Water crisis: Ugu District Municpality; State of municipality: Dr JS Moroka Local Municipality briefing

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Cooperative Governance and Traditional Affairs

13 March 2020
Chairperson: Ms F Muthambi (ANC)
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Meeting Summary

The Member of the Executive Committee (MEC) for COGTA in Mpumalanga should write a movie titled Who's In Charge about what was happening in the Dr JS Moroka Local Municipality, because the incidents that were happening in this municipality happened only in movies.

This was the view of the Portfolio Committee on Cooperative Governance and Traditional Affairs (COGTA) when it was briefed on the status of the municipality. Referring to the state of governance in the municipality, Members pointed out there was a lack of oversight committees, and a lack of implementation of council resolutions. The 2018-19 audit had been halted due to community protests and a lack of cooperation by management. Key council documents were not tabled due to the non-sitting of the council. Political instability in the municipality had also worsened the situation.

The Committee heard that the budget of the municipality had deteriorated for the last three financial years and was currently unfunded by an amount of R227 million in terms of a Provincial Treasury assessment. This had resulted in the withholding of equitable share transfers by the National Treasury. Currently the municipality was transacting outside the financial system, which was making it difficult for the Provincial Treasury to assess the financial performance.

There had been hostility towards the administration team since its inception on 3 February. The team had been held hostage more than three times by a group of individuals and gangsters within the premises. The administration team had been barred from entering the premises, and documents were not made available when they were requested. There had been a lack of support from the South African Police Service (SAPS) to protect them.

Members said that there was anarchy in the municipality and there was no reason why the MEC could not approach the courts for an interdict and exercise all the powers vested in him.

Ugu District Municipality reported the problem of water supply in the area had been caused by persistent labour relations and technical challenges in the area. The labour relations challenges had resulted in unprotected strikes which had increased the levels of vandalism to the infrastructure. The suspension of 14 shop stewards and termination of 121 employee contracts had negatively impacted on the water supply throughout the district. All these criminal actions had been reported to the SAPS.

The technical challenges had resulted from inadequate bulk infrastructure and a scarcity of raw water resources. Other factors were the aged infrastructure and load shedding. The electrical infrastructure had not been replaced and water pipelines were 30 years old. The plans were in place, but were hampered by budget constraints for full a roll out. The most urgent task was to fill critical vacancies and to continue engagements with stakeholders and give them hope that everything was under control.

Members wanted to know why the municipality had been reluctant to approach National Treasury for a regional bulk infrastructure grant, and asked the delegation to give reasons why Ugu should not be placed under administration.

Meeting report

Briefing by Ugu District Municipality

Mr Sivuyile Mbewu, General Manager: Water and Sanitation Department: Ugu District Municipality, told the Committee that the water supply problems in the municipality were a result of labour relations and technical challenges.

Since 2016, the Ugu municipality had been having persistent labour relations challenges leading to unprotected strikes. 14 shop stewards had been suspended and charged for misconduct in January 2020. This had resulted in an unprotected strike which continued from 8 January until the end of February, when the services of 121 employees were terminated from service. As a consequence, increases in incidents of vandalism of infrastructure, torching of the municipal fleet, and intimidation of staff had been experienced. This had negatively impacted on the water supply throughout the district. All these criminal actions had been reported to the SAPS.

Technical challenges had resulted from inadequate bulk infrastructure and scarcity of raw water resources. This had been caused by the drought since 2016. Another challenge was the aged infrastructure and power load-shedding. The electrical infrastructure had not been replaced, and water pipelines were 30 years old. The plans were in place, but were hampered by budget constraints for a full roll out.

On required interventions, the 15 non-operational Ugu-owned water tankers had gone for repairs and detailed condition assessments had been undertaken to consider auctioning those that needed to be scrapped. During February, 21 water tankers were hired, especially during the unprotected strike. Support was also received from the Department of Cooperative Governance and Traditional Affairs (COGTA).

Ms Londiwe Sotshede, Acting Chief Financial Officer (CFO): Ugu District Municipality, reported the municipality was facing budget challenges, which was being attended to in conjunction with the Provincial Treasury, hence the revision of the draft adjustments budget that was adopted by council on 28 February. The Provincial Treasury had requested further cuts on expenditure which the municipality had implemented and tabled to council on 12 March. Going forward, their 2020/21 budget would be based on realistic revenue assumptions, and expenditure would be aligned with anticipated revenue collection and cost containment measures.

There had been challenges with the billing system, which were currently being attended to. The reason for these challenges was that they moved from the Revenue Management System (RMS) to the Sage system, which had not been fully configured. There had been an improvement in the turnaround time to attend to customer queries. The municipality had had service interruptions from the South African Post Office (SAPO), as payments were not made in time due to the financial constraints. Customer bills had now been sent to customers on a monthly basis. The municipality was calculating its collection ratio based on the monthly billings vs receipts, and that was why there had been a difference in the ratios.

Concerning financial interventions, she reported that a financial recovery plan had been developed, and it was being reviewed to optimise the effectiveness of its implementation. Assistance was also being provided by the Provincial Treasury and COGTA to address government debt. The focus was being placed on high-use consumers to strengthen collection, and the municipality was considering the handing over of long outstanding debt. The indigent register was being reviewed to align with the registers of local municipalities.

With regard to critical vacancies, the post of the chief financial officer had been advertised and shortlisted. Interviews would be conducted soon. The post had been vacant since 2019. The Project Management Unit (PMU) was also being capacitated, including the Revenue Management Unit, to improve revenue collection.

The communication plan had been designed to respond to critical areas of supply. The mayor had convened meetings with all ward councilors within the district to inform them about the state of water challenges and the interventions being implemented with a view to communicating the same information to their constituencies. The call centre had been upgraded and was receiving up to date information which was being communicated to different stakeholders. All media platforms were being employed to communicate challenges and solutions.

She concluded by stating that the most urgent task on their side was to fill critical vacancies and to continue engagements with stakeholder and give them hope that everything was under control. The municipality was grateful to the Premier’s office, COGTA, the Provincial Treasury, the Department of Water and Sanitation and the Umgeni Water Board, for their support and provision of resources.

Ms Barbara Mgutshini, Deputy Director General (DDG): Planning and Development, COGTA, KwaZulu-Natal (KZN), commented that the presentation was a collective project of Umgeni Water and COGTA in the province. The parties involved had held several meetings with districts to focus on water provision and challenges. Ugu was one of the recipients of the funding and water tanks. COGTA was not only providing funding, but also exercising oversight to see if the money was going to where it was needed the most. Ugu was receiving special attention. The provincial COGTA had established a rapid response task team that would be dispatched to where there were challenges. It had assessed all the municipalities and had got support plans for Ugu in terms of activities the municipality had to action, including the filling of vacancies.

(Tables were shown to illustrate status of water services provision; raw water resources and bulk infrastructure; required water interventions; the debt collection rate; metre reading statistics; and conditional grants summary)

Briefing by Dr JS Moroka Local Municipality

There was a discussion on whether the presentation should continue after Mr Mandla Msibi, Member of the Executive Committee (MEC) for COGTA, pointed out he was surprised to find the suspended municipal manager, Mr Thami Kubheka, at the Committee meeting, because the invitation had been extended to the MEC and executive mayor only.

Members of the Committee wanted to find out why the suspended municipal manager was at the meeting.

Mr Kubheka informed them that no labour processes had been followed when he was dismissed. The court had not found any reason for his dismissal. The high court in Middleburg had re-affirmed his position as the municipal manager of the municipality. The court’s decision had been given to the administrator and the municipality. He had received an alert there was an acting municipal manager, and had instructed his lawyers to file for the review of the matter, because his dismissal had been illegal. He had received an email from the secretary of the Committee to attend the meeting in Parliament, because it would be discussing the issues of the Dr JS Moroka.

An official from the Department said the Committee secretary had not been aware there was an administrator in the Dr JS Moroka municipality. The invitation had already been sent to the municipal manager. The Committee secretary was advised only after the invitation had been.

The Chairperson indicated it could be that the suspended municipal manager had come to the Committee to understand what was going to happen at the meeting, and that he had financed his own travel. The suspended municipal manager had the right to attend the meeting, because it was open to the public.

Mr H Hoosen (DA) said the tug-of-war over who was in charge at the municipality was going to make matters worse.

Mr B Hadebe (ANC) said it was clear the municipality was under administration. The court matters had not been clearly communicated to the Committee. The court had set aside his dismissal, and the administrator was in charge, whether the municipal manager had been dismissed or not.

The Chairperson asked the Committee not to get involved in court battles about which it was not fully informed. She asked Mr Kubheka to remain at the meeting, because it was clear he had paid for his travelling costs.

The Committee then agreed to continue with the presentation.

The MEC briefly informed the Committee there were anomalies within the municipality, which was why section 139 (b) of the constitution had been invoked. During July 2019, his office had sent a letter to the municipality to try find out why the offices were closed and services were not being rendered to the people. The executive mayor had given them an unsatisfactory response. The executive mayor, speaker, and chief whip had held discussions with the municipal manager, because he had taken the municipality to court. The administration team had been sent to meet the executive management, organised labour and the municipal manager in order to get a full picture of what was happening at the municipality. The administration team had presented an unsavoury report about the municipality. A forensic investigation was conducted, but it could not be presented because there were two opposing groups in the municipality, with one group representing the municipal manager while the other was fighting for the executive mayor. The Minister had suggested the application of 139 (b).  During a Portfolio Committee (PC) meeting in January, the Provincial Executive Committee (PEC) had taken a decision to put the municipality under section 139 (1) (b) in order to address the problems in the municipality.

He said the municipality faced three problems:

  • Monthly financial statements were not submitted, and a financial expert had been sent to manage the matter.
  • Non compliance with regulations. A legal expert had been sent to deal with matters of compliance.
  • The administration was not functioning, so an administrator had been sent to deal with the running of the municipality

Terms of reference for the administration team had been developed so that they could communicate weekly with the MEC. The situation was so volatile that the South African Police Service (SAPS) had refused to help them. That was why they were also requesting the Committee to speak with the Minister of Police. He had been informed by the administrator that it was difficult for him to do his work because they had been held hostage by gangsters, and that no service provider would be paid until everything had been verified. He said Mr David Masombuka had been appointed to look at the finances of the municipalities, but he had later resigned because he feared for his life. The presence of the suspended municipal manager was hindering the progress of the municipality.

(Due to time constraints the MEC was asked to cut short his narrative and prepare the Committee a full report on the matter, with dates for each item or incident)

Mr B Mhlanga, Administrator: Dr JS Moroka Local Municipality, took the Committee through the status of the municipality and touched on institutional arrangements, state of governance and finances in the municipality, and intervention programmes.

He said there had been hostility towards the administration team since its inception on 3 February. The team had been held hostage more than three times by a group of individuals within the premises. They had been barred from entering the premises, and this was informed by letters issued by Mr Kubheka to a security company to keep the team away from the premises. Documents were not made available when requested by the administration team, and there had been lack of support from the SAPS to protect them.

He informed the Committee that there were many vacant management positions. The three-month period for acting managers had lapsed, and there was a vacuum at the senior management level. There were delays in the finalisation of the disciplinary hearings. The majority of the managers implicated in wrong doing were from the finance directorate. These officials were not allowed to enter the municipal premises, regardless of the outcomes.

Regarding the state of governance in the municipality, he pointed out there was a lack of oversight committees, and a lack of implementation of council resolutions. The 2018-19 audit had been halted due to community protests and a lack of cooperation by management. Key council documents – the integrated development plan (IDP), budget process plan, mid-year budget and performance assessments -- were not tabled due to non-sitting of council. The political instability in the municipality had also worsened the situation. There had been a lack of support provided by the municipal administration to the risk and audit committees.

The budget of the municipality had deteriorated for the last three financial years and was currently unfunded, with an amount of R227 million in terms of the Provincial Treasury assessment. This had resulted in the withholding of the equitable share transfers by the National Treasury. Currently, the municipality was transacting outside the financial system, which was making it difficult for Provincial Treasury to assess the financial performance. The accuracy of the financial records or reports, and the reconciliation of daily transactions, had remained a challenge. Therefore, the municipal infrastructure grant (MIG) spending was standing at zero percent, and the municipality could not prove whether the grant funding was cash-backed.

The budget steering committee was reported to be non-functional.  The deteriorating cash flow had resulted in an inability to honour obligations. Low revenue collection and increased debt impairment were due to ineffective collection systems. There was no credible valuation roll that informed the accuracy of the billing system. Prohibited expenditures in the form of unauthorised, irregular, fruitless and wasteful expenditure, were among the main challenges.

Mr Mhlanga also revealed there had been a late appointment of service providers for capital projects for both the MIG operations and maintenance. The current MIG expenditure was standing at 26%. There was a need to build internal capacity to capacitate the project management unit (PMU) of the municipality. There was a lack of water infrastructure related projects, and this had resulted in the lack of interaction between the Department of Public Works (DPW) and the municipality on water-related issues. Water-related by-laws were lacking. As a result, there were illegal connections and some business people were selling water on behalf of the municipality.

Lastly, he said the intervention programme had been designed, amongst other things, to fast track the finalisation of disciplinary hearings; the filling of critical positions; develop a clear audit action plan that was linked to consequence management; ensure 100% expenditure on the MIG programme; engage the Auditor General (AG) to resume and finalise the 2018/19 audit; and to restore functionality of section 79 and 80 committees.

Discussion: Deliberations on Ugu District Municipality

Mr M Hendricks (Al Jama-ah) commented he had taken special interest in water matters across the country, because the constitution said people must have access to water. The budget had been allocated, but the expenditure had been less. It was clear there had been no leadership in the district. 14 shop stewards had mysteriously been suspended because of dissatisfaction with the leadership. As a result, they had been silenced. It was pointless to give excuses for challenges. Solutions were needed for the problems and to make sure that people had access to water.

Mr Hadebe wanted to know for how long had the municipal manager been sick, and asked if the municipality would meet the deadline for securing a permanent municipal manager. He commented that the urban areas had more meters than the rural areas, yet the district was 80% rural. He wanted to know how much the municipality was spending monthly on hired water tankers. He asked about the time frames for the projects, and how much had been allocated for repairs and maintenance.

Mr Hoosen said the presentation had not stated that there was something wrong in the Ugu district. He wondered how the mayor could come to Parliament to explain why he was not delivering any service. That must be embarrassing to the leadership of the municipality. The problem appeared to involve poor management of the municipality and corruption. The problem had been going on for a number of years, but it did not appear it would go away soon. He asked if there had been any politician or staff member that had been benefiting from companies dealing with the municipality. How was the municipality going to ensure that those who were sabotaging the water infrastructure were going to be jailed?

Mr C Brink (DA) wanted to establish how the municipality was going to ensure people had access to water. He asked if the adjusted budget had been approved and voted on. What was happening regularly to update councillors on water matters?

Mr B Luthuli (IFP) remarked that Umgeni Water had been asked to assist Ugu with bulk water, but Ugu had refused the offer to help. It wanted joint management of the project. The main reason for the refusal had had not been clearly indicated. He said the presentation was not a reflection of what was happening on the ground.

Ms G Opperman (DA) asked for an update on the 121 employees and 15 shop stewards that had been suspended. Had borehole drilling been considered as an option? She wanted to know what the impact would be on the audit of expenditure, seeing that Ugu had bypassed procurement procedures.

Ms M Tlou (ANC) asked that the Committee be given the main reason for suspending employees and shop stewards. What actions had been taken to ensure things would return to normalcy, because the strike had started around 8 January and continued until the end of February? She asked who was coordinating meetings with stakeholders. Did the municipality have trained people for infrastructure maintenance?

Mr G Mpumza (ANC) commented that the acting municipal manager had not provided details about the Special Investigating Unit (SIU) investigation into the water crisis. The mayor appeared to be sleeping normally, as if there was no problem of providing water for the communities. The preponderance of unrest in the municipality was an indication of the absence of a labour relations forum in the municipality, because if it was there, there would not be so many challenges. He wanted to know what measures were in place to intervene in a situation where there had been no water since 2015, and asked why the municipality had been reluctant to approach National Treasury for a regional bulk infrastructure grant. He remarked that the communication plan of the municipality had been a knee-jerk reaction. Communication was a strategic function in order to engage with stakeholders. He could not understand why the apex of the administration had acting people, because that was an invitation for the AG to qualify the municipality.

Mr K Ceza (EFF) asked what the strategy was for the district to bridge the gap in terms of capacity, to ensure the attraction and retention of skills to rural municipalities. Municipalities were the face of service delivery, but it appeared that all municipalities in SA had a lull period -- not knowing what to do for a certain while. He asked how effective the IDPs were. Did the municipality have a central register to capture the names of employees involved in wrong doing so that they did not get employed elsewhere while their cases were continuing?

Mr T Brauteseth (DA; KZN) commented that the entire problems of the Ugu district had been evident in the AG’s report. The municipality was sitting on a disclaimer. It had failed to account for proper revenue collection, water losses, internal control deficiencies, fruitless and wasteful expenditure, and had flouted supply chain management (SCM) procedures. He wanted to know how much had been set aside for improving infrastructure because it had been vandalised. He asked the delegation to give reasons why Ugu should not be placed under administration. He suggested the Committee should consider establishing an inter-ministerial task team to come up with a solution for these problems.

The Chairperson asked if the municipality had a legal department. She wanted to know the nature of assistance provided by Umgeni Water to the municipality, and asked why that collaboration had not been mentioned in the presentation. The capacity of the municipality to collect revenue was a concern. She asked the Committee to be given a list of the departments that owed the municipality money. She said the presentation did not mention anything about the disaster management plan. Had consequence management been implemented against officials who had submitted late financial statements? Could the municipality guarantee the safety of water consumed by the people? How much had been spent on tinkering?

Due to time constraints, the Chairperson asked the municipality to respond in writing and come up with a master plan that talked to the concerns raised by the Members. The interactions had been an eye-opener. She asked the acting municipal manager to give the concluding remarks.

Ugu’s response

The Municipality responded they had not been oblivious to the concerns raised by the Committee and constituencies on matters related to water. Their intention was to respond to these matters and try to address the needs of the communities within the Ugu area. A proper diagnosis of what had happened had already started.

The main problem was around the absence of the Regional Bulk Infrastructure Grant (RBIG) and that was where Umgeni Water came in. Not all was bad in Ugu. There were pockets of excellence. The municipality had already spoken to the Municipal Infrastructure Support Agency (MISA) on some other matters. It was developing an oversight report which had given them pointers to what needed to be attended to, and it had to be approved by the end of the month.

In terms of the AG’s findings, the municipality had moved from a disclaimer to a qualification, and it was correcting all the findings. Critical vacancies which had caused instability would be filled, especially the position of the CFO. Other portfolios under the CFO, like the budget office and revenue collection, would be given serious attention. By the end of April, they would have developed a turnaround plan for the municipality. This would be done with support from COGTA and other relevant departments.

Deliberations on Dr JS Moroka Local Municipality

Mr Brink asked if the MEC was certain that section 139 (1) (c) could not be invoked without first exhausting other avenues. It was clear the administrator and the provincial administration were overwhelmed by the situation. If the provincial government's account was accurate, there was no reason why the matter should not have been handed over to the courts in order to get a protection order.

Ms Tlou asked how many people had been fired since 2019, and enquired who the signatories were at the bank. She wanted to know if the former municipal manager was still benefiting from the state after being fired by the council.

Mr Ceza wanted to know what was being done about water delivery, because it was the ordinary people who were suffering. He reasoned it was unfair to centre the discussion and presentation on a person who was said to be an anarchist. He asked how much money was owed by creditors to the municipality. He remarked the situation was an indication of corruption in the municipality, and the mayor was keeping quiet on this matter -- his role in terms of remedying the matter had not been explained. There were allegations of nepotism within the municipality, because the wives of certain managers were being appointed to positions. He asked why the 2009 Agrihub had not been completed, because the intention to build it had been to help people. He asked if there was money available to complete it, and if it was not available, where was it going to be sourced? How was the issue of water being sold to people by private individuals going to be remedied?

Mr Hoosen commented that it appeared that the SAPS was dysfunctional in the area, because it was not clear whether the Provincial Police Commissioner had ever been approached about the situation in the municipality. He suggested the MEC should write a movie titled Who's In Charge about what was happening in this municipality, because the incidents that were happening in this municipality happened only in movies. He asked the MEC and administrator to start all over again.

Mr Luthuli said the people who were suffering the most were the ones living under the JS Moroka Municipality. If the administrator could not be helped by the police, the Committee had an obligation to approach the national Minister of Police to look into the matter. The whole thing was a joke -- he had never seen anarchy like this before.

MEC Msibi made it clear to the Committee it was not going to be easy to invoke section 139 (1) (c), because the forensic investigation would be completed only at the end of March. This was making it difficult for him to answer the questions from Members, because that would be jeopardising the work of the forensic investigation. The only thing he could do was to send the Committee the terms of reference for the investigation. He added that the mayor and municipal manager could not comment on the questions, because it would be unfair for one of them to comment and the other not to comment. The former municipal manager had been interdicted to account to the municipality before end of March.

The Chairperson commented that there was anarchy in the municipality, and there was no reason why the MEC could not approach the courts for an interdict and exercise all the powers vested in him. She suggested the MEC should get a legal opinion on steps that should be taken to resolve the matter without wasting time. It was clear there were no services rendered in this municipality.

Mr Hoosen said it was clear the municipal manager was not acting alone in this whole matter. Surely, he was in concert with other politicians.

Mr Msibi said he had no information on that matter. He admitted they had delayed in dealing with this because they had thought everything would be fine.

He assured the Committee that payments of accounts were done through the office of the administrator, because the municipality could not afford to pay for rendered services it did not know about. Furthermore, the administrator had talked with the cluster commander and special commander of SAPS about the situation. It had been alleged that the commanders were part of the process of causing instability. He had even spoken with the PEC about the allegations involving the special and cluster commander, and the matter had also been relayed to the MEC for Safety, but nothing had happened.

The Chairperson asked what the MEC was recommending the Committee should do, if there were gaps in the local government legislation.

Mr Msibi said local government was in need of legislation reform. For instance, if there were allegations against an executive mayor and municipal manager and an MEC was asked to put the matter aside during an investigation, there was no law that dealt with that. Mayors, for example, did not have any jurisdiction over councillors.

Mr Hoosen said though he sympathised with the MEC, it was not acceptable to suggest there was nothing he could do. That was shocking, because the MEC was in charge of the Department and had to make things happen by using his powers.

Mr Ceza indicated it was unfortunate that because of the forensic investigation, the Committee could not interact with the municipal manager and mayor on things that had come up during the presentation.

A COGTA official assured the Committee the Department was working with the province on this matter. The fact that section 139 (1) (b) had been applied showed that interventions had taken place and that the municipal manager and administrator should abide by the regulations. The Department had already interacted with the executive mayor, municipal manager and the MEC. It had advised the municipal manager to refrain from convening council meetings because he had no standing. It had further advised the Speaker not to fight other people's battles, and to concentrate on his work. Lastly, COGTA was ensuring the administrator was being given space to do his work and restore the municipality to being able to continue providing services to its communities.

The Chairperson suggested the MEC should keep on updating the Committee on the interventions as they happened, and reminded him to continue to seek legal advice on the steps that should be taken when the municipality was in a state of collapse. She also urged that the finalisation of the forensic report should be speeded up so that the Committee could get details on action that should be taken, because there must be recourse and a remedy for the situation. She said there was no reason why section 139 (1) (c) could not be invoked. The MEC had the law on his side.

The Committee would deliberate on the matter and come up with resolutions on what should be done.

The meeting was adjourned.

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