Petition from residents to investigate allegations of corruption and maladministration at Knysna Local Municipality with the Deputy Minister

Meeting report

Mr H Hoosen (DA) was elected as the Acting Chairperson.

Briefing on the Petition from residents to investigate allegations of corruption and maladministration at Knysna Local Municipality

Rev Ralph Stander, Leader of Knysna Unite, briefed the Committee on a petition that called for a forensic investigation into the allegations of corruption and maladministration against the Knysna Local Municipality. Knysna Unite was a community organisation that operated in Knysna and was formed more than a year ago when the municipality started to introduce pre-paid water meters into Knysna. Rev Stander said that what was strange was that water meters were only pushed in the Black community, with the White community being excluded. Knysna Unite therefore decided to do something about this situation.

An important issue at the time was pre-paid water meters. Rev Stander said that most people do not buy pre-paid electricity so how were they going to afford pre-paid water. So this was the starting point and the matter was even taken as far as the HRC (Human Rights Commission). The added concern was that the Knysna Municipality was pushing the pre-paid water meter issue with such vigor even though it was not in the budget. The Auditor-General questioned this as there was no official tender for the project.

The municipality was also ‘piggy-backing’ on the Cape Town City Council tender which was illegal. The municipality acquired 4000 water meters and then right after this acquired another 4000 meters while all the meters had not even been installed.

Rev Stander said that the Municipal Manager has no interest in poor people. The municipality was also spending lots of money on consultants. The other issue was about the CFO who was supposed to look after the financial affairs of the municipality but was under investigation.   

All these issues prompted Knysna Unite to call for a forensic investigation into the allegations. Knysna Unite took this issue as far as they could, to the Public Protector, the Provincial Government even as far as the Human Rights Commission. People in Knysna are very poor and suffering even more under COVID-19.

He also alleged that the ANC Chief Whip in the Knysna Council was assaulted by the Chief Financial Officer of the Knysna Municipality.

The Municipality’s response

The Executive Mayor of Knysna, Councillor Elrick van Aswegen, said that the Committee had received a response from the Knysna United letter and a copy of the petition. He said that he was appointed by a Mayoral Committee who exercised oversight over various portfolios.

He said he would deal with the following issues:

1. Knysna Municipality does not have a mayor;

2. The suspension of the Municipal Mayor;

3. No or very little service delivery in Knysna;

4. Prepaid water meters; and

5. Allegations against the CFO.

1. Knysna Municipality does not have a mayor

Mr Aswegen said that since the removal of Mark Willemse, the then Mayor of Knysna – after his membership was terminated by his political party the DA – the Executive Deputy Mayor appointed a Mayoral Committee who exercised oversight over various portfolios. These portfolios were aligned to different directorates within the municipality. As a result of the pending litigation matter instituted by Mark Willemse against the DA, in a bid to have him reinstated it was decided not to fill the vacancy until the conclusion of the civil matter. Judgment was handed down against Mr Willemse in March 2020. The election of an Executive Mayor was delayed due to COVID-19 regulations. On 11 June 2020 the Council elected Councillor Elrick van Aswegen as the new Executive Mayor.

2. The suspension of the Municipal Mayor 

As a result of the breach of fiduciary duties of the Municipal Manager, the Knysna Municipality resolved to conduct an investigation into the allegations of serious misconduct in accordance with the disciplinary regulations for senior managers. The investigation was conducted by an independent investigator from Stadler and Swart attorneys, not by the Executive Deputy Mayor or the CFO as was alleged. The Charges regarding irregular expenditure, financial misconduct and other matters related to the breach of fiduciary duties of the Accounting Officer has been formulated. The proceedings against the Municipal Mayor were not frivolous. He could not divulge anything further because the disciplinary procedures were confidential.

3. Little or no service delivery in Knysna

Mr Aswegen (the Executive Mayor) said that this allegation was without any truth because there were a number of projects in water sanitation and roads currently running. This included the grading and blading of gravel roads. There were lots of improvements required in areas with African communities.

On community projects in the 2018/19 financial year, there was a massive community project which saw the upgrade of a sports ground in a White location and a multi-purpose centre to the value of R3.2 million. COVID-19 has caused delays to this project although it is in quite an advanced stage. There were upgrades to the library and the ablution facility in the taxi rank to the value of approximately R12 million.

The Mayor said that bulk infra-structure projects were completed in the CBD (Central Business District) G-way and Palm station to the total value of approximately  R9 million. A number of phased out infrastructure projects were also commenced with. The value of these were in the region of R82 million.

A few of the upgrades in 2019/20 were: the Holy Water Reticulation system; the upgrade of Knysna Water Treatment Works; the Charlesville water supply; the CBD Pipe and placement and the Grey Street upgrade which was still continuing. The electrification of a number of informal settlements with a total of 243 new connections has also been completed. Over 17km of pothole repairs has been completed with over 9km of resealing of tarred roads and 42 km of re-gravelling of gravel roads. Spreadsheets have been enclosed with features of these service delivery projects.  

Integrated human settlement projects included a number of housing projects on the way in the greater Knysna. A total of 149 structures have been completed and a number of other projects have commenced or were at the stage of practical completion. A report has been attached showing progress on integrated settlements.

On Small, Medium and Micro Enterprises (SMMEs), a total of R67 million was spent on HDIs which includes SMMEs and small scale contractors for the 2018/19 and 2019 financial year. A total of R985 112 was spent on SMMEs and small contractors in the 2019/20 financial year.

The Mayor said that there have also been a number of Ward specific projects like access ramps, installation of repairs to town halls, outdoor gyms and the installation of CCTV cameras. This shows clear evidence that service delivery to the local community continued to take place through both grant funding and internally generated funds.

4. Pre-paid meters

It was safe to say that the prepaid water meter tender was procured in accordance with the provisions of Regulation 32. This tender was subject to forensic investigation.

5. With regard to the allegations levelled against the CFO by Knysna United, these allegations were served before the Council on 19 March 2020. The allegations have been referred to the disciplinary board established in terms of the Municipal Regulations and the Financial Misconduct Act. The report from the disciplinary Board was served before Council on 11 June 2020. The disciplinary Board resolved that there was prima facie evidence of irregularities in the award of this tender which warranted further investigation. The Council resolved to appoint a Forensic Investigative team to conduct a forensic audit into the award of this tender and into the irregularities in the award thereof. Further information cannot be divulged because the matter is currently under investigation.

The Mayor said that he felt the need to raise an issue here. The water meters, as stated by Reverend Stander was a very contentious issue. He just wanted to give the Committee a few figures on this: R62 million was spent on water meters. 7500 water meters were purchased and 6995 of them were received. 5000 of those meters have been activated.

He said that now he was speaking as the ward Councilor of Ward 6. In his Ward there were interactions on a monthly basis with the constituency of Ward 6. Since 2017 he had reported back on a monthly basis every first Monday explaining to them what was going to happen and how the water meters were going to work. He added that he had explained that water meters would not be forced on community members as it was their choice. His interaction with the municipality was quite clear as he might not need water meters in his Ward at this stage but given that people were receiving accounts for R203 000 for water, and water meters could address this, he would be in support of them. He appreciated the opportunity to be able to respond.

Discussion

The Chairperson said that Dr D George (DA) asked if he could participate in the meeting as his constituency was in this municipality under discussion.

Ms P Xaba-Ntshaba (ANC) thanked the Executive Mayor for the presentation. She stated that during the presentation, the Executive Mayor had mentioned that a forensic investigation had been conducted. She requested clarity on the outcomes of this investigation and asked for it to be shared with the Committee.

She recalled that the Executive Mayor had spoken a lot about Ward 6, the ward he represented. She asked how many wards were situated in the municipality and what would happen to other wards if there were any, seeing that the Executive Mayor only focused on the water challenges in his ward.

She asked what the finding of the forensic investigation he had spoken about was.

Mr K Ceza (EFF) said that he will be patient with the Knysna Municipality and will address the issues as they happened. He quoted section 149 of the South African Constitution that dealt with essential, national standards and minimum standards that had to be in place for work to be conducted.

He asked of the Executive Mayor to explain what he (the Executive Mayor) thought the Committee should do about the issues that had been raised.

He also asked whether the Executive Mayor had any recommendations and proposals that could benefit poor people that resided in informal settlements that ensured sustainable livelihoods for the most vulnerable.

Mr Ceza further pointed out that South Africa was currently under a State of Disaster. The Executive Mayor did not elaborate on the impact that the tender in question had on poor households and households headed by children and the most vulnerable.

He added that even though the Executive Mayor had only been appointed 72 hours ago, he still had enough time to familiarise himself with the challenges in his municipality, especially as it related to the immediate needs as a result of Covid-19. He asked what impact the tender had on informal areas.

He asked further what proposals he was making with regard to persons implicated in that tender.

He wanted to know what happened to the water tankers. ‘Where are the water tanks/Jo-Jo tanks’?

He also wanted to ascertain whether the Knysna Municipality was politically stable. He recalled that he had read about the municipality's CFO who had assaulted a female municipal employee. **He wanted to know whether a case had been opened and whether the Executive Mayor knew the case number. ‘This was supposed to be a progressive society; one cannot allow such things to happen’.

Ms M Tlou (ANC) expressed her displeasure with the Knysna Municipality. She lamented the lack of service delivery to the residents of Knysna.

She said that she had realised that Knysna had no serious leadership and governance structures because the municipality faced a multitude of challenges that included a lack of accountability. This, she said, also affected the entire community of Knysna as it was evident that the municipality had inadequate human resource capital needed to properly administer a professional administration between organised labour and the Council. She asked the Executive Mayor to explain why this was the case.

According to her, the Knysna Municipality was rife with poor performance and maladministration and she asked the Executive Mayor what consequence management had been implemented and what measures had been put in place to ensure that those who are doing wrong would be disciplined.

She also asked;

• Whether the Municipality had a monitoring and evaluation system;
• What is happening when people are still having problems with water tankers, yet at the same time the Municipality spent R113 million for this propose? This was irregular and fruitless and wasteful expenditure; and
• What was the outcome of the independent investigation?

She questioned the lack of service of delivery as well as the decision by the Municipality to give contracts to unknown entities, yet there had been small businesses in dire need of the work. She asked the Executive Mayor to provide a list of all the consultants.

She lamented the procurement of another 4000 unused water meters that had not been installed as yet but were probably ‘gathering dust’ in the Municipality's storerooms. She noted that the Executive Mayor and the acting City Manager were supposed to provide a thorough briefing on this wasteful and irregular expenditure because this was what was happening in ‘your’ municipality. A clear explanation was needed of what was happening. Members have not heard in how many wards food parcels were distributed to soften the blow of COVID-19.

Dr D George (DA) stated that the Reverend had made salient points in his letter of complaint. He informed Members that when the former Municipal Manager resigned she had issued a statement that detailed the chronic dysfunction in the Municipality. He added that it was a fact that the Knysna Municipality had completely failed to deliver services to the community.

He added that the Knysna Municipality ran out of money in 2019 – unable to pay their staff and had to apply for a loan from the Development Bank of South Africa (DBSA) of about R71 million. When the former Municipal Manager (MM) resigned the loan was withdrawn. The Previous Municipal Manager had called for the municipality to be placed under administration. The Western Cape Provincial Government then reached out to Knysna and offered assistance, however the offer was turned down. Powers would then have had to be delegated to the Acting Municipal Manager at the time. The support offered by the province was rejected, and there was uncertainty about the loan. There was a very deep seated problem in Knysna. ‘There needs to be a broader forensic investigation, but more importantly how did the municipality run out of money’?

He asked the Executive Mayor how satisfied was he that they would not run out of money again anytime soon.

The Provincial Government wanted to send additional resources to Knysna to prevent it (Knysna) being placed under administration. Knysna refused the assistance as the Council refused to delegate powers to the acting MM. ‘Why did they not want to accept support and assistance from the province’.

He recalled that Knysna had chronic governance and service delivery issues. He called for a thorough forensic investigation that covered every aspect in Knysna and not to limit it to the Municipal Manager and the CFO only.

He asked the Executive Mayor how satisfied was he that Knysna would not run out of money again and why Knysna refused assistance from the Provincial Government.

He lamented the service delivery challenges in Knysna that continued unabated. He said that this situation was unacceptable.

‘What was most unacceptable was that it was the poor who got left behind’.

Mr B Luthuli (IFP) asked why the Executive Mayor refused to have Knysna placed under Section 139 (1b) as it seemed that the Council was dysfunctional.

He stated that he had not heard what had been done about the extra 4000 pre-paid meters that had been bought. ‘What was the cost of the extra 4000 meters’? Knysna was now sitting on more than 4000 meters that were not being used.

He wanted to ascertain what the cost to the tax payer of the extra 4000 water meters had been.

Ms Xaba-Ntshaba asked the Executive Mayor to address the issue about the selective installation of pre-paid water meters and also what is the time frame around the forensic investigation into the prepaid water meter tender?

‘Further, under the circumstances do the people of Knysna local municipality have the capacity to provide quality service to the people of Knysna’?

Mr Ceza asked if the Municipality does have the capacity to prevent corruption in the future; and if yes, what systems are in place to do so in terms of pre-empting and preventing corruption in that municipality.

He asked further what the Executive Mayor would do now in terms of the spread of COVID-19.

Mr H Hoosen (DA) noted that he was aware that Executive Mayor van Aswegen had been appointed 72 hours ago and that he had inherited a municipality in dire straits. The Executive Mayor and councillors had been elected with the promise that they will better the lives of their residents. It did not appear that this has materialised as there are serious issues of financial mismanagement, corruption and maladministration. ‘So as a newly elected Mayor, what is your plan and vision to turn the situation around’?

Mr Hossen also added that R62 million had been spent to procure 7500 pre-paid water meters. This came to about R8500 per water meter. ‘Look at prices out there in the market, it is about half of what the Municipality has paid. Something does not appear very kosher there. I want to hear from you what action you are going take against the culprit who has used the people’s money to either line their own pockets or those of unscrupulous business people there. You have to provide comfort to the Committee that you are helping the people in that Municipality’. He noted that something did not seem right about this procurement.

About the water meters he said ‘You procured 7500 water meters, you received or installed 6950. There was still a shortfall of quite a few water meters, please explain this to us’?

Responses

The Executive Mayor informed Members that it was not the Council that took a decision to not invoke Section 139 of the Constitution. He wanted to make it clear that the Council never debated Section 139. When the previous Acting Municipal Manager (MM) resigned, she made it clear that she could not function in an environment with too much influence from external factors. This he understood to have meant, influences that emanated from structures outside the Municipality that did not reside in Knysna.

On the R71 million loans from the DBSA, he said that the current Acting MM will respond to this particular question.

On the political instability in the Knysna Municipality; the Executive Mayor blamed the DA who brought actions against their own previous Mayor. According to him when the previous Mayor started litigation, Knysna's problems started and the DA instigated an investigation into the previous DA aligned Mayor. This situation put this municipality - especially the Council- under serious strain which was why they had the Deputy Mayor in an Acting post for close to a year. Therefore this municipality did not have a Mayor because of the DA actions against the then Mayor Mr Mark Willemse. As a result of the political instability, the Deputy Executive Mayor acted for almost a year as there had been no Executive Mayor. The political instability had been brought to a close with his (the current) Executive Mayor’s election as the new Executive Mayor on 11 June 2020.

With regard to the question about selective installation of pre-paid water meters he said it was not done selectively. The water was never metered there. He refuted allegations that the pre-paid water meters had been installed selectively. He said he wanted to re-emphasise that not one household was forced to accept a water meter. Areas that had no prepaid water meters received water meters first. Not one household had been forced to take a water meter.

On poor service delivery, he noted that the Deputy Executive Mayor that was seated next to him lived in Knysna's poorer neighborhood and that he would be able to inform Members about the challenges in his community.

He said that he was unsure about the question on water tankers.

The Executive Mayor also explained that Knysna's woes did not start with political instability. The woes started with the devastating fires that ravaged Knysna. The fires led to many businesses being closed and people losing their jobs.

He explained that Knysna ran out of money in December 2019 and that investments had been used to pay creditors and municipal staff.

He said that it was a legislative requirement that every Municipality has the responsibility to protect communities especially the most vulnerable. Knysna has an active support structure for indigent communities. Knysna provides six kiloliters of water for free to poor communities and another three kiloliters of water to other citizens. 

Knysna also provided 30 units of free electricity to the poor. He stated that it was quite clear that Knysna was not perfect but it tried to assist the poor and vulnerable to the best of their ability.

He asked the Chairperson if he could ask the Municipality's Legal Manager to provide a synopsis of all the legal issues currently and disciplinary actions being instituted against officials.

The Chairperson said that there were still questions – some of them very specific - that had not been responded to. Before handing over to the MM there was an opportunity for him to address the Committee to give his vision to the Committee about turning the Municipality around.

The Executive Mayor said that some of the questions will be answered by Mr Louis Scheepers the Legal Manager and the MM. The Chairperson had asked a very important question. This was what he was going to do as the Executive Mayor. He had inherited a Municipality with a lot of problems and it would not be an easy task. When he received congratulations on his appointment, all of them said that they did not envy his position. There were a lot of challenges. Challenges were not his biggest fear. His biggest fear was that he would disappoint the people out there. The people of Knysna were tired of instability, negativity and hearing about all the negative things on social media. He assured the Committee that this Counsel followed the regulations and the right procedures when dealing with the issues. Rome was not built in a day. He knew that the spirit of the Municipality and Counsellors from all political parties wanted to make sure that Knysna was turned around. A turnaround strategy has been adopted. The province has been engaged with on this issue and the Provincial Treasury. They were making sure to take the Communities with on this journey. Everyone’s support was needed to turn Knysna around.

The Deputy Mayor Mr Aubrey Tsengwa, said he would deal with two issues. He insisted that these were allegations which could not be proven. These water meters were only installed in the poor areas. Knysna Unite was misleading the Committee. He added that water meters were installed in about nine of the 11 eleven wards. It was only in wards nine and 10 where the Counsel had taken a decision that water meters had to be installed in those two wards. ‘Water meters were all over show in Knysna’.

With regard to the allegation that the Chief Whip of the ANC was assaulted by the CFO: he was in that meeting and there was no assault. Service delivery was taking place in all the areas. He came from the poor area. Services were delivered there. They had almost everything. He just wanted to state categorically that these allegations could not be tested. He appealed to Rev Stander after the session to produce evidence. He reiterated these were allegations that could not be tested.

The Deputy Mayor said that addressing all the challenges in Knysna will take time as Rome was not built in one day. The Council had devised a turnaround strategy for the Municipality and there had been consultations with the Western Cape Provincial Government on the turnaround strategy. Knysna's residents were also engaged to gauge their sentiments.

On the company building houses which was awarded a tender by the suspended MM…

The Acting Chairperson interjected and said that the Deputy Mayor was dealing with issues that had not been raised.

The Deputy Mayor asked what the questions were.

The Acting Chairperson said that ‘you don’t even know the questions that had to be responded to’. That was why he said that the (DM) was dealing with all sorts of other issues.

Ms Xaba-Ntshaba asked for the name of the company involved in the housing tender.

The Deputy Mayor said ‘JPB’.

The Deputy Mayor questioned the allegations that had been leveled against Knysna Municipality, the Council and that the Municipality had installed pre-paid water meters in the poor areas of Knysna. These areas were situated more to the north of Knysna. He asked the Committee to ask for evidence.

He also questioned the allegations of assault by the CFO of the ANC Chief Whip. He said that Knysna United had misled the Committee about the true state of affairs. He stated that he had been in the meeting where the supposed assault had occurred, and nothing untoward had happened.

He added that the northern areas had access to tarred roads, electricity and water and that it was important to clarify this point. He called on Rev Stander to provide evidence to substantiate his allegations.

The Executive Deputy Mayor accused Rev Stander of a conflict of interest as Rev Stander was apparently awarded a tender by the suspended MM. According to the Executive Deputy Mayor the tender had been awarded illegally and Mr Stander was still benefitting from this tender. He accused Rev Stander of being out of touch with the needs of the poor. He also informed the Committee that Rev Stander also benefitted from another tender that was allegedly awarded to the company JPB.

Mr Louis Scheepers Acting Municipal Manager, Knysna Municipality, said that he would respond two questions. One was the DBSA loan and the second one was Knysna's interaction with the Western Cape Provincial Treasury and dealing with the financial position of the municipality.

With regard to the loan, he explained that the DBSA did not fund operational expenditure, it funds capital projects in municipalities, and this was what the R71 million loan was for. In terms of the status of the loan at the moment, the DBSA Risk Committee after taking cognisance of the situation in the municipality expressed their worry about instability in the municipality. Mr Scheepers said that a meeting was had with the DBSA on Monday were questions were asked regarding stability and what was happening in the municipality at the moment. These questions were answered to their satisfaction, and these answers would be taken back to their Risk Committee that was sitting next week. According to the people spoken with in the DBSA, they foresaw no problem with the loan being released and the money being paid to the municipality.

On interactions with the Provincial Treasury, he said that they had a very constructive meeting with the Western Cape Provincial Treasury today. They reflected on a Diagnostic Review with the Provincial Treasury together with what the Provincial Department of local government has done in the municipality, and what was left now was implementation of the matters that flowed from the Diagnostic Review.

He conceded that the municipality was facing financial viability constraints. This was as a result of a few things, the 2017 fires and COVID-19. He noted that this was a municipality highly dependent on tourism for its economic activities in the municipality and was suffering more than other municipalities because of this. From an economic perspective what they would have to do was to make sure that the local economy was diversified so that all the ‘eggs’ was not in the tourism basket as was the case at the moment.

There were internal issues that impacted on its revenue raising capacity. Of concern were internal challenges such as the ability to raise revenue, the ability to implement proper credit control measures and to ensure the acquisition of the right skills. Those matters were all under consideration at the moment together with partners in the provincial government, with both the provincial treasury and the Provincial Department of Local Government. It was important to say that one of the abiding themes in the discussion with Provincial Treasury today was what was needed was local solutions to the problems. This meant that the local municipality had to provide answers to the situation it was in at the moment. 

Even though he had only assumed his position recently he was confident that they would be able to turn things around. This would necessitate hard work from both the administrative and political leadership in the municipality, having partnerships with individuals and institutions in our communities and partnerships with provincial and national government partners.

The Acting Chairperson asked the Mayor if all the questions had been answered.

Executive Mayor van Aswegen said that the Legal Manager needed to respond to the legal questions and the disciplinary process that the Committee had asked.

Executive Mayor van Aswegen said that the Acting Chairperson's calculations about the water meters were correct. This was why the matter was currently under investigation.

Knysna Municipality's Legal Manager, Ms Melony Paulsen, said that a Member had asked about the procedures investigation that Council had resolved on 11 June. She said that the legislation required that the investigation had to be completed within three days of appointment. So the legislation dictated how long the municipality had to conclude that forensic investigation.

She said her office was re-assigned duties during COVID-19 to attend to relief aid in Knysna. In answer to the Committee’s question on relief aid to communities, they had decontaminated and continued to decontaminate all public areas on a weekly basis. They are still vetting and awarding vouchers to the value of R350 to persons in need of food aid. They had received R550 million from Premier Winde which bought 1500 food parcels that had been delivered to vulnerable communities and affected persons. The figure for food parcels was quite high and together with Rotary, Knysna was still sending out vouchers to the value of about R3 million. Relief aid was continuing even though they were on Level 3.

She also informed the Committee that her office had been assigned new duties such as administering the town's Covid-19 relief response. To date, the following had been done;

• All public spaces had been decontaminated
• issuance of R350 food vouchers to distressed residents
• 1 200 food parcels had been secured through funding by the Western Cape provincial government

The Acting Chairperson called on the Chairperson to take over chairpersonship.

The Chairperson was not available.

Mr Luthuli said that as the Executive Mayor was talking it was only proper to right down all those things because he did not think all the deliberations with Knysna would be completed today. Mr Luthuli said that the Executive Mayor should compile outstanding questions to ask which because of time constraints they were unable to do it.

The Acting Chairperson asked the Mayor if this was possible.

The Mayor said that the Committee would be given written responses.

Briefing by the Western Cape government on the situation in Knysna

Mr Graham Paulse, HOD: Western Cape Department of Local Government, briefed the Committee on the Western Cape Provincial Government's position on the allegations leveled against the Knysna Municipality. He said that he planned to deal with three matters. The allegations of fraud corruption and maladministration were received by the office of the MEC in the province and had been forwarded to the Western Cape Government and based on that, they have written to the municipality to ask for additional information. If one looks at 106 of the Systems Act, it states:  ‘when the MEC actually becomes aware of any allegations of fraud corruption and maladministration, the MEC must write to the municipality. Therefore the MEC does not have discretion. So the MEC has written and asked for additional information on all the allegations, and this has been forwarded to the municipality. In this province the Western Cape Government had its own Act which was the Western Cape Monitoring and Support Act of Municipalities, Act 4 of 2014. KwaZulu Natal has similar legislation in place, so in terms of this legislation the Department investigates all allegations of fraud, corruption and maladministration in municipalities. The municipality has been given 30 days to respond. No documentation has been received on the matter so the MEC has written to the municipality again and asked them to provide all the relevant information within seven days.

What normally gets done and this was in line with the legislation, was that if it comes to the MEC then there would be a full assessment of whether their exists prima facie evidence of maladministration, and if the Minister was of the view that there was evidence of maladministration then the Minister would designate forensic investigators to go and independently investigate the allegations. Presently they were at the point of waiting for the documentation from the municipality. On assessment and if the MEC is of the view that forensic investigators should be appointed, then the MEC will proceed to appoint independent investigators to do the forensic investigations. So the matter of the allegations of fraud, corruption and maladministration were in hand. The Municipality has decided to investigate the matter of the water meters and the appointment of the particular company involved.

In his discussion with the previous MM Michelle Gratz, all the documents were forwarded to the Western Cape government, but on checking their offices, the information was still outstanding.

With regard to the number of Acting MMs: the Acting MM Johnny Douglas had asked for a Diagnostic Review in 2018 which meant working with provincial departments, the Provincial Treasury, led by this government, and led by Environmental Affairs, Economic Development, and Development Planning to do a full assessment of the governance matters, finance matters, and service delivery of the municipality, a report was provided and at the point where the matter had to be presented to council, Dr Sitembele Vatala MM was appointed and a support plan was developed. Dr Vatala had agreed to proceed with the implementation of the support plan. Ms Gratz was then appointed recently and she approached the provincial government again to do a Diagnostic Review. This has been done

This Diagnostic Review revealed several findings around governance, service delivery, administration, HR and financial matters in relation to the municipality. Recommendations were made as to how to deal with the findings. This Diagnostic Review has not been presented to the council as yet. Based on the findings of that Diagnostic Report, they decided with the provincial government to put a full support package together for Knysna Municipality in terms Section 154 of the Constitution.  Also as part of that the support packaged, Knysna Municipality had to include a Financial Recovery Plan for the municipality given the financial challenges. They were of the view that Knysna was in need of the support whatever it was called – ‘Support’ or ‘Turnaround’ that the Acting MM has referred to should include a financial recovery plan. If it implies putting a team together this will be done to restore Knysna to its ‘original glory’.

The Committee has been given a PowerPoint presentation on the findings and recommendations of the Diagnostic Review. They have also worked with the National department for assistance as the previous MM has referred to administration and intervention as areas of concern. In their view one could also do a support package without putting the municipality under administration. This part of the meeting was concluded.

The Chairperson was welcomed to the meeting.

She asked if SALGA was ready to make a presentation.

Mr Khalil Mullagie, Western Cape Provincial Executive Officer, SALGA, said that they did not have anything to add as they would ‘piggy-back’ on the work that the provincial Department of Local Government and the provincial department were doing. Given the circumstances in the municipality, SALGA has not been directly involved in the work of the provincial government. It has been supporting the municipality on a range of other issues related to HR and land issues. Once the support plan was unpacked with the municipality, they would identify areas where they could provide support to the municipality.

The Chairperson thanked the Acting Chairperson for standing in for her.

Discussion

Mr Hoosen stated that he had listened carefully to the responses by the Western Cape government and the Executive Mayor. He stated that he was encouraged by the progressive suggestions to turn things around in Knysna. This relates to a much broader investigation into the municipality’s accountability of officials as it was important to get to the bottom of who caused the problems in the first place and who should be held accountable. He asked what actions the Western Cape Government intended to take to get to the bottom of the mess, and what was going to be done to hold those people accountable, ‘can’t just turn a blind eye’.

Mr Ceza asked ‘how could this have happened under your watch as a province’? ‘Do you have the capacity to pre-empt these things in the Western Cape.’ ‘Out of these things do you have the capacity to react even when there was no crisis because right now the Committee was seeing a political leadership crisis, a financial crisis, and a service delivery crisis regarding the water meters that were not reaching the needy’. ‘Was the municipality being held accountable’? ‘How was it possible for the problems in Knysna to happen under the Provincial Government's watch’? He wanted to ascertain whether the Western Cape had the capacity to pre-empt graft and maladministration.

Mr Luthuli said it was difficult because important documents still had not been received. The Committee has not been able to get to the bottom of all the problems in Knysna. He stated that he was still waiting on the Western Cape government to send the relevant information. According to him, it seemed as if the municipality was unable to diagnose the problem and the Provincial Government had no idea what had transpired in Knysna.

The Chairperson referred to slide 3 of the presentation which made reference to the findings of the Diagnostic Report. She asked ‘Are these going to be shared with the Committee’?

The Chairperson called on the Western Cape government to share the results of the diagnostic review that had been conducted with the Committee.

Responses

Mr Paulse replied that a thorough assessment of the terms and references were first concluded before a forensic investigation could proceed and that the provincial government worked closely with the Hawks and the National Prosecuting Authority. The provincial government would then appoint two forensic investigators, after these forensic investigations a report is presented to the MEC.

The MEC would then hand the report to the Mayor who would then table it for consideration in Council. Only then would the report be furnished to the Hawks to consider criminal charges. He added that sometimes there was ample evidence at hand only for a case to fall apart at the trial.

In the Western Cape government's view, the MEC had limited powers to intervene, hence the decision by the Western Cape to formulate a provincial framework that dealt with intervention by the MEC.

He added that the Western Cape did have a monitoring and evaluation system in place that was administered by the Provincial Treasury. The Treasury stood ready to assist.

Mr Paulse said that all the allegations were received and a thorough assessment has been done. Based on the assessment the terms of reference for the forensic investigation were written. This was a formal forensic investigation so it worked very closely with the South African Police, the Hawks and the Public Prosecuting Authority. So the MEC would designate at least two Forensic Investigators - for which the Department would pay – and a full investigation then would be done. That report would be given to the Minister who would then ask the Mayor to deal with it in Council. At the same time the report would be given to the Hawks who would do further investigation in terms of criminality and if there was prospects for prosecution then the Directorate of Public Prosecutions would have to be dealt with. In his view they were busy with two municipalities and there where councillors and senior officials in those municipalities who were implicated and criminal charges have been laid, and he suspected that some of them would be arrested very soon.

In his view capacity existed to support Knysna Municipality. Based on the support plan and the turnaround strategy or a support package for Knysna one could definitely provide support to that Municipality. He felt that the MECs had limited powers to intervene in municipalities. The national Department of Cooperative Governance has put together a framework to regulate the interventions in municipalities. They were of the view that there should be mechanisms and legislation that would enable quicker intervention into municipalities. There was a monitoring and evaluation system between the Provincial Treasury and themselves. The Provincial Treasury monitors finance, the Western Cape local government monitors governance and service delivery, and based on that they could gauge the municipality on any challenges with regard to service delivery. He added that based on the findings they had already put together a support plan.  

The Chairperson asked someone to deal with the diagnostic reports.

Mr Luthuli intervened and asked if his question on MPACs could be dealt with.

The Chairperson said that this would be dealt with after the diagnostic reports were dealt with.

Ms Eda Barnard, Chief Director: Municipal Performance Monitoring and Support, Western Cape Department of Local Governemnt, acknowledged that Members had the presentation and referred Members to slide 3 which dealt with the previous diagnostic review report (done in 2018 in terms of providing a little bit of background) after being approached by an Acting Municipal Manager at the time to ask for a diagnostic assessment.

The Chairperson intervened and asked how many Acting Municipal Managers the Municipality had had since 2018.

Mr Paulse answered that a Mr Grant Eastman was one or the Municipal Managers and Johnny Douglas was acting and then Dr Cam Chetty was appointed as Municipal Manager. Then he left and Johnny Douglas came back as acting for a while. Dr Fotala was still with the municipality but was under suspension. Michelle Gratz left so Mr Louis Scheepers has been appointed as Acting MM.

The Chairperson said that this will help the Committee understand the nature of the problems.

Ms Barnard said that they were asked by the Acting MM at the time Mr Douglas, to do a diagnostic assessment. They put together a team of themselves, the Provincial Treasury, the Department of Housing, the Department of Environmental Affairs and whoever had a role to play. They visited the municipality for a few days and literally checked everything in terms of their operations and came up with findings in terms of what was functioning well and what was not and then came up with a support plan to fix the problems. Some of the recommendations were not implemented. They were approached later this year in May by the Acting Municipal Manager Michelle Gratz to repeat the process and undertake a Diagnostic Assessment. What Members will see from the presentation prepared was that some of the findings were exactly the same.

The Chairperson interjected and asked when the Acting MM approached them again after the suspension of the MM.

Ms Barnard said that it was in May this year.

Ms Barnard said that the findings were more or less the same including some cash flow issues that the Municipality was facing that was discussed earlier. Once again the high turnover in the administration was causing instability. A detailed report was prepared – as requested by the HOD - which still had to be presented to the Counsel but what they were proposing was called a support package or support plan so it would be a comprehensive financial support plan that would stand on two legs. The first being a financial Leg with a support plan with certain actions which were detailed in the presentation. The other leg stands on what was called a comprehensive package which looked at measures to stabilise the organisation. So for example it says for ‘for critical posts address some of the HR matters, some of the disciplinary matters and look at some of the service delivery issues’. She said that they had not as yet presented findings as well as proposed plans to the Counsel. But importantly on slide 12 what was being proposed to Knysna was to look at the urgency of these matters which recommended that the Counsel consider the findings that were made by the team and also the adoption of the two-legged plan. What was then done was working together with the National COGTA, Provincial Treasury, the Department of Human Settlements and everyone that had a role to play in the municipality. This was the proposal that will be made to the council.

The Chairperson asked if it was not a waste of resources because the recommendations in 2018 were not implemented.

Mr Ceza said that his question that was not answered related to the MPAC: ‘What was the strength of this structure like with the tender irregularities implicating a person in administration’? The municipalities should speak to the strengthening of the Public Accounts Committee in the municipality. ‘How measures would be put in place in this mayoral committee structure to get it to clamp down on corruption?’

Mr B Hadebe (ANC) said that in relation to the plan, he wanted clarity on whether the plan had been tabled to the political leadership of the Municipality and what was the feeling of the leadership, or were they not buying into the plan. He felt that the plan before going to Council had to go to the political leadership before the municipality interacted with the plan.

The Chairperson asked the HOD Mr Paulse if he wanted to respond.

Mr Paulse said that the Diagnostic Report has made findings and recommendations around the functioning of the committees. That was discussed with the previous MM who also confirmed that there were challenges with the functioning of the committees particularly the MPACs within the municipality. Findings were made in that regard including certain recommendations around it and it will be part of the plan to support the Municipality in that regard.

Mr Paulse said that with regard to the question about the plan, if the Council or Mayor deems it appropriate it would be presented to the Acting MM as well as the Mayoral Committee. From their own experience they could then augment the plan.

He referred to the Chairpersons question around the guarantee; their stance was that they work together with the Municipality – Acting MM and so on. They were confident that they would be able to assist Knysna.

The Chairperson called upon the Mayor to respond.

The Mayor said that if there were any allegations against any official the Council was obliged to take action, and unfortunately that could lead to these types of situations where there was more than one acting person in a situation. On MPAC, there was a very strong MPAC in the Council and a lot of these issues were currently under investigation by MPAC.

The Chairperson interjected and asked why nothing was implemented from the Diagnostic Report in 2018. ‘You were elected in 2016, now I am putting you on the spot as you are jointly and severally liable”

The Mayor said that some of the issues in the diagnostic report still had to get to the Council. He said that there was serious instability in the Council since 2018. He did not want to mention this but he would anyway. He was asked by a member of the business forum what he thought of putting this municipality under administration. His response was quite simple – if one asked him that question prior to COVID-19, he would have said yes because they had fought for too long with political instability and that created other problems for the municipality. Standing in front of business in main street, and he said to that person – ‘do you see all the people sitting in front of the shopping mall in the main street’ (there was about 100 people sitting there), unemployed hungry people, and because of COVID-19 were put in a position where they could not provide for themselves and their families. So he answered and said that putting the Municipality under administration would not assist those people sitting on the side of the road waiting for work.

He agreed with the Chairperson that they did not implement the recommendations and said that there was a lot they did not do and that was partly due to instability and partly disciplinary actions. The last Acting MM that resigned, in her reasons given to Council then was that she could not work in a situation where there was always interference from external people. Not the council, just outsiders that put her under a lot of pressure. His response to her was that one should never resign because of pressure from people; one should rather deal with the problem.

On the question of how does the Executive buy into the plan put forward by the province; they were quite clear that with the support of the province, they would accept their commitment and the municipality’s commitment to turn the situation around. They were serious in getting Knysna back to its previous stature. They were committed to implement all the recommendations from the province and the Provincial Treasury.

Mr Hadebe said that their commitment gave a sense of comfort from your side. He had faith in the acting Municipal Manager given his previous achievements and hoped he would not disappoint this time around. The Committee would hold the Municipality accountable and he had a sense of comfort in the plans for the future.

The Chairperson said that there was comfort that that there was the political will in particular from local government to sort Knysna out. She was told that they were going to convene a Council meeting to make sure the two reports 2018 plus 2021 were adopted. There needs to be a clear action plan and timeline on who was going to do what to address all the issues. The Provincial Government should be able to share and adopt the 2021 Report because the Committee wanted to follow up on the issues. They will schedule a meeting with the municipality next quarter for an update. She was inspired by their commitment.

The Acting Chairperson said that it would be fair to give Knysna United an opportunity to respond.

Response/Comments by Knysna United

Rev Stander (Knysna United) reported that the organisation would not respond at present and preferred to provide all responses in writing. He said he was confident that the new Executive Mayor would take up the relevant matters and do the right thing. He knew the new Acting MM would also do the right thing. He said that he was happy with the organisation that he represented and had full confidence in the new Executive Mayor and acting MM. they would be sending something in writing to the Committee. He thanked the Committee for the opportunity.

The Chairperson said that as a Committee they would have to consider what has been put before them. It was a petition that had been forwarded to the Committee from the Office of the Speaker. The Deputy Mayor should take it easy. They had to hold a hearing of this nature just to get to the bottom of this matter. She assured everyone that they were all united to make local government work. She was however concerned about the people on the ground that had to receive the services from the Municipality. The Committee would intervene if the municipality was not fulfilling its mandate. She addressed the Deputy Minister and said that she did not see a representative from COGTA Nationally. The Committee would have liked to and needed to hear from COGTA Nationally.

Rev Stander said that Dr Kevin Naidoo, the Executive Manager was present.

The Chairperson said that she was pleased that Dr Naidoo was present.

Closing remarks by the Deputy Minister

Mr Obed Bapela, Deputy Minister of Cooperative Governance and Traditional Affairs, noted that the session had been very helpful. He thanked the Committee for their assistance. He expressed his pleasure in being informed that they would be engaging with the DG of COGTA to see what they could do to provide support and the MEC with his officials for both calling for the support of the National Department. The Department will engage the Western Cape to ascertain what more could be done to assist Knysna. Section 154(1) of the Constitution might be invoked to assist. He asked that in future they not wait for the municipality to be distressed before intervening. This would compel immediate intervention by both national and provincial government. If the province was not performing its function they still had Section 139(7). The team was given hope.

The Chairperson thanked the officials from the Department of Local Government, the HOD and the two colleagues from the Provincial Treasury. She said the Committee would deliberate on the report and await the submission from Rev Stander. They would meet Knysna Municipality next term.

The meeting was adjourned.