Consequence management in Eastern Cape municipalities

Public Accounts (SCOPA)

18 November 2020
Chairperson: Mr M Hlengwa (IFP)
Share this page:

Meeting Summary

10 Nov 2020

Consequence management in municipalities: Interaction with Eastern Cape COGTA MEC

SCOPA continued its inquiry into consequence management in municipalities following investigations into maladministration, fraud and corruption. The MEC of the Eastern Cape Cooperative Governance and Traditional Affairs (EC-COGTA) presented data on the Section 106 investigations in 27 Eastern Cape municipalities. Details were provided where possible; however, 11 municipalities have not submitted information as to investigations that have take place or which have not allowed investigations to take place.

The MEC said the Provincial COGTA faces resistance in conducting Section 106 investigations, particularly section 106(1)b where misconduct is suspected. The seeming autonomy of municipal councils is indicative of a political problem, which COGTA cannot solve. There is politicisation and ancillary factionalisation of matters in municipalities. The delay in tabling investigations is due to this. This results in push-back; which is why professionalisation and respect for due process is needed. People are not used to COGTA and the MEC taking action against councillors.

The MEC stressed the factional battles in certain municipal councils, render the job of EC-COGTA difficult in trying to achieve stable municipalities. COGTA cannot resolve political problems administratively. It is for political parties to solve political problems. The presentation detailed investigation updates conducted by EC-COGTA through National Treasury; National Prosecuting Authority (NPA); Directorate for Priority Crime Investigation (Hawks) and Special Investigating Unit (SIU).

Although the Committee was pleased to hear that EC-COGTA was taking active steps to hold municipalities accountable and refer cases to law enforcement agencies, it requested more details such as when investigations took place and were tabled before councils and the officials involved. It was concerned about the tendency of officials leaving municipalities without being held to account. SCOPA felt that the three spheres of government need to put their heads together to ensure that the disregard of law and due diligence is addressed not only in Eastern Cape municipalities, but nationwide. SCOPA would conduct an oversight visit to Eastern Cape and prioritise municipalities to and where it should call them to appear before SCOPA.

Meeting report

Opening remarks
The Chairperson was glad the Eastern Cape MEC for Cooperative Governance and Traditional Affairs had prioritised the virtual meeting and found a replacement chairperson for his other meeting to be present, particularly in light of the previous week’s postponed meeting. The previous three presentations which the Committee had received have been consolidated into one.

Eastern Cape post-investigation consequence management in municipalities
EC-COGTA MEC, Mr Xolile Nqatha, acknowledged the regrettable occurrence the week prior; apologised for it and explained that miscommunication led to the rescheduling of the meeting. They had complied with submitting the report timeouly as directed by the Committee.

The MEC introduced his team: Mr Andile Fani Head of Department (HOD) for EC-COGTA; Ms Pashee Roboji, Deputy Director General (DDG): Developmental Local Government; Mr Macumu, legal advisor, and Mr Siyabonga Mdodi: Parliamentary Liaison Officer for the Office of MEC. Without further ado, he asked the HOD to present.

Mr Andile Fani, EC-COGTA HOD, apologised for the confusion in the week prior. He explained that there was no intent to undermine the Committee. The mistake which took place on his part was that when the initial meeting was postponed, it did not retract the first presentation. When the first meeting was postponed, EC-COGTA had a chance to obtain more reports from law enforcement agencies.

Introduction
Mr Fani said the Eastern Cape has 39 municipalities categorised as 2 Metropolitans, 6 Districts (DMs) and 31 local municipalities (LMs). Its report deals with the municipalities identified by SCOPA and on consequence management measures implemented after investigations conducted at these municipalities in accordance with the good governance pillar of Back To Basics and section 106(1)of Municipal Systems Act.

National COGTA is establishing a database of officials dismissed due to criminal or misconduct cases in accordance with guidelines set out in the presentation.

Although EC-COGTA was not able to gain information on all 27 municipalities as to the consequence management progress, it continues to engage with the affected municipalities and law enforcement agencies to receive an update in due course. The presentation is therefore an indication of progress made by law enforcement agencies within the province.

Background
• In municipalities depends on the effective management and administrative competence as well as the collective will of Municipal Councils to work for progressive change.
• The challenge facing some of our Municipal Councils is failure to provide quality and sustainable services. EC-COGTA is calling on all Councillors as public representatives, to demonstrate unwavering commitment to fight corruption and promote safe and healthy environments, in accordance with the Constitution, 1996 and relevant Legislation.
• The only coalition council in the Eastern Cape is in the Nelson Mandela Bay Municipality. The coalition government in Nelson Mandela poses challenges in as far as taking council resolutions. Due to diversity of political affiliations, the council deadlock in taking resolutions and this has a negative impact on the delivery of basic services.
• A typical example of this is the adoption of the budget which was adopted long after the legislated timeframe. The city has also undergone and still is going through considerable political instability, which has affected the administration.
• All councils in the Eastern Cape had at least four ordinary Council meetings during 2019/2020 and 2018/19 as legislated.
• The period from 2016/17 to 2019/20 financial years indicates that Mayoral Committees/EXCO have been in place, the trend in the Eastern Cape has been that the all Mayoral Committees/EXCO have sat at least 4 times in these years.
• As at the end of 2018/19 all the municipalities within the Eastern Cape had established functional Audit Committees and Internal Audit units. However, Internal Audit governance is still a challenge in the province and the maturity levels of municipalities in terms of Internal Audit is still lagging behind.
• Only two municipalities in the province failed to submit their Annual Financial Statements to the Auditor General on time during 2017/18 (Sakhisizwe and Sundays River Valley Local Municipalities). There are 14 delegated municipalities out of 36 that have not established Disciplinary Boards.
• The Amathole District and Local Municipalities are the most challenged with no municipality having established to date. Common reasons for the non-establishment of Disciplinary Boards are that items for the establishment of Disciplinary Boards are yet to be taken to council and in instances where the item has been presented to Council, the council resolution confirming the establishment of boards have not been submitted by municipalities to Provincial Treasury.
• Provincial Treasury assists municipalities with the establishment of Disciplinary Boards by unpacking the Financial Misconduct Regulations through Provincial workshops and individual engagements with municipalities.
• Provincial Treasury also assists municipalities by facilitating training for the Financial Misconduct Disciplinary Boards on their role and responsibilities. A total number of twelve financial misconduct cases were reported to have been investigated during the reporting period.

Purpose
To establish if consequence management has been implemented from investigation findings.

Section 106(1)(b) EC-COGTA municipality investigations
Investigations are outlined per municipality, and categorised under the headings:
- Investigation status
- Action taken by the MEC
- Allegations made against the municipality
- Action taken against the implicated.

The 27 municipalities were noted. Details about the investigations in these municipalities are in the presentation: Amalahleni LM; Amathole DM; Blue Crane Route LM; BCMM; EC-Emalahleni LM; Engcobo LM; Enoch Mgljima LM; Great Kei LM; Ingquza Hill LM; Joe Gcqabi LM; KSD LM; PSJ LM; Raymond Mhalba LM; Sakhisizwe LM; Walter Sisulu LM

EC-COGTA did not have records on whether these municipalities were investigated although they have all been alerted for an update except the last two municipalities: Dr Beyers Naude LM; Kouga LM; Makana LM; Mbashe LM; Mhlontlo LM; Mnquma LM; Nelson Mandela Bay Metro; Ngqushwa LM; OR Tambo DM; Sara Baartman LM: Umzimvubu LM.

NPA Municipal Case Prosecution Update
This details the summaries of cases currently before the court and those which have been postponed. Although it was difficult, EC-COGTA sought out all law enforcement agencies who could provide information about areas where it did not have records. The details on the cases summarised in the presentation are linked to the following municipalities:
- Buffalo City Local Municipality, which has a matter that has been postponed for trial.
- Buffalo City Metropolitan Municipality; which has two cases that have been postponed for trial.
- Cacadu District Municipality, which has a matter that has been postponed for trial.
- Ikwezi Municipality, which has a matter that has been postponed for trial.
- King Sabatha Dalindyebo Municipality, which has a matter that has been postponed for trial.
- Ngqushwa District Municipality which is not a district municipality; however, it was kept as such in the presentation as this is how it appeared in the NPA records. It has a matter that has been postponed for trial
- Engcobo Local Municipality, which has two cases that have been postponed for trial.
- Alfred Nzo District Municipality, which has a matter that has been postponed for trial.
- Mnquma Local Municipality, which has twomattersthat have been postponed for trial.
- Lukhanji Municipality, which has a matter that has been postponed for trial.

SIU municipal investigations update
All investigations conducted in terms of proclamations have been concluded and reports submitted. The reports have been submitted to the President, and after doing so, SIU takes the reports back and investigates further or arrests as needed. The presentation shows completed investigations per municipality.

Directorate for Priority Crime Investigation (Hawks) municipal investigations update
An update was received on 30 September 2020. A summary is in the presentation with “around 21” cases of municipal corruption and related offences under investigation.

Challenges with possible solutions
The MEC recently wrote letters to affected municipalities requesting progress on implementation of action plans, however, only Great Kei and Emalahleni responded. Legal consideration is underway in dealing with all those that are not cooperating. Lockdown slowed down the process of tabling of investigation reports to municipalities, however, the process of tabling the outstanding reports is underway.

COGTA is committed to support municipalities in implementing the forensic reports outcomes; however, only Great Kei and Emalahleni requested such support.

All tabled investigation reports are handed over to the law enforcement agencies for pursuing of the criminal matters and possible recoveries.

Municipal Officials Misconduct Prescripts: Guide
EC-COGTA provides a guide on procedure for addressing misconduct, so that officials who have committed misconduct cannot merely move to new municipalities, as has been happening in the past.

Conclusions
• Legal consideration is underway for dealing with those municipalities that are not cooperating. Lockdown slowed down the tabling of reports to municipalities. The need for COGTA to conduct investigations arises and the budget is a challenge considering the number of municipalities needing support.
• Communities seem more comfortable when COGTA initiates investigations than when municipalities do.
• The high volume of municipal cases tends to affect the turnaround time between all law enforcement agencies and stakeholders creating backlog.
• The Local Government Anti-Corruption Strategy has contributed positively to Hotline cases and there has been a decline in reporting.
• A Local Government Anti-Corruption Forum has been formed to facilitate dialogue between law enforcement agencies; national and provincial departments as well as all local government role players to assist with better coordination of enforcement and preventative measures.
• EC-COGTA has developed a joint team approach in dealing with municipal petitions comprised of representatives from infrastructure, legal, municipal capacity, municipal admin, municipal development and anti-corruption units. Reports are currently underway.

MEC’s additional remarks
MEC Xolile Nqatha highlighted that the MEC faces resistance in conducting section 106 investigations, particularly section 106(1)b which states that if the MEC suspects misconduct, the MEC must investigate. Secondly, there is the politicisation and ancillary factionalisation of matters in municipalities. Thirdly, the delay in tabling investigations is due not only to COVID-19 but also to the factionalisation of how matters are treated. Factionalisation resulted in push-back; which is why EC-COGTA is calling for professionalisation and an anchoring of all that is done to be founded on respecting due process. Lastly, people are not used to COGTA and the MEC taking action against councillors, which has led to push-back. He gave some examples of consequence management. Four councillors investigated by EC-COGTA were removed from Walter Sisulu Municipality as they were facilitating land invasions, then selling the land. Similarly, a councillor in KSD was alleged to have taken R25 000 from an unemployed woman, promising her an RDP house. The woman had used money contributed by her children who had NSFAS grants. EC-COGTA acted in this case, however, the councillor has gone to court to appeal the decision and EC-COGTA will oppose it. These are some of the issues which EC-COGTA faces as it does its work.

Discussion
Mr B Hadebe (ANC) thanked the MEC for his presentation. He understood some of the quagmire that the MEC finds himself in. He was by no means a legal expert; however, he thought that ignorance of the law is no excuse. The ignorance of the law by municipalities does not excuse them from having to comply with it. As SCOPA, it does not have jurisdiction to deal with factional battles within municipalities. Its mandate is limited to financial non-compliance, maladministration and misappropriation of the public purse for which SCOPA wants to see consequence management.

It wants to get a sense of how much was misappropriated; by which officials occupying which positions; and what action was taken and sanction given. He asked how many criminal cases have been referred to the relevant authorities and if there has been litigation to recover money. This is what SCOPA is interested in, and he felt that there was information missing from the report as it is not detailed enough. A number of investigations are deemed concluded; however SCOPA has no sense of the amounts stolen and who was involved. He asked for dates on when investigated cases were tabled to councils. He asked about information on how far EC-COGTA is in terms of the timeframes outlined in s106. For the municipalities which have not responded, he asked that reasons be given for lack of response as the Act is clear. The report is a skeleton without flesh. He asked that the flesh be attached. He acknowledged the progress made do far. Without an indication on how far it is in following the timeframes of s106, SCOPA will not be able to say if EC-COGTA is on the right track or not.

Mr S Somyo (ANC) thanked the MEC for the report. There are a number of concerns raised by Mr Hadebe, which he felt were critical. EC-COGTA and the MEC were facing a huge challenge with areas still in progress of investigation and the reports needing to be tabled, considering the number of municipalities. It raised grave concern about the implications for stability considering the fraud, corruption and maladministration which bedevils the operational credibility of municipalities in the Eastern Cape.

If these concerns were categorised, one would probably find that those municipalities initiate investigations, but the court system is working slowly in bringing resolution to these cases. Would it not be possible for the NPA to provide assistance in finalising the cases? SCOPA and the Office of the MEC need to be exemplary in finding resolution of their cases as the alternative is for their work to lose meaning. Engagement with law enforcement agencies is crucial for matters to be finalised and a stable environment created in municipalities.

The myriad of investigations which have taken place in Nelson Mandela Bay are meant to be known to EC-COGTA. It pained him to have a scanty referral system on matters which are deeply corrupt in this metro. OR Tambo municipality could be spoken of in a similar vein. Such matters need to be cited for SCOPA to establish what needs to be done to assist municipalities and enhance the District Development Model. The lacklustre and scanty way of presenting these matters is in itself a challenge as the matters are very serious and need to be dealt with as such to assist with stability at a municipal level.

Ms N Tolashe (ANC) raised the MEC not been able to access investigation reports of municipalities. Is the problem with the legislation, in the relationship between the executive and the councils or between the executive and investigating agencies? She raised these concerns because she knew that in the communities where this happen, there would never be stability until the investigations are completed and whatever needs to be implemented is implemented. If this is not done, people will forever be found protesting, with some parties taking advantage of the difficulties faced in municipalities. She really wanted to know where the problem lay.

She confirmed the perception raised by the MEC and HOD, where municipalities are of the view that COGTA should not intervene, even here there are problems. Thus she knows this does happen. This creates a huge problem because it allows municipalities to do as they wish. It also creates a perception in communities that the government allows anarchy and that nothing is done when anarchy takes place.

Although the MEC and the HOD may not be able to give SCOPA exact answers, the matter needs further discussion so that in time the municipalities do not become a no-go area as far as oversight is concerned. If this is allowed to happen, it will create problems. For example, municipalities not permitting the MEC to come and advise is creating more problems as people do not account for wrongdoing and the perception is confirmed that government does not act.

Officials who have committed misconduct and yet are hopping from one municipality to another, is a concern. All three spheres of government need to look into this. Wherever such persons move, they cause further instability; leaving allegations behind without explanation; only to work in another municipality and create more problems and instability. SCOPA needs to consider how to address this. She agreed that SCOPA needed a clearer picture from the MEC and HOD as it was not very clear in the presentation. She asked that dates be added for when the misconduct was noted. Whilst she heard that this was a problem in the Eastern Cape, she knew this was also a national issue. SCOPA needs an update on the MEC’s relationship with the investigating authorities. She asked for information on the persons involved. She was worried, particularly about OR Tambo municipality. She asked if EC-COGTA would work on that municipality so that the services that that municipality requires will be provided for. It is a big municipality, and the people are relying on Parliament to gain assurance that the people will be served. She asked for assurances about this.

Mr Hadebe noted there were coalition councils where EC-COGTA said there was no update about investigations. He asked for the latest update on Nelson Mandela Bay. He asked for a brief explanation so a precedent is not set for accepting a lack of information.

The Chairperson said that the salient points had been covered. It was good that the confusion of the prior week where the MEC had not seen the presentation, was clarified. This clarity helps SCOPA to know that EC-COGTA is at least on the same page. He indicated to the MEC that SCOPA would be coming to the Eastern Cape before the end of the year to interact with some of the municipalities as part of its own ongoing oversight of municipalities. Next week, it would be in KwaZulu-Natal, and thereafter SCOPA would be coming through Eastern Cape.

He was sure the Office of the MEC would assist the Committee in determining which municipalities to prioritise. He commended the initiative the MEC reported about the movement of officials who leave behind a trail of destruction. As Ms Tolashe said, this occurrence has become a perennial headache across the three spheres of government in the public service. Government needs to find ways and means to solve it. Whilst there needs to be improvement in binding timeframes to consequences, this presentation was a step in the right direction. It will be good for SCOPA to consult with EC-COGTA so that when it conducts the oversight it can be aware of the procedures which are being actioned. He asked the MEC for his response on the matters raised by Members.

EC-COGTA responses
Mr Fani replied about the oversight structures in Nelson Mandela Metro. The Municipal Public Accounts Committee (MPAC) is facing challenges in the metro because each time there are changes in the political environment, the MPAC membership is also being changed. New people then need to be trained although the previous members would have been trained, and there is the politics of reshuffling which poses a challenge. The challenge of not having investigations to report is because some investigations are with National Treasury and these investigations have been handed over to the Hawks. EC-COGTA has been following up with National Treasury and can request further information from it if it does not impact on sensitive investigations at this point.

DDG Ms Pashee Roboji spoke to the instability of political leadership in the Nelson Mandela Metro which affects the Section 79 structures including the MPAC and internal audit as already indicated. EC-COGTA has been trying to assist municipalities. However, once there is a change in council, those Section 79 structures are affected although the Municipal Structures Act clearly indicates these need to be in place to ensure accountability and consequence management. Most of the other details requested by the Committee would need to be looked with the MEC and HOD for EC-COGTA to respond to the Committee more thoroughly.

MECs response
The MEC appreciated the feedback from SCOPA. He committed to adding more detail; including the names of implicated persons where available and provide the information to the Committee. He gave examples of the information at the disposal of the MEC’s Office such as the knowledge that the Chief Financial Officer in Emalahleni has resigned and another employee was dismissed. In Great Kei, EC-COGTA knows that an employee has been on suspension for almost a year. There is also a service provider who did not complete work in Emalahleni who EC-COGTA wrote a letter to, informing it that it would be blacklisted and unable to serve government if it did not complete its work. The service provider has since returned to complete the work. The Ingquza Hill municipality report has been tabled. People were complaining that they had not been interviewed and EC-COGTA opened a space for them to submit complaints; following which EC-COGTA tabled a supplementary report in October. The report was adopted by council and the issue is now for council to create an ad-hoc committee to develop an action plan. Unfortunately, there are now some efforts to frustrate this progress.

He has made the comment before that COGTA cannot resolve political problems administratively. It is for political parties to solve political problems, which is why the MEC has been calling on them, including his own to do so. It is not for COGTA to resolve these problems. He gave the example in the Nelson Mandela Metro, where even the Auditor General team was pushed back, when a threatening letter was pushed under the door resulting in AG team needing to leave the metro.

The seeming autonomy of municipal councils is indicative of a political problem, which COGTA cannot solve. The MEC would appreciate the Committee’s support in addressing this over-arching problem. On OR Tambo, EC-COGTA has completed its own investigation of irregular expenditure which is close to R1 billion. This report has not yet been tabled, which is why the detail was not provided in this case as it can only be provided after tabling the report in the council.

EC-COGTA will not resolve the matter until the municipalities are stabilised of all factionalisation and the politics is resolved. In the main, it will not be solved by COGTA. The provincial department has had to make some concessions as sometimes there is total disregard for due process. For example, there was a delay in its intervention in OR Tambo which asked EC-COGTA to send an acting municipal manager (MM) after its MM had been suspended. Its ordinary practice is to send a technical team to conduct an assessment to create terms of reference for an acting MM supported by three officials. That assessment is used to create terms of reference. However, OR Tambo rejected the terms of reference and said it will conduct its own. These are the strange concessions being made. However, EC-COGTA wants councils to give their terms of reference as it wants to get into that cooperative space since some of the work needing to be done in councils cannot be done from outside of them. The system works only if entered into on the basis of the principles of cooperative governance and interdependence of the spheres of government. If municipalities behave as if they have absolute autonomy, there will be a big problem. In the main, it is a political problem to be solved by political parties, who should address the problems in municipalities with determination. He has engaged with political parties on this point, including his own organisation. He looked forward to the Committee’s visit and said that EC-COGTA would have to prepare to ensure it is available for all of the visits and able to assist in answering questions.

Further comments
Mr Hadebe appreciated the commitment to send information, however, some of the information would be readily available, such as the dates on which the investigations were tabled and the dates letters were sent to the municipalities. SCOPA will need this information to know what to prioritise in its Eastern Cape oversight visit.

The MEC asked Mr Fani to respond.

Mr Fani replied that he had the information on hand but for the sake of accuracy he asked to submit it to the Committee later that day.

Mr Hadebe agreed, however, he thought that it was obvious that SCOPA would want to know the date of submission and where the councils do not respond, to know what EC-COGTA then did to push for the information. SCOPA should not have to probe EC-COGTA for answers.

The Chairperson agreed that information should always be readily available. He thought the points were well-captured by the MEC and his team. He thanked the MEC and said that the Committee would be in contact with the Office of the MEC to identify municipalities which SCOPA will want to meet with and where it will be meeting in the Eastern Cape for the purposes of calling municipalities to appear before it in the Eastern Cape. SCOPA desires to meet municipalities to gain a better understanding of the situation. The information already given to date will help. The conversation was not over, it would continue into the oversight visit and SCOPA would be requesting information as and when it requires it.

He thanked the Committee for its hard work and commitment, and reminded Members it would be in KwaZulu-Natal from Friday, to conduct its oversight visit.

The Chairperson adjourned the meeting.




 

Download as PDF

You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.

See detailed instructions for your browser here.

Share this page: