employees that who were 60 years and above were able to exit the system. It must be highlighted that those that would need to exit the system were employees where the Municipality was finding it hard to train and redeploy them to other strategic positions. In essence, this was to deal with the bloated structure of the Municipality. The package that was to be given to those who were exiting the system was also particularly high and this was one of the concerns that had been noted. The suspension of the CFO came out of the realisation that even the office of the MM was not performing optimally.
The Chairperson wanted to know if the problem around the effectiveness of the MM was only picked up after the suspension.
Mayor Vilane admitted that the problem became clearer when the CFO was suspended. The Municipality had appointed an independent investigator to deal with matters around the suspension of the CFO and the process was still ongoing. It had been discovered that the problem of financial misconduct and insubordination was not only within the financial office but also in the office of MM. The institutional memory could not be passed on to the people who were trained to perform basic tasks like cleaning and maintenance. The priority of the Municipality was on absorbing a highly skilled labour that could be transferred to other strategic positions. The Municipality together with the assistance of COGTA had just completed the process of training local councillors and emphasised on their responsibility as prescribed in the Constitution. In conclusion, the reason the Municipality accepted the intervention that had been taken by the Provincial Executive was out of realisation that it was engulfed by many problems.
Mr Scelo Duma, Senior Manager: Municipal Governance; COGTA, stated that the Municipality is currently in a dire financial strain and the estimates are that the Municipality would remain with a deficit at the end of 2016/17 financial year regardless of the intervention. The Municipality was currently sitting with an R80 million deficit and this was because it had used a conditional grant to fund the operation.
The Chairperson said that this was a very helpful engagement for the Committee to arrive at a certain determination. The Committee would accept the apology of the Mayor for not appearing before the Committee last week but warned that the Mayor would need to prioritise his duties as the proposed intervention was more important than anything else at the moment. The Mayor should be given a task to read the difference between section 139 and section 154 of the Constitution. The intervention did not necessarily mean that province or national had no competence to ensure that the municipalities were capacitated and monitored.
Ms Engelbrecht expressed concern about the Mayor seemed to be unaware of his management role within the Municipality.
The Chairperson responded that the Committee was still to do an oversight over the Municipality but the priority at the moment was on whether the Committee supported the intervention in the Municipality. The Municipality should expedite the process of disciplinary action that had been taken against the CFO as employees who were suspended were still earning income.
Ms G Manolope (ANC, Northern Cape) moved for approval of the intervention in UMkhanyakude District Municipality based on the substantive and procedural process of the intervention as clearly explained by the MEC of COGTA in KZN.
Mr D Ximbi (ANC, Western Cape) also seconded the approval of the intervention in the Municipality.
The Committee adopted the approval of the intervention in UMkhanyakude District Municipality in terms of section 139(1) (b) of the Constitution.
The meeting was adjourned.
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