Municipal forensic investigations: COGTA report; Constitutional Court judgement on Municipal Systems Amendment Bill; with Minister & Deputy Minister

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Cooperative Governance and Traditional Affairs

06 March 2018
Chairperson: Mr M Mdakane (ANC)
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Meeting Summary

The Committee met with the Minister, Deputy Minister, and the Department of Cooperative Governance and Traditional Affairs to discuss the progress on forensic investigations in local government and the Constitutional Court requirements for the Municipal Systems Amendment Bill 2011.

In his remarks, the Minister expressed his commitment to working closely with the Committee and to provide information whenever required to do so. He stated that the key issues were ensuring good governance and efficient delivery of service within the local government space, fighting corruption and mismanagement and fostering the spirit of inclusivity in the development agenda. He noted that the Department of Cooperative Governance and Traditional Affairs had a big role to play in economic recovery, the promotion of investment, inclusive growth and unemployment through inter-Ministerial Committees.  He had already met with the Minister of Small Business Development.

In its presentation on forensic investigations in local government, the Department indicated the status of investigations on reports from municipalities across the country. 120 reports had been received comprising 500 cases.  110 reports had been assessed and ten dismissed for lack of evidence. He gave details of some of the action that had been taken, ranging from Presidential Declarations to court cases and disciplinary action.

Key issues raised by the members were the powers of the Department in enforcing recommendations, the slow process of concluding investigations, and the issue of recovering money through asset forfeiture of offenders.  One Member asked whether politicians had been investigated. A Member was concerned that suspended people might have continued to draw salaries as the investigations dragged on for years. Another Committee Member was concerned that they had heard nothing about cases of corruption after 2014.

In the matter of the Municipal Systems Amendment Act, the Department noted that the High Court had declared the Act invalid because, even though it affected provinces, it had not gone before the National Council of Provinces. The Department acknowledged the limited timeframe before the Act would become invalid. The Constitutional Court had granted a suspension of the order until 9 March 2019.  The Department would not include any substantive issues in the legislation but would begin a new process to attend to substantive issues and to amend the legislation to incorporate those issues.

Members expressed concern over the slow process of legislative process and reform in the Department.

Meeting report

Opening remarks

The Chairperson welcomed all the Committee members, the Minister, Deputy Minister and the delegation from the Department of Cooperative Governance and Traditional Affairs (COGTA) for attending. He introduced the agenda to be discussed, noting that the second issue on the agenda, Process in dealing with the Constitutional Court judgement on the Local Government: Municipal Systems Amendment Bill (2011), was urgent since the deadline was the following year.

Mr E Mthethwa (ANC) raised a concern that matters discussed in the Committee were being wrongly reported in the media and suggested that the Committee should be able to deal with that.

The Chairperson responded that the matter would be considered at the end of the meeting. He then welcomed the Minister, Mr Zweli Mkhize, and invited him to make a few remarks.

Remarks by the of Cooperative Governance and Traditional Affairs

The Minister thanked the Chairperson and the Committee and said that he was humbled by the appointment to serve as a Minister in COGTA. The Department understood the important relationship between the ministry and the Portfolio Committee. It was a hallmark of democracy that the Executive should come and account to Parliament through the Committee. The Department was committed to working closely with the Committee and to sharing all information available, whenever necessary. Though Members in Parliament belonged to different political parties, each was a representative of diversity of views, political or otherwise. Being new to the Department, the Minister said he was impressed with the vibrancy and enthusiasm of the members of the Department.

From the point of view of COGTA, a number of issues needed urgent attention. Firstly, there was a need to ensure good governance and efficient delivery of service within the local government space. The Department would work very closely with the municipalities and provinces to ensure that dysfunctional municipalities were dealt with. The Department would pay particular attention to bankrupt municipalities with finance mismanagement or irregular expenditure issues.  The Minister would be adopting the Back-to-Basics approach by visiting municipalities and provinces for discussions on how to improve management of resources. COGTA was committed to fighting corruption and mismanagement. COGTA was keen to embrace the spirit of change and optimism that the President had called on every South African to adopt. The Minister was committed to fostering the spirit of inclusivity where everyone played a role in development and felt included.

The President had raised issues on food security and an agrarian revolution as critical matters and the Department was committed to giving support to municipalities and local government as they dealt with those issues. On big issues like economic recovery, promotion of investment, inclusive growth and unemployment, COGTA had a role to play in various Inter-Ministerial Committees.  The Minister had already had a meeting with the Minister of the Department of Small Business Development and had pledged the support of COGTA.

On the issue raised on the relationship between municipalities, government and the institutions of traditional leadership, the Department would have discussions with the stakeholders to find common solutions and give feedback to the President.

The Department was facing challenges in compiling the report.  The   reports had been collected from various municipalities and had had to be analysed.  Furthermore, the people who had to act on the issues were located in various departments. What was to be presented to the Members would not be the whole report but would give an indication of the work going on.  It had to be noted that some of the components of the report belonged to law enforcement and not COGTA. Law enforcement agents demanded confidentiality regarding matters under investigation.  The Committee could refer to the cases, but not the officials. He referred to the details of one of the cases as an example of what the Department had available.  Members would be given a look, but the contents would not be available to the members of public attending the sitting. The Committee should direct the Departments as to whether the presentation should go through each case in detail.  He added that COGTA staff would receive further training in dealing with corruption.

The Chairperson directed that the Department did not have to present all the 500 cases of the forensics report, but only a summary indicating the status of the forensics audit in the country and the issues in the process of implementation.

Briefing on progress on forensic investigations in local government

Mr Dan Mashitisho, Director-General, COGTA, introduced the COGTA team and explained how the reports were going to be presented.

Mr Manyadi Nkashe, Chief Director:  Anti-Corruption, COGTA, started the presentation by giving the background.  The Department had requested provinces and municipalities to submit copies of forensic reports commissioned by municipalities since April 2009. A total of 120 reports had been received and out those, 110 had been assessed by the Department. Assessment was conducted in line with the Good Governance pillar of the Back-to-Basics approach.

The Department had been assisted by various law enforcement agencies and stakeholders to conduct the assessments: Directorate for Priority Crime Investigation (DPCI), Asset Forfeiture Unit (AFU), Special investigations Unit (SIU), National Treasury and the Office of the State Attorney.

Following the assessment, a number of focus areas had been identified: irregular, wasteful and unauthorised expenditure, procurement irregularities, appointment irregularities, theft of cash, fraud, and corruption and maladministration.

Most of the forensic reports made recommendations that certain remedial or corrective measures be taken. The assessment of some of the reports, however, pointed to the need for further investigation.  Where fraud, corruption and related offences had been identified, those matters had been referred to relevant law enforcement agencies.

Eleven forensic reports were referred to the SIU for further assessment to determine whether the cases should be investigated under the Presidential Declaration. So far, the President had signed two proclamations on referred forensic reports. The proclamations were for Thabazimbi Local Municipality and Mopani District Municipality. While SIU considered some of the matters closed due to lack of evidence, some of those were, nevertheless, being pursued by DPCI. In some instances an inquiry by ISU was underway.

The progress received from DPCI indicated that one case for Nelson Mandela Bay Metro had been finalised and the accused had been found guilty.  Details regarding the sentences had not yet been received.  Cases involving four municipalities were under investigation.  Details would be made available at a later stage in order not to compromise investigations.  One case involving Mkhondo Local Municipality was on trial.  Two cases had been provisionally withdrawn, i.e. against Thembisile Hani Local Municipality and Pixley Ka Seme Local Municipality.  Two cases were awaiting a decision by the National Prosecuting Authority.

Some cases had been taken forward by the municipalities themselves. In Newcastle Local Municipality five accused had been arrested and three had been convicted while the matter relating to one accused was on trial.  In Bela-Bela Local Municipality a final written warning had been issued to several officials as corrective action whilst a criminal case had been opened against one official.

In the Nelson Mandela Bay Metro, four cases had been referred to South African Police Service (SAPS)/Hawks.  The Executive Director for Human Settlements had been discharged and one company had been blacklisted.  Other matters were still under litigation and disciplinary processes were underway in other cases.

He concluded by assuring the Committee that the Department would continue to collaborate with law enforcement agencies, provinces and municipalities to ensure the success of the project. He also informed the Committee that the Minister had launched the revised Local Government Anti-Corruption Strategy and the Municipal Integrity Management Framework.  The strategy was being rolled out in municipalities throughout the country.


Mr K Mileham (DA) welcomed the Minister and commented him on the commitment to attend the sessions. He noted that the forensic reports related to the period before October 2014.  What had gone on after that?  There was slow progress in taking action.  That was of primary concern to the Committee. The report indicated that the Department had received 120 cases and 110 had been assessed. What had happened to the other ten cases?  Politicians and public officials were liable for irregular, unauthorised expenditure and efforts had to be made by the municipalities to recover those funds. What was being done to recover money and how much had been recovered so far?

Mr Mileham wanted to know how many politicians had formed part of the investigations mentioned in the report and what action had been taken against them? For example, the case of the Mandela funeral scandal in the Eastern Cape was not mentioned anywhere in the report. Also, cases prior to the 2011 Local Government elections where a former mayor had initiated a programme that had spent over R 1 billion in six months had not been mentioned.  The Committee had looked at the forensics report on those cases and had issued recommendations.  What had happened to those cases?

Mr J Dube (ANC) asked whether the Department had been able to collect all the forensic reports and, if not, how many were pending and what the Department was doing to ensure that those were submitted and evaluated.

Ms B Maluleke (ANC) asked how much power the Department had in assisting the municipalities and provinces in implementing the recommendations.

Mr E Mthethwa (ANC) asked whether it was likely that people who had been suspended with cases pending for years were still collecting salaries.

Ms N Mthembu (ANC) asked about a database of offenders found guilty so that they did not seek employment in local government in other provinces.

Mr C Matsepe (DA) asked why a municipality had to make a call to the Department for them to be investigated.

COGTA responses

The DG responded that COGTA had very limited powers in enforcing sanctions except in the case of mandatory sanctions such as irregular expenditure, where there was a mandatory sentence for corruption. The Department could suggest stiffer sentences if an offender received a light sentence. In many other cases, it would be seen as interfering with the process.

Mr Andries Nel, Deputy Minister of COGTA, emphasised that as a Department, they had made it clear that there was zero tolerance to corruption.  Corruption and good governance and service delivery were not compatible.  On the powers of the Department, he stated although COGTA was not a law enforcement agency, it could and did play a coordination role between the municipalities, provinces and national law enforcement agencies. Furthermore, fighting corruption was not just about enforcing the law but included involving people in service delivery and effective financial management.  It meant ensuring effective Municipal Public Accounts Committees and clean audits for the municipalities.  Those actions limited the space for corruption to occur. Also, the Department utilized existing statutory powers such as Section 106 to launch investigations.

The Minister informed the Committee that specific questions put to him would be responded to by the Department. On the power of the Department, he stated that it was the responsibility of COGTA to follow up with relevant partners to ensure that recommendations were enforced. On suspended people drawing salaries, the Minister had been briefed on all the senior management people suspended in municipalities in a bid to understand the issues and was confident that he would be able to deal with it.

On the issue of asset forfeiture, COGTA acting Deputy DG, Mr Tebogo Motlashuping, stated that there were timeframes involved when someone was suspended so a person could not draw a salary for three to four years as Mr Mthethwa had indicated.  The Department held quarterly meetings with municipalities to track cases under investigations so that they did not drag on. On the question of a database, he indicated that a database existed both in electronic and print form and only the Department could make changes to the database. It was thus difficult for someone under investigation to seek employment in another province.

The Minister indicated that 277 cases had not been finalized and were still under investigation in all provinces. 127 staff members across the country had resigned before the finalization of disciplinary cases. The process of implementation was slow because on one side, the police were involved, which necessitated a whole process of investigations. Also, the involvement of unions in disciplinary cases tended to slow down the cases.

In a follow-up, Mr Mileham said that his question as to why ten cases had not been assessed had not been answered. Also, of the 210 reports assessed, how many had been concluded? Was the high number of cases prosecuted in Western Cape an indication that the province was more corrupt or was it because the province was stricter on corruption?

The Minister responded that the Department only acted on reports forwarded to it by the municipalities and could not answer why prosecutions were higher in some provinces than in others. Reports were made up of many cases, unless it was a unique case where a report contained combined cases. It would be thus difficult to talk about closing a particular report. It was better to talk about cases.

Mr Motlashuping responded that only 110 cases out of 120 were pursued by the Department since the SIU had found insufficient evidence for ten cases.

The Chairperson thanked the Department for the presentation and everyone for their contributions. He invited the Department to make a presentation on the second agenda item.

Briefing on the Municipal Systems Amendment Bill, 2011 (Constitutional Court ruling)

Mr Andries Nel began the presentation by reminding the Committee that the matter at hand arose out of the fact that the Constitutional Court had, on 9 March 2017, confirmed the High Court’s ruling that declared the Municipal Systems Amendment Act (MSAA) 2011 invalid. The Constitutional Court had suspended the invalidity of MSAA for 24 months to allow the legislature an opportunity to correct the defect as identified by the courts. Time was running out since the suspension came to an end on 9 March 2019.

The Municipal Systems Amendment Bill had been introduced in Parliament in 2010 but during the enactment process, the Joint Tagging Mechanism had “tagged” the Bill as an ordinary Bill not affecting the provinces. Parliament had approved the Bill as set out in section 75 of the Constitution on 19 April 2011. However, the High Court had found that the Act should have gone to the National Council of Provinces before proclamation as it did, indeed, affect the provinces.

Mr Motlashuping said that the Department was in contact with the parliamentary legal services and the Department’s legal services would give technical support to Parliament in relation to what the Act says.

The Chairperson asked whether there were any other substantive issues that the Department would want to propose. If the issue was about Section 75 or 76, then those are technical issues that the Department could deal with given the looming deadline. If there were substantive issues, how did the Department want to proceed given the timeframe?

Mr Motlashuping responded that, during the Department’s previous engagement with the Committee regarding the inclusion of substantive matters in the process, the Department had indicated it was not going to include any substantive matters in that particular process given the timeframe. However, the Department had assured the Committee that it would instigate a new process to amend the MSAA.

The Chairperson suggested that the legal services retag the MSAA to make sure that the courts did not rule against the Act again.  That was the urgent matter. The substantive matters should be dealt with separately.

Mr K Mileham said the hard copy of the presentation that he had received had noted at least three substantive issues but he believed that it was a very good decision to deal with tagging first and then deal with the substantive issues. He found it acceptable to discuss substantive issues in a separate process once the MSAA had been tagged and the legislation pushed forward before the end of the year. He pointed out the slow process of legislative process and reform in the Department since the substantive issues had been discussed for over three years. There was also other legislation that was in process but had not been finalised.

Mr Andries Nel responded that in developing legislation, one needed to move cautiously as there were extensive consultations involved. The Department, however, did take note of the concerns of the Member. The Customary Initiation Bill had already been passed by the Cabinet and was on its way to Parliament.

The meeting was adjourned.

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