Consequence management against implicated municipalities: Interaction with KZN COGTA MEC

Public Accounts (SCOPA)

09 October 2020
Chairperson: Acting: Mr M Dirks (ANC)
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Meeting Summary

Video: Standing Committee on Public Accounts (National Assembly) 09 Oct 2020

The purpose of the meeting was for the KwaZulu-Natal Department of Cooperative Governance and Traditional Affairs (COGTA) to brief the Committee on the consequence management measures implemented against the KwaZulu-Natal municipalities in relation to the investigations conducted into 34 municipalities in the province. The information presented by COGTA will help the Committee decide which municipalities must be summonsed to appear before Parliament. The meeting took place on a virtual platform.

The briefing focused on consequence management measures implemented pursuant to investigations conducted at these municipalities. Following the finalisation of these investigations, reports are tabled with the relevant municipalities who are then required to implement its recommendations, while the implementation of such recommendations are monitored by COGTA. Although municipalities do take steps to implement the reports and respond positively in most instances, this is not without challenge. Further, although reports may be provided, it does not respond to each recommendation made and even when this is the case, the results are disillusioning. Whilst efforts are made to engage municipalities and to obtain progress reports on the implementation of recommendations, not all municipalities provide regular and sufficiently detailed reports to assess progress - in this regard, COGTA has adopted a cooperative approach by engaging the municipalities at an administrative level and requesting engagements with certain councils to elevate the matters at a political level.

COGTA reported that out of the 34 municipalities that are under investigation, 21 municipalities still have incomplete cases under investigation. A total of 29 investigations out of 54 are still incomplete.

Members expressed concern that the Special Investigation Unit (SIU) and the Hawks were not present in the meeting. The Committee stated the importance of all investigative units being present when the investigations into the affected municipalities are discussed. Members asked how service providers can take advantage of the municipality and public funds without assistance from municipal officials. How can officials not be guilty or implicated? There is a serious problem when municipalities can conduct the investigations themselves. When there are any irregularities detected at a municipality, it should be reported to the MEC of COGTA for proceedings to be instituted. Officials who resigned or are no longer involved at the municipalities must still be held accountable. Regarding the Richmond local municipality, the Committee requested timeframes for when the reports on this municipality will be available as it is one of the municipalities that will be summonsed to appear before Parliament to account for its actions.

Meeting report

The Acting Chairperson opened the virtual meeting and welcomed Members and the delegation from the Department of Cooperative Governance and Traditional Affairs (COGTA). The delegation consisted of Mr Sipho Hlomuka (KwaZulu-Natal MEC: COGTA), Mr Thando Tubane (Head of Department: COGTA KZN), and Ms Sheetal Govender (Director: Municipal Investigation, KZN COGTA).

The purpose of the meeting was for COGTA to brief the Committee on the consequence management measures implemented against the 34 KwaZulu-Natal municipalities where investigations were conducted. The information presented by COGTA will help the Committee decide which municipalities must be summonsed to appear before Parliament.

KZN COGTA Briefing 

Mr Sipho Hlomuka (KwaZulu-Natal MEC: COGTA) opened the presentation by stating that KwaZulu-Natal has 54 municipalities (43 local and ten district municipalities, and one metropolitan municipality). This briefing relates to the 34 municipalities identified by the Committee that is under investigation, consisting of 25 local and eight district municipalities, and one metropolitan municipality. The investigations into the municipalities include those conducted in terms of section 106(1)(b) of the Municipal Systems Act 32 of 2000. This briefing focuses on consequence management measures implemented pursuant to investigations conducted at these municipalities. Following the finalisation of these investigations, reports are tabled with the relevant municipalities who are then required to implement its recommendations, while the implementation of such recommendations are monitored by COGTA.

Mr Thando Tubane, Head of Department: COGTA KZN, stated that section 106(1)(b) of the Municipal Systems Act, which gives powers to the MEC to institute the proceedings against the municipalities, is unenforceable. It does not give further powers to the MEC to enforce implementation of the recommendations. COGTA often finds itself in court with municipalities which are failing to implement the recommendations. This matter was brought to the National Department of COGTA, and it was asked that amendments be brought to section 106. In the past week, the Portfolio Committee of COGTA visited the province of KwaZulu-Natal and the same plea for amendments to section 106 was brought before the Committee.

Although the municipalities do take steps to implement the reports and respond positively in most instances, this is not without challenge. Further, although reports may be provided, it does not respond to each recommendation made and even when this is the case, the results are disillusioning. In many instances, particularly with disciplinary action, many officials resign prior to disciplinary matters being finalised, civil recovery proceedings are delayed and not many are instituted as this is often linked to criminal liability in terms of section 300 of the Criminal Procedure Act (51 of 2007) and most reported criminal cases remain pending for prolonged periods without any successful prosecutions.

Whilst efforts are made to engage municipalities and to obtain progress reports on the implementation of recommendations, not all municipalities provide regular and sufficiently detailed reports to assess progress. in this regard, COGTA has adopted a cooperative approach by engaging municipalities at an administrative level and requesting engagements with certain councils to elevate matters at a political level. Section 106(1)(b) of the Systems Act does not provide for enforcement mechanisms hence COGTA attempts cooperative measures to ensure implementation. Notwithstanding this, every effort has been made to present as much information as possible although some of the information is difficult to extract.

Background and introduction:

Ms Sheetal Govender, Director: Municipal Investigation, COGTA KZN, presented the briefing and stated that out of the 34 municipalities that are under investigation, 21 municipalities still have incomplete cases under investigation. A total of 29 investigations are still incomplete.

Summary of investigations at municipalities:

At the AbaQulusi local municipality, one out of the three investigations are concluded (33% of cases) and the investigations involved Supply Chain Management (SCM) irregularities, financial misconduct on procurement and contract management, and allegations of fraud, corruption, and maladministration.

At the Alfred Duma local municipality, one out of the three investigations are concluded (33% of cases) and the investigations involved irregularities, maladministration, misappropriation of assets, misconduct, and allegations of fraud, corruption, and maladministration.

At the Amajuba district municipality, the only investigation at the institution is concluded (100% of cases) and involved SCM irregularities. There are no incomplete investigations at this municipality.

At the eDumbe local municipality, one out of the two investigations are concluded (50% of cases) and the investigations involved the hacking and changing of a service provider’s banking details, and allegations of fraud, corruption, and maladministration.

At the Emadlangeni local municipality, both investigations are concluded (100% of cases) and involved SCM irregularities and financial misconduct on procurement and contract management. There are no incomplete investigations at this municipality.

At the Endumeni local municipality, the only investigation at the institution is concluded (100% of cases) and involved fraud allegations against municipal officials and management. There are no incomplete investigations at this municipality.

At the eThekwini metropolitan municipality, none of the three investigations are concluded (0% of cases) and the investigations involved allegations of financial misconduct on non-compliance with SCM, ongoing investigations by the SIU and other cases investigated by the Integrity Unit.

At the Harry Gwala district municipality, one out of the three investigations are concluded (33% of cases) and the investigations involved irregularities in the procurement of goods and services from ten service providers, financial misconduct by the former accounting officer, and misappropriation of funds and payments to fictitious employees.

At the Ilembe district municipality, none of the two investigations are concluded (0% of cases) and the investigations involved eight cases of allegations relating to the misappropriation of assets, fraud, financial misconduct, SCM irregularities, and possible irregularities in the SCM process. These two investigations are scheduled to be completed by the end of November 2020.

At the Jozini local municipality, the only investigation at the institution is concluded (100% of cases) and involved five allegations of misappropriation of the municipality’s assets, SCM irregularities, and expenditure management. There are no incomplete investigations at this municipality.

At the Kwadukuza local municipality, both investigations are concluded (100% of cases) and involved the awarding of a contract for supply of photocopiers, and the possible collusion between prepaid electricity vendors and former employees. There are no incomplete investigations at this municipality.

At the Maphumulo local municipality, two of the three investigations are concluded (66% of cases), and involved SCM irregularities, unauthorised payments of salaries, and theft of diesel.

At the Umfolozi local municipality, the only investigation at the institution is concluded (100% of cases) and involved allegations of fraud. There are no incomplete investigations at this municipality.

At the Mooi Mpofana local municipality, the only investigation at the institution is concluded (100% of cases) and involved financial misconduct. There are no incomplete investigations at this municipality.

At the Msinga local municipality, the only investigation at the institution is concluded (100% of cases) and involved the authenticity of payments made to suppliers by former employees. There are no incomplete investigations at this municipality.

At the Msunduzi local municipality, the only investigation at the institution is not yet concluded and is in progress (0% of cases). The investigation involved allegations of fraud, corruption, theft, recruitment mismanagement, SCM irregularities.

At the Mtubatuba local municipality, the only investigation is partially completed and not yet finalised (0% of cases). The investigation involved unauthorised, irregular, and fruitless and wasteful expenditure relating to SCM irregularities, appointment of senior staff that are incompetent or unqualified, ITC processes and procurement, and the fraud, corruption, and dishonesty of councillors.

At the Ndwedwe local municipality, the only investigation at the institution is concluded (100% of cases) and involved irregularities on duplicate payments that were made to suppliers. There are no incomplete investigations at this municipality.

At the Newcastle local municipality, one out of the two investigations are concluded (50% of cases) and the investigations involved SCM irregularities and financial misconduct on procurement.

At the Nkandla local municipality, the only investigation is partially completed and not yet finalised (0% of cases). The investigation involved financial misconduct, fraud, and improper conduct.

At the Nquthu local municipality, the only investigation is concluded (100% of cases) and involved an investigation into the state of governance and administration of the previous council of the municipality. There are no incomplete investigations at this municipality.

At the Okhahlamba local municipality, none of the two investigations are concluded (0% of cases) and the investigations involved allegations of misappropriation of funds receipted and not banked, and allegations of ghost employees.

At the Ray Nkonyeni local municipality, the only investigation is concluded (100% of cases) and involved allegations of fraud at the former Ezinqoleni municipality. There are no incomplete investigations at this municipality.

At the Richmond local municipality, the only investigation is partially completed and not yet finalised (0% of cases). The investigation involved grant spending.

At the Umdoni local municipality, the only investigation at the institution is partially completed and not yet finalised (0% of cases). The investigation involved the loss of funds and SCM irregularities.

At the Umgungundlovu district municipality, the only investigation is partially completed and not yet finalised (0% of cases). The investigation involved allegations of maladministration and improper conduct by municipal officials.

At the Umhlathuze local municipality, the only investigation is partially completed and not yet finalised (0% of cases). The investigation involved allegations of payment made to a supplier for goods and services that were not received.

At the Umkhanyakude district municipality, four of the five investigations are concluded (80% of cases) and one investigation remains incomplete. The investigations involve SCM irregularities, financial misconduct on procurement, and allegations of fraud, corruption, and maladministration.

At the Umngeni local municipality, the only investigation at the institution is partially completed and not yet finalised (0% of cases) and involved allegations of fraud, corruption, and maladministration.

At the Umzimkhulu local municipality, the only investigation at the institution is partially completed and not yet finalised (0% of cases). The investigation involved allegations of maladministration, corruption, the unconscionable use of public funds by the municipality, and alleged fraud and corruption regarding the renovation of the Memorial Hall, building Test Ground and the Traffic Department.

At the Umzinyathi district municipality, both investigations are concluded (100% of cases) and involved expenditure relating to boreholes and debt collection, and the alleged maladministration, fraud, and corruption relating to SCM irregularities. There are no incomplete investigations at this municipality.

At the Umzumbe local municipality, the only investigation is partially completed and not yet finalised (0% of cases) and involved allegations of fraud, corruption, and maladministration.

At the Uthukela local municipality, the only investigation is partially completed and not yet finalised (0% of cases) and involved financial misconduct and fraud.

At the Zululand district municipality, the only investigation is partially completed and not yet finalised (0% of cases) and involved allegations of fraud, corruption, and maladministration.

Conclusion 

Most municipalities where these investigations have been concluded have been either unable (even unwilling) or slow in implementing the findings and the recommendations. While COGTA continues to carry out these investigations, these have become a serious cost driver as most municipalities merely refer investigations to COGTA even where it has the capacity to undertake own investigations. The South African Police Services have also been either slow or unable to pursue some of these investigations citing various reasons such as lack of capacity, or that the investigations do not meet their own set requirements.

Discussion

The Acting Chairperson asked the COGTA delegation whether members from the SIU and the Hawks were present in the meeting. He stated the importance of all investigative units being present when the investigations into the affected municipalities are discussed.

MEC Hlomuka answered that a delegation from the Auditor-General of South Africa (AGSA) was present, but that he was unaware if members from the SIU and the Hawks were present in the meeting.

Ms B Swarts (ANC) thanked the delegation from COGTA for the briefing. Regarding the Harry Gwala district municipality, none of the municipal staff were implicated in the investigations. Who conducted the investigation? Service providers cannot take advantage of the municipality and public funds without assistance from municipal officials. How can officials not be guilty or implicated? In the Jozini local municipality, the National Prosecuting Authority (NPA) decided not to pursue the case. What are the reasons it has given for not wanting to pursue the case? At the Nquthu local municipality, no officials were held accountable, although legal representation was appointed. How much was paid to lawyers for this investigation and why were the officials not investigated? Why did the municipality not use the SIU to conduct the investigations into these cases?

Ms N Mente-Nqweniso (EFF) asked for reasons why officials at the Ndwedwe local municipality were not charged after making duplicate payments. Why are there no criminal cases opened against officials who left municipalities after looting public funds? Simply because officials resign or are no longer involved with the municipalities does not mean that they are above the law.

The Acting Chairperson stated that there is a serious problem when municipalities can conduct the investigations themselves. When there are any irregularities detected at a municipality, it should be reported to the MEC of COGTA for proceedings to be instituted. It seems like the leadership of these municipalities run the institutions like it is their own private businesses and they disregard the rule of law. The Committee gets the sense that no action has been taken regarding past reports on the investigations at the eThekwini metropolitan municipality. COGTA has not dealt with the fraud and corruption allegations of the past and it must be addressed before the Committee can engage with the current problems at the municipality. Regarding the Richmond local municipality, the Committee needs timeframes for when the reports on this municipality will be available as it is one of the municipalities that will be summonsed to appear before Parliament to account for their actions. All the forensic reports must be submitted to the Committee, including the report on forestry income that seems to have run dry. There is no governance at the Richmond local municipality and COGTA must provide the necessary reports to the Committee.

Response 

Mr Tubane stated that COGTA highlighted some critical challenges it is encountering regarding implementation of the reports on the investigations into municipalities. Some municipalities pick and choose which recommendations it wants to implement. There is a serious lack of coordination within the law enforcement agencies when it comes to ensuring the implementation of COGTA’s recommendations to the municipalities, especially the recommendations that must be criminally dealt with.

He agreed that it would have been a more comprehensive and beneficial meeting if the SIU and Hawks were present to deal with the issues of the enforcement of COGTA’s recommendations. Regarding the report on forestry income, COGTA tabled the report to the municipality which in turn tabled it to the SIU. What more does the Committee require COGTA to do?

The consequence management regime is being undermined by municipal officers who resign when they are implicated in investigations. The implementation of COGTA’s recommendations take time and gives space to those who are affected to remedy the situation to avoid sanctions. COGTA urged the Committee to consider amendments to section 106 of the Municipal Systems Act to widen the powers of the MEC to include the enforcement of the implementation of the recommendations. The limitation on the MEC’s powers to only be able to institute the proceedings against the municipalities and not enforce it, should be addressed as a matter of urgency to strengthen the measures that hold these municipalities and officials accountable. There is an attempt by municipalities to challenge COGTA’s reports in court to avoid the tabling of these reports and the implementation of COGTA’s recommendations. Nine of the municipalities in the report are those under intervention per section 139(1)(b) of the Constitution. There is a correlation between the invocation of section 139(1)(b) of the Constitution and those municipalities investigated under section 106 of the Municipal Systems Act.

COGTA agreed with the observations made by Ms Swarts regarding the Harry Gwala district municipality. It cannot be that there is no consequence management when municipalities conduct investigations on their own. It is part of the duties of the leadership of the municipalities to effect consequence management, but this often gets outsourced to COGTA despite that it is a legal obligation of the municipalities. It is within the Committee’s prerogative to summons the municipalities and hold them accountable.

Regarding the Jozini local municipality, the challenge of dealing with police reports or the NPA is that COGTA is handicapped in not knowing the progress made in the cases once it is handed over. COGTA has no knowledge of how much was paid to the lawyers appointed in the investigations into the Nquthu local municipality, as it was an internal investigation. COGTA will follow up in this regard and enquire why the SIU was not employed in its internal investigation. Regarding the Ndwedwe local municipality, COGTA made recommendations to the municipality that involves criminal charges being brought against the officials implicated. However, because of the limited power given to the MEC in section 106 of the Municipal Systems Act, COGTA has no ability to enforce the implementation of its recommendations.

By law, municipalities are entrusted to conduct their own investigations. The question of discipline within a municipal space is reserved for municipalities and it must discharge that responsibility in a responsible fashion and with accountability. Municipalities are encouraged to conduct its investigations on its own. However, when COGTA opines that there is a need for it, the MEC can conduct his own investigation.

Regarding the Richmond local municipality, COGTA must indicate that its forensic investigation reports would have been tabled at the municipalities before the end of June 2020. The Manase Report was tabled, and the eThekwini metropolitan municipality has begun to implement the recommendations of the Report.

MEC Hlomuka emphasised the point made by Mr Tubane regarding the limitations of section 106 of the Municipal Systems Act. COGTA is appealing to national leadership to reconsider the amendment of section 106 to strengthen the consequence management measures that can be enforced on the investigated municipalities. Until the issue of section 106 has been dealt with, COGTA is able to say that it has done its work and fulfilled its mandate. The limitation regarding enforcement measures must be dealt with. In terms of law, municipalities are entrusted to conduct their own investigations and compile their own forensic reports.

The Acting Chairperson stated that the Committee is aware that municipalities whitewash their investigations to avoid implicating officials in unlawful behaviour. The Committee notes the problem COGTA faces of municipalities tending to challenge its recommendations in court.

Mr A Lees (DA) asked COGTA to submit all reports relating to the investigations of municipalities (including draft reports) to the Committee within 14 days.

MEC Hlomuka stated that the reports would have been tabled by the municipalities.

Ms Govender stated that section 106(1)(c) of the Municipal Systems Act, requires the MEC to report to the NCOP, the Chairperson of the NCOP, the Minister of Finance, and the Minister of COGTA regarding his decision to institute an investigation in a municipality and to provide reasons. Section 106(1)(b) does not speak to the provision of forensic reports. The NCOP must be provided with the outcome and findings of the reports of an investigation into a municipality. The actual report is not provided, because until such a time that the reports are fully implemented, it must be noted that these reports contain implicated officials and sensitive information for investigation. The reports are not circulated in any forums until it is fully implemented because of the legal considerations of people’s rights and liberties. The submission or circulation of the reports will present legal challenges to the MEC. The correct protocol will have to be followed in acquiring the documents that the Committee requests.

Ms Mente-Nqweniso stated that her question regarding the reasons why officials at the Ndwedwe local municipality were not charged after making duplicate payments was not adequately addressed.

Ms A Beukes (ANC) stated that there is a trend before the resolution of cases that the municipal officer is no longer in service of the municipality. Is there a process involved? What is the process of blacklisting the officials who resign when implicated in improper conduct or unlawful behaviour? There are no clear timeframes given to municipalities which results in COGTA waiting for the decisions of the municipalities. Regarding the Umkhanyakude district municipality, it is not acceptable to say that because the case stems from 2013 that it is no longer worthwhile to pursue. Lastly, she enquired whether there are employees at COGTA that regularly follows up on the investigations at the municipalities and evaluates the effect the investigations have. Municipalities are taking advantage of the lack of regular follow-up from COGTA.

Mr Tubane stated that Members are frustrated by the same issues that COGTA is. The trend of resignations during or before the implementation of consequence management measures are a challenge. There were attempts by the National Department of COGTA to establish a database of blacklisted officials, but there is no such mechanism effectively in operation. COGTA agrees that it cannot be a good enough response that a case will not be pursued because it is an old case from 2013. COGTA will continue to follow up on this case, but the Committee will get better responses if it summonses the relevant municipalities to appear before Parliament. COGTA has a unit that deals with municipal investigations and an internal control unit to coordinate its work on investigations internally.

The Acting Chairperson thanked Members for their questions and the delegation for their responses.

The meeting was adjourned.
The Acting Chairperson opened the virtual meeting and welcomed Members and the delegation from the Department of Cooperative Governance and Traditional Affairs (COGTA). The delegation consisted of Mr Sipho Hlomuka (KwaZulu-Natal MEC: COGTA), Mr Thando Tubane (Head of Department: COGTA KZN), and Ms Sheetal Govender (Director: Municipal Investigation, KZN COGTA).

The purpose of the meeting was for COGTA to brief the Committee on the consequence management measures implemented against the 34 KwaZulu-Natal municipalities where investigations were conducted. The information presented by COGTA will help the Committee decide which municipalities must be summonsed to appear before Parliament.

KZN COGTA Briefing 

Mr Sipho Hlomuka (KwaZulu-Natal MEC: COGTA) opened the presentation by stating that KwaZulu-Natal has 54 municipalities (43 local and ten district municipalities, and one metropolitan municipality). This briefing relates to the 34 municipalities identified by the Committee that is under investigation, consisting of 25 local and eight district municipalities, and one metropolitan municipality. The investigations into the municipalities include those conducted in terms of section 106(1)(b) of the Municipal Systems Act 32 of 2000. This briefing focuses on consequence management measures implemented pursuant to investigations conducted at these municipalities. Following the finalisation of these investigations, reports are tabled with the relevant municipalities who are then required to implement its recommendations, while the implementation of such recommendations are monitored by COGTA.

Mr Thando Tubane, Head of Department: COGTA KZN, stated that section 106(1)(b) of the Municipal Systems Act, which gives powers to the MEC to institute the proceedings against the municipalities, is unenforceable. It does not give further powers to the MEC to enforce implementation of the recommendations. COGTA often finds itself in court with municipalities which are failing to implement the recommendations. This matter was brought to the National Department of COGTA, and it was asked that amendments be brought to section 106. In the past week, the Portfolio Committee of COGTA visited the province of KwaZulu-Natal and the same plea for amendments to section 106 was brought before the Committee.

Although the municipalities do take steps to implement the reports and respond positively in most instances, this is not without challenge. Further, although reports may be provided, it does not respond to each recommendation made and even when this is the case, the results are disillusioning. In many instances, particularly with disciplinary action, many officials resign prior to disciplinary matters being finalised, civil recovery proceedings are delayed and not many are instituted as this is often linked to criminal liability in terms of section 300 of the Criminal Procedure Act (51 of 2007) and most reported criminal cases remain pending for prolonged periods without any successful prosecutions.

Whilst efforts are made to engage municipalities and to obtain progress reports on the implementation of recommendations, not all municipalities provide regular and sufficiently detailed reports to assess progress. in this regard, COGTA has adopted a cooperative approach by engaging municipalities at an administrative level and requesting engagements with certain councils to elevate matters at a political level. Section 106(1)(b) of the Systems Act does not provide for enforcement mechanisms hence COGTA attempts cooperative measures to ensure implementation. Notwithstanding this, every effort has been made to present as much information as possible although some of the information is difficult to extract.

Background and introduction:

Ms Sheetal Govender, Director: Municipal Investigation, COGTA KZN, presented the briefing and stated that out of the 34 municipalities that are under investigation, 21 municipalities still have incomplete cases under investigation. A total of 29 investigations are still incomplete.

Summary of investigations at municipalities:

At the AbaQulusi local municipality, one out of the three investigations are concluded (33% of cases) and the investigations involved Supply Chain Management (SCM) irregularities, financial misconduct on procurement and contract management, and allegations of fraud, corruption, and maladministration.

At the Alfred Duma local municipality, one out of the three investigations are concluded (33% of cases) and the investigations involved irregularities, maladministration, misappropriation of assets, misconduct, and allegations of fraud, corruption, and maladministration.

At the Amajuba district municipality, the only investigation at the institution is concluded (100% of cases) and involved SCM irregularities. There are no incomplete investigations at this municipality.

At the eDumbe local municipality, one out of the two investigations are concluded (50% of cases) and the investigations involved the hacking and changing of a service provider’s banking details, and allegations of fraud, corruption, and maladministration.

At the Emadlangeni local municipality, both investigations are concluded (100% of cases) and involved SCM irregularities and financial misconduct on procurement and contract management. There are no incomplete investigations at this municipality.

At the Endumeni local municipality, the only investigation at the institution is concluded (100% of cases) and involved fraud allegations against municipal officials and management. There are no incomplete investigations at this municipality.

At the eThekwini metropolitan municipality, none of the three investigations are concluded (0% of cases) and the investigations involved allegations of financial misconduct on non-compliance with SCM, ongoing investigations by the SIU and other cases investigated by the Integrity Unit.

At the Harry Gwala district municipality, one out of the three investigations are concluded (33% of cases) and the investigations involved irregularities in the procurement of goods and services from ten service providers, financial misconduct by the former accounting officer, and misappropriation of funds and payments to fictitious employees.

At the Ilembe district municipality, none of the two investigations are concluded (0% of cases) and the investigations involved eight cases of allegations relating to the misappropriation of assets, fraud, financial misconduct, SCM irregularities, and possible irregularities in the SCM process. These two investigations are scheduled to be completed by the end of November 2020.

At the Jozini local municipality, the only investigation at the institution is concluded (100% of cases) and involved five allegations of misappropriation of the municipality’s assets, SCM irregularities, and expenditure management. There are no incomplete investigations at this municipality.

At the Kwadukuza local municipality, both investigations are concluded (100% of cases) and involved the awarding of a contract for supply of photocopiers, and the possible collusion between prepaid electricity vendors and former employees. There are no incomplete investigations at this municipality.

At the Maphumulo local municipality, two of the three investigations are concluded (66% of cases), and involved SCM irregularities, unauthorised payments of salaries, and theft of diesel.

At the Umfolozi local municipality, the only investigation at the institution is concluded (100% of cases) and involved allegations of fraud. There are no incomplete investigations at this municipality.

At the Mooi Mpofana local municipality, the only investigation at the institution is concluded (100% of cases) and involved financial misconduct. There are no incomplete investigations at this municipality.

At the Msinga local municipality, the only investigation at the institution is concluded (100% of cases) and involved the authenticity of payments made to suppliers by former employees. There are no incomplete investigations at this municipality.

At the Msunduzi local municipality, the only investigation at the institution is not yet concluded and is in progress (0% of cases). The investigation involved allegations of fraud, corruption, theft, recruitment mismanagement, SCM irregularities.

At the Mtubatuba local municipality, the only investigation is partially completed and not yet finalised (0% of cases). The investigation involved unauthorised, irregular, and fruitless and wasteful expenditure relating to SCM irregularities, appointment of senior staff that are incompetent or unqualified, ITC processes and procurement, and the fraud, corruption, and dishonesty of councillors.

At the Ndwedwe local municipality, the only investigation at the institution is concluded (100% of cases) and involved irregularities on duplicate payments that were made to suppliers. There are no incomplete investigations at this municipality.

At the Newcastle local municipality, one out of the two investigations are concluded (50% of cases) and the investigations involved SCM irregularities and financial misconduct on procurement.

At the Nkandla local municipality, the only investigation is partially completed and not yet finalised (0% of cases). The investigation involved financial misconduct, fraud, and improper conduct.

At the Nquthu local municipality, the only investigation is concluded (100% of cases) and involved an investigation into the state of governance and administration of the previous council of the municipality. There are no incomplete investigations at this municipality.

At the Okhahlamba local municipality, none of the two investigations are concluded (0% of cases) and the investigations involved allegations of misappropriation of funds receipted and not banked, and allegations of ghost employees.

At the Ray Nkonyeni local municipality, the only investigation is concluded (100% of cases) and involved allegations of fraud at the former Ezinqoleni municipality. There are no incomplete investigations at this municipality.

At the Richmond local municipality, the only investigation is partially completed and not yet finalised (0% of cases). The investigation involved grant spending.

At the Umdoni local municipality, the only investigation at the institution is partially completed and not yet finalised (0% of cases). The investigation involved the loss of funds and SCM irregularities.

At the Umgungundlovu district municipality, the only investigation is partially completed and not yet finalised (0% of cases). The investigation involved allegations of maladministration and improper conduct by municipal officials.

At the Umhlathuze local municipality, the only investigation is partially completed and not yet finalised (0% of cases). The investigation involved allegations of payment made to a supplier for goods and services that were not received.

At the Umkhanyakude district municipality, four of the five investigations are concluded (80% of cases) and one investigation remains incomplete. The investigations involve SCM irregularities, financial misconduct on procurement, and allegations of fraud, corruption, and maladministration.

At the Umngeni local municipality, the only investigation at the institution is partially completed and not yet finalised (0% of cases) and involved allegations of fraud, corruption, and maladministration.

At the Umzimkhulu local municipality, the only investigation at the institution is partially completed and not yet finalised (0% of cases). The investigation involved allegations of maladministration, corruption, the unconscionable use of public funds by the municipality, and alleged fraud and corruption regarding the renovation of the Memorial Hall, building Test Ground and the Traffic Department.

At the Umzinyathi district municipality, both investigations are concluded (100% of cases) and involved expenditure relating to boreholes and debt collection, and the alleged maladministration, fraud, and corruption relating to SCM irregularities. There are no incomplete investigations at this municipality.

At the Umzumbe local municipality, the only investigation is partially completed and not yet finalised (0% of cases) and involved allegations of fraud, corruption, and maladministration.

At the Uthukela local municipality, the only investigation is partially completed and not yet finalised (0% of cases) and involved financial misconduct and fraud.

At the Zululand district municipality, the only investigation is partially completed and not yet finalised (0% of cases) and involved allegations of fraud, corruption, and maladministration.

Conclusion 

Most municipalities where these investigations have been concluded have been either unable (even unwilling) or slow in implementing the findings and the recommendations. While COGTA continues to carry out these investigations, these have become a serious cost driver as most municipalities merely refer investigations to COGTA even where it has the capacity to undertake own investigations. The South African Police Services have also been either slow or unable to pursue some of these investigations citing various reasons such as lack of capacity, or that the investigations do not meet their own set requirements.

Discussion

The Acting Chairperson asked the COGTA delegation whether members from the SIU and the Hawks were present in the meeting. He stated the importance of all investigative units being present when the investigations into the affected municipalities are discussed.

MEC Hlomuka answered that a delegation from the Auditor-General of South Africa (AGSA) was present, but that he was unaware if members from the SIU and the Hawks were present in the meeting.

Ms B Swarts (ANC) thanked the delegation from COGTA for the briefing. Regarding the Harry Gwala district municipality, none of the municipal staff were implicated in the investigations. Who conducted the investigation? Service providers cannot take advantage of the municipality and public funds without assistance from municipal officials. How can officials not be guilty or implicated? In the Jozini local municipality, the National Prosecuting Authority (NPA) decided not to pursue the case. What are the reasons it has given for not wanting to pursue the case? At the Nquthu local municipality, no officials were held accountable, although legal representation was appointed. How much was paid to lawyers for this investigation and why were the officials not investigated? Why did the municipality not use the SIU to conduct the investigations into these cases?

Ms N Mente-Nqweniso (EFF) asked for reasons why officials at the Ndwedwe local municipality were not charged after making duplicate payments. Why are there no criminal cases opened against officials who left municipalities after looting public funds? Simply because officials resign or are no longer involved with the municipalities does not mean that they are above the law.

The Acting Chairperson stated that there is a serious problem when municipalities can conduct the investigations themselves. When there are any irregularities detected at a municipality, it should be reported to the MEC of COGTA for proceedings to be instituted. It seems like the leadership of these municipalities run the institutions like it is their own private businesses and they disregard the rule of law. The Committee gets the sense that no action has been taken regarding past reports on the investigations at the eThekwini metropolitan municipality. COGTA has not dealt with the fraud and corruption allegations of the past and it must be addressed before the Committee can engage with the current problems at the municipality. Regarding the Richmond local municipality, the Committee needs timeframes for when the reports on this municipality will be available as it is one of the municipalities that will be summonsed to appear before Parliament to account for their actions. All the forensic reports must be submitted to the Committee, including the report on forestry income that seems to have run dry. There is no governance at the Richmond local municipality and COGTA must provide the necessary reports to the Committee.

Response 

Mr Tubane stated that COGTA highlighted some critical challenges it is encountering regarding implementation of the reports on the investigations into municipalities. Some municipalities pick and choose which recommendations it wants to implement. There is a serious lack of coordination within the law enforcement agencies when it comes to ensuring the implementation of COGTA’s recommendations to the municipalities, especially the recommendations that must be criminally dealt with.

He agreed that it would have been a more comprehensive and beneficial meeting if the SIU and Hawks were present to deal with the issues of the enforcement of COGTA’s recommendations. Regarding the report on forestry income, COGTA tabled the report to the municipality which in turn tabled it to the SIU. What more does the Committee require COGTA to do?

The consequence management regime is being undermined by municipal officers who resign when they are implicated in investigations. The implementation of COGTA’s recommendations take time and gives space to those who are affected to remedy the situation to avoid sanctions. COGTA urged the Committee to consider amendments to section 106 of the Municipal Systems Act to widen the powers of the MEC to include the enforcement of the implementation of the recommendations. The limitation on the MEC’s powers to only be able to institute the proceedings against the municipalities and not enforce it, should be addressed as a matter of urgency to strengthen the measures that hold these municipalities and officials accountable. There is an attempt by municipalities to challenge COGTA’s reports in court to avoid the tabling of these reports and the implementation of COGTA’s recommendations. Nine of the municipalities in the report are those under intervention per section 139(1)(b) of the Constitution. There is a correlation between the invocation of section 139(1)(b) of the Constitution and those municipalities investigated under section 106 of the Municipal Systems Act.

COGTA agreed with the observations made by Ms Swarts regarding the Harry Gwala district municipality. It cannot be that there is no consequence management when municipalities conduct investigations on their own. It is part of the duties of the leadership of the municipalities to effect consequence management, but this often gets outsourced to COGTA despite that it is a legal obligation of the municipalities. It is within the Committee’s prerogative to summons the municipalities and hold them accountable.

Regarding the Jozini local municipality, the challenge of dealing with police reports or the NPA is that COGTA is handicapped in not knowing the progress made in the cases once it is handed over. COGTA has no knowledge of how much was paid to the lawyers appointed in the investigations into the Nquthu local municipality, as it was an internal investigation. COGTA will follow up in this regard and enquire why the SIU was not employed in its internal investigation. Regarding the Ndwedwe local municipality, COGTA made recommendations to the municipality that involves criminal charges being brought against the officials implicated. However, because of the limited power given to the MEC in section 106 of the Municipal Systems Act, COGTA has no ability to enforce the implementation of its recommendations.

By law, municipalities are entrusted to conduct their own investigations. The question of discipline within a municipal space is reserved for municipalities and it must discharge that responsibility in a responsible fashion and with accountability. Municipalities are encouraged to conduct its investigations on its own. However, when COGTA opines that there is a need for it, the MEC can conduct his own investigation.

Regarding the Richmond local municipality, COGTA must indicate that its forensic investigation reports would have been tabled at the municipalities before the end of June 2020. The Manase Report was tabled, and the eThekwini metropolitan municipality has begun to implement the recommendations of the Report.

MEC Hlomuka emphasised the point made by Mr Tubane regarding the limitations of section 106 of the Municipal Systems Act. COGTA is appealing to national leadership to reconsider the amendment of section 106 to strengthen the consequence management measures that can be enforced on the investigated municipalities. Until the issue of section 106 has been dealt with, COGTA is able to say that it has done its work and fulfilled its mandate. The limitation regarding enforcement measures must be dealt with. In terms of law, municipalities are entrusted to conduct their own investigations and compile their own forensic reports.

The Acting Chairperson stated that the Committee is aware that municipalities whitewash their investigations to avoid implicating officials in unlawful behaviour. The Committee notes the problem COGTA faces of municipalities tending to challenge its recommendations in court.

Mr A Lees (DA) asked COGTA to submit all reports relating to the investigations of municipalities (including draft reports) to the Committee within 14 days.

MEC Hlomuka stated that the reports would have been tabled by the municipalities.

Ms Govender stated that section 106(1)(c) of the Municipal Systems Act, requires the MEC to report to the NCOP, the Chairperson of the NCOP, the Minister of Finance, and the Minister of COGTA regarding his decision to institute an investigation in a municipality and to provide reasons. Section 106(1)(b) does not speak to the provision of forensic reports. The NCOP must be provided with the outcome and findings of the reports of an investigation into a municipality. The actual report is not provided, because until such a time that the reports are fully implemented, it must be noted that these reports contain implicated officials and sensitive information for investigation. The reports are not circulated in any forums until it is fully implemented because of the legal considerations of people’s rights and liberties. The submission or circulation of the reports will present legal challenges to the MEC. The correct protocol will have to be followed in acquiring the documents that the Committee requests.

Ms Mente-Nqweniso stated that her question regarding the reasons why officials at the Ndwedwe local municipality were not charged after making duplicate payments was not adequately addressed.

Ms A Beukes (ANC) stated that there is a trend before the resolution of cases that the municipal officer is no longer in service of the municipality. Is there a process involved? What is the process of blacklisting the officials who resign when implicated in improper conduct or unlawful behaviour? There are no clear timeframes given to municipalities which results in COGTA waiting for the decisions of the municipalities. Regarding the Umkhanyakude district municipality, it is not acceptable to say that because the case stems from 2013 that it is no longer worthwhile to pursue. Lastly, she enquired whether there are employees at COGTA that regularly follows up on the investigations at the municipalities and evaluates the effect the investigations have. Municipalities are taking advantage of the lack of regular follow-up from COGTA.

Mr Tubane stated that Members are frustrated by the same issues that COGTA is. The trend of resignations during or before the implementation of consequence management measures are a challenge. There were attempts by the National Department of COGTA to establish a database of blacklisted officials, but there is no such mechanism effectively in operation. COGTA agrees that it cannot be a good enough response that a case will not be pursued because it is an old case from 2013. COGTA will continue to follow up on this case, but the Committee will get better responses if it summonses the relevant municipalities to appear before Parliament. COGTA has a unit that deals with municipal investigations and an internal control unit to coordinate its work on investigations internally.

The Acting Chairperson thanked Members for their questions and the delegation for their responses.

The meeting was adjourned.
 

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