Dr Ruth Segomotsi Mompati & Mamusa District Municipality: state of municipalities

Meeting report

The meeting was briefly delayed as some of the invited political leaders were not in attendance. The meeting was briefly adjourned to follow up on this.

Members were dissatisfied and frustrated that some Municipalities had not submitted reports to the Committee and officials were not present in the meeting.

Mr K Ceza (EFF) expressed his disappointment at Municipalities not taking the Committee seriously. He exclaimed that Members need to have time to peruse documents and since municipalities do not send them through, it is clear that they do not want to be held accountable. This shows how people are unqualified and do not have the political will at a municipal level to find solutions. It signifies an inability of municipal officials to be held accountable. In future, the Committee should not allow a municipality to come and waste state resources and Members time. The fact that presentations are not submitted on time means that officials think they may not be questioned. Mr Ceza made a statement saying “You can’t cheat us at CoGTA as many of us focus on the details and our people on the ground tell us things”.

Ms E Spies (DA) said the complete disregard for the Committee was unacceptable. She was not surprised at the mess the Municipalities were in and that they could not provide the Committee with a presentation. She suggested that if role players do not send presentations beforehand, meetings should not be held.

Ms P Xaba-Ntshaba (ANC) said what was happening was very frustrating and that the Committee could not tolerate it. The disrespectful behavior needed to be discussed. The Committee wanted to assist people on the ground. She imagined how people on the ground might be suffering if this is what the Committee experienced.

Mr I Groenewald (FF+) said the Committee could now see what he had complained about regarding the North West and its non-compliance to legislation. The people on the ground want action to be taken and Parliamentary rules allow for this to happen.

Ms H Mkhaliphi (EFF) agreed with the other Members and said such behavior could not be tolerated. Officials needed to be accountable to the Committee as it had an oversight role. She suggested that the meeting continue and that those who did not submit presentations should do it at another time. “The country is at level one and the Committee needs to know that its people are being serviced. The Committee will not pretend as if it is happy”. Joining meetings and being quiet must come to an end.

Ms D Direko (ANC) expressed her disappointment in the municipalities and said it was frustrating to experience such conduct especially from provinces experiencing service delivery issues, unrest and political instability. The Committee wants to understand the nature of the challenges, but the officials have disappeared. The Committee does not understand if this is deliberate behavior or not and there should be consequences for not submitting a report. The Committee should physically go to these municipalities to assess the situation. The fact that some reports were not submitted tells one that something is not right in these municipalities. The Committee will take action using the rules of Parliament.

The Chairperson said the Committee needed to proceed to hearing the presentations. The Committee was trying to elevate the AG’s reports as it was not properly implemented by municipalities. The Committee was collaborating with the AG’s office to deal with the state of municipalities by performing oversight. The North West has drawn attention as it is the only municipality that did not achieve a clean audit in 2018/19. The province also has the highest number of disclaimers for two consecutive financial years. Dr Ruth S Mompati, Mamusa and Naledi Municipalities were amongst the disclaimed auditees in 2018/19. Four of six municipalities in the district received a disclaimer. Half of the municipalities in the district failed to submit their annual financial statements by the cutoff date of 20 January 2020. The failure to submit financial statements on time shows a deterioration of accountability in the spending of public funds. The AG has described the state of local government in some provinces as a cause for distress.

Recently Kgetlengrivier Municipality lost faith that it would be provided with clean drinkable water and approached the court. This has emboldened residents of Mamusa Municipality to launch a similar legal challenge. The communities in these areas have experienced many years of sewage spills in the streets and even their homes. Water supply is inconsistent and of poor quality. There are broken street lamps and potholes that have been left unrepaired. She pointed out that the Mamusa Municipality has been the most unstable in the district and has had political in-fighting leaving the finances of the institution in tatters. The Constitution encourages the involvement of communities and community organisations in the matters of local government. What happened the morning of the meeting, where the Committee spent almost an hour trying to locate colleagues cannot happen again. This is a sign that things are in disarray in the district.

SALGA Presentation

SALGA presented to the Committee on its engagements with the Dr Ruth Segomotsi Mompati District Municipality.

The AG reported that despite continuity in the use of consultants for two consecutive years, Dr Ruth S Mompati District audit outcomes regressed from a qualified opinion to a disclaimed opinion. This was due to the lack of basic controls, namely proper record keeping as well as daily and monthly reconciliations of key balances like assets. The combination of a vacancy for the CFO position as well as a lack of skills in the finance unit, gave rise to the continued use of consultants. Evidence of deteriorating accountability on the part of the Municipality’s management was noted, as all processes during the audit were led by consultants.

The interlinking challenges facing municipalities and the local government sector relate to the weakening of municipal governance and leadership that is characterised by poor oversight, limited consequence management and instability at senior management levels. A lack of skills undermines service delivery and transformation at the local sphere.

SALGA’s municipal audit support programme is based on four pillars: institutional capacity, financial management, leadership and governance.

SALGA’s support programmes include: budget engagements on a yearly basis, revenue management on a yearly basis, capacity building on asset management, conducting Municipal Standard Chart of Account (MSCOA) training, training on the Municipal Public Accounts Committee (MPAC) guide and toolkit, providing portfolio based training for MMC for finance, MPAC support, consequence management and accountability protocols and strengthening Council oversight. Audit committee training, a risk and ethics management workshop and a records management workshop will be held. Cost containment measures will be implemented to ensure the cost of governance is reasonable to the demands for effective service delivery.

There will be capacity building for Councillors, MPAC strategic planning support and a work session with municipalities that were previously under administration.

SALGA donated Personal Protective Equipment (PPE) from the Solidarity Fund on 4 February 2021. 

SALGA committed to ensure that management (Municipal Managers and senior management), political leadership (Mayors) and oversight bodies (Municipal Councils and portfolio committees) respond to AGSA messages about addressing risks and improving internal controls.

SALGA will ensure that municipalities develop, document and implement a revenue collection strategy that addresses credit control. The CFO and finance committee must review and question instances where the credit policy is diverted.

SALGA will capacitate the Supply Chain Management (SCM) office and leadership on SCM.

SALGA will ensure all municipalities established disciplinary boards in terms of the regulations on financial misconduct.

SALGA, AGSA and Provincial Treasury establish formal engagement structures to deliberate on technical audit queries to address inconsistencies with audit processes.

SALGA’s suggested actions for the Dr Ruth S Mompati District include: Political leadership exercising oversight effectively, empowering the internal audit unit, having effective researchers for MPACs, document and implement internal controls and standard operating procedures, comply with MSCOA implementation, reduce the use of consultants and fill vacancies with competent officials.

[See presentation slides for further detail]

 

North West Provincial Treasury input

Ms Motlalepula Rosho, MEC Finance: North West Provincial Treasury, made a presentation to the Committee on measures implemented by the North West Provincial Treasury to ensure municipalities comply with the Municipal Finance Management Act (MFMA).

Municipal performance failures include: organisational structures causing municipalities to be unable to carry out constitutional and legislative functions, bloated organisational structures, inability to recruit and retain skilled and experienced officials, critical positions remain vacant, most municipal officials lack the needed skills, knowledge and expertise and officials lack change management skills to embrace MFMA reforms and change.

Financial management performance failures include: tabling and adopting unfunded budgets, the non-implementation of financial management procedures are still a problem in that procurement plans are not developed and implemented. There is a disregard for laws and regulations and transactions are not promptly recorded. Key accounts are not reconciled and closed on a monthly basis. There is a lack in proper records management and reports required by the MFMA are not submitted or lack credibility and accuracy. There are poor annual financial statements which results in poor audit opinions.

Service delivery failures include: poor maintenance and repairs on service delivery infrastructure, poor planning and monitoring of service delivery capital projects which breaks down service delivery, lack of engineers to assist in implementing projects and the reliance on consultants who charge exorbitant amounts. There is a lack of basic service delivery machinery. Council lacks knowledge of the local government sphere and there is a lack of oversight. There is non-implementation of consequence management

[Refer to presentation for table and details on budgets funded and unfunded and disclaimers by various municipalities]

Provincial Treasury has resolved to take the lead and ensure payment of debt owed by government departments to municipalities. A government debt forum has been formulated with the participation of the provincial department of public works and municipalities. This was to ensure resolution of disputes relating to debt owed by government departments to municipalities and subsequent payment of debts. The provincial treasury has facilitated engagements between the provincial department of public works and municipalities for outstanding property rates, tax and service charge disputes. This intervention has resulted in municipalities collecting income amounting to over R300 million.

Interventions in municipalities have caused them to become complacent which can be seen in the poor performance of municipalities once provincial government support is withdrawn.

The Minister of Finance has, in his response, committed to support provincial government in implementing the mandatory interventions in all municipalities identified as having financial crisis.

National Treasury has also agreed to provide assistance and support to provincial treasury with preparation of the financial recovery plans. The arrangement is that provincial treasury will prepare the financial recovery plans through the procured resources and submit same to National Treasury.

National Treasury will then conduct a review of the prepared document to confirm if the financial recovery plan was prepared in compliance with the approved framework and legislation.

Thereafter approval of the financial recovery plan for implementation will take place.

North West CoGTA presentation

Mr Mmoloki Cwaile, MEC Cooperative Governance, Human Settlements and Traditional Affairs, North West, presented to the Committee on the support provided to Dr Ruth S Mompati District and its local municipalities.

Putting people and their concerns first has been prioritised through contact and electronic workshops and working sessions to hear community concerns to enable municipalities to address the concerns, for e.g. Batho Pele policies. There has also been monitoring of community participation in the implementation of Government socio-economic development programmes.

Support was provided on the implementation of infrastructure service delivery programmes.

[See presentation for further detail]

Municipalities were supported with the reviewing and implementing of indigent policies.

The Kagisano-Molopo Municipality benefitted from the Expanded Public Works Programme (EPWP) Project and 15 participants were appointed and received a stipend for eight months.

Water and sanitation was supported by funding the Dipudi water augmentation in Kagisano-Molopo Municipality and the refurbishment of existing boreholes and drilling for water supply.

The municipality was also supported with building institutional capabilities and good governance to comply with Local Government Municipal Systems Act (MSA) regulations on the appointment and conditions of employment officials. Telephonic working sessions were conducted due to the COVID-19 pandemic.

Challenges to good governance include: water and sanitation challenges as the water service authority is not assisting. Allegations were leveled against the accounting office on fraud and corruption for a tender valued at R16 million to HT Pelatona contractor.

Council resolved to suspend the Mayor of the municipality at the Special Council meeting on 19 February 2021. This is now being contested in court.

Municipalities were assisted with: revenue management enhancement initiatives, a municipal post audit action plan, monitoring the Council oversight role, support on the Municipal Property Rates Act implementation. There has been assistance with the compliance with MSA regulations on the appointment and conditions of officials.

There has been support for the development of a new spatial development framework.

Lekwa-Teemane Local Municipality was assisted with the MIG LED infrastructure grant for projects for the 2021/22 financial year.

There is continuous monitoring of Community Works Programmes (CWP) to ensure COVID-19 compliance. 5 400 jobs were created through the CWP.

There has been engagement on disaster management policy frameworks, support for fire brigade service policy and legislation. Fire fighting vehicles were secured for R6 053 418.

Municipal Challenges: Most do not have waste management powers and functions or integrated waste management plans and officers. There is a lack in the tools of trade and inadequate funding for waste management and infrastructure.

Auditor-General Presentation on Dr Ruth S Mompati Municipality

The municipality’s financial statements audit outcome for the 2018/19 financial year regressed from qualified with findings to a disclaimer of opinion. The disclaimer of opinion was primarily due to material unexplained differences between the financial statements and underlying accounting records. Where the municipality processed adjustments to address prior year material limitations, information to support the adjustments could not be submitted for audit. The financial statements line items which were the basis of the qualification in the 2017/18 financial year also contributed to the disclaimer of opinion for the 2018/19 financial year. This points to a lack of oversight responsibility by management in ensuring that the post audit action plan designed to address issues from the prior year audit is fully implemented to prevent re-occurrence of the same material misstatements. The predetermined objectives audit outcome for the 2018/19 financial year is qualified with findings, which is the same audit outcome as the 2017/18 financial year. Although the audit outcome remains unchanged, it is worth noting that for the 2018/19 financial year, material misstatements were identified on fewer performance indicators than in the 2017/18 financial year. The qualification for the 2018/19 financial year was as a result of differences between the achievement reported in the annual performance report and the supporting evidence submitted for audit.

Auditor-General Presentation on Mamusa Municipality   

The records management system of the municipality is of great concern together with the lack of leadership stability and the vacancies of key senior positions. There are very little internal control systems established and/or implemented and the preparation of financial statements, registers, reconciliations and ledgers are mainly an annual exercise performed for the purpose of compliance.

Summary of common root causes to be addressed

1. Lack of adequate oversight responsibility by the Accounting Officer over the preparation of financial statements, the report on predetermined objectives, compliance with laws and regulations, and internal controls. The leadership did not implement adequate processes to ensure that reviews took place before information was submitted. This was evidenced by the material misstatements identified in the financial statements, audit of performance information and instances of non-compliance with laws and regulations.

2. Lack of internal controls and adherence to existing internal controls, which resulted in various instances of irregular, fruitless and wasteful expenditure being incurred and other material misstatements in the financial statements, not being detected

3. Material misstatements were identified in the financial statements, because Senior Management did not detect misstatements during the preparation and review process. This indicates that there were weaknesses in internal control with regard to the review process of the financial statements. Documentation required to support the amounts in the financial statements submitted for audit were not adequately maintained and filed.

4. Underlying records and general ledgers were not adequately maintained and reviewed resulting in various incorrect transactions being recorded. Management did not adhere to the reporting and disclosure requirements of the applicable accounting framework.

5. The SCM unit of the entity did not always function effectively as incidences of irregular, fruitless and wasteful expenditure were identified. The necessary procurement procedures were not always followed.

6. The audit committee did not adequately review the financial statements to identity material misstatements.

National COGTA on Dr Ruth S Mompati (RSM) District Municipality presentation

Mr Loyiso Ncoko, COGTA Director: Local Government, presented on the Dr Ruth S Mompati District Municipality.

He confirmed that the administration is fairly stable in Dr RSM, Greater Taung and Kagisano-Molopo as all positions of senior management were filled. Lekwa-Teemane has three senior management positions filled out five, Mamusa has one senior management position filled out of five, and Naledi has three senior management positions filled out of five.

There are challenges in finalising service level agreements between the local and the district municipalities in order to enhance roles and responsibilities of the Water Services Authority (WSA) and WSP.

Dr RSM District has a number of traditional leadership that also works closely with government at various levels.

Mamusa Municipality was dissolved through s139(1)(c) of the Constitution and Council was re-constituted in January 2020.

There has been poor project and contract management leading to non-completion of projects at the required time and budget. Poor project monitoring has lead to projects not being implemented as per the registered scope and poor workmanship.  Poor planning has also lead to late registration of projects and appointment of service providers which in turn delays service delivery to the communities. The Project management unit is under capacitated as currently there is only one project manager for all the MIG projects. Utilisation of MIG funds was not for its intended purpose.

The Ruth Sekgomotsi Mompati District Municipalities were allocated a total MIG of R261 848 in the 2020/21 financial year. An expenditure of R109 108 (42%) has been reported as at the end of December 2020. A balance of R152 740 is still to be spent by end June 2021.

The Covid-19 District Command Council also strengthened by the District Development Model (DDM) approach has assisted in the improvement of implementation of the Intergovernmental Relations Framework Act (IGR) in the District. CoGTA allocated a total amount of R2.025 million for the District and its locals through the disaster relief funds. CoGTA assisted in the establishment of the District Command Council and its sub-structures.

[See presentation for further detail]

Mamusa Municipality presentation

27% of the action plans have not been started, 24% of the action plans are in progress and 49% of the action plans have been completed.

47% of the audit paragraphs have not been resolved, 6% of the audit paragraphs are in progress and 47% of the audit paragraphs have been resolved.

The municipality embarked on Operation Duela and indigent registration initiatives to enhance revenue collection. The current average collection rate of the municipality as 31 December 2020 is 51%, which is an improvement on the previous 47% after the COVID-19 lockdowns. 

The main contributors to the lower collection rate are water, sanitation, and refuse removal, with the total average collection rate of 17.94%. The low collection rate is ascribed to poor service related challenges, the aging municipal water infrastructure and the rainy season.

The main contributors to the high collection rate are property rates (88%) paid in advance by National Department of Public Works and Infrastructure for the rest of the financial year and electricity (82%).

Due to Covid-19 Lockdowns, and the socio-economic problems encountered by community members, the municipality was unable to implement the credit control and debt collection policy fully. Other challenges include the municipality’s water and sanitation aged infrastructure, which is currently affecting the health conditions of the communities. This also has a negative impact on their willingness to pay for basic services rendered by the municipality.

Total debt that the municipality owes to creditors is an amount of R177 042 000 as at December 2020. The main creditors being owed are SARS, ESKOM, Auditor-General, Munsoft Financial System, and Pension Funds. Payment arrangements have been made with Munsoft Financial System and Auditor- General.

Outstanding creditors include: pension funds (r12 million), contractors (incomplete projects), SARS, ESKOM, financial system vendor, Auditor-General and other various creditors (photocopiers, VAT refund collection)

The municipality is currently dealing with an arrangement for payment on a warrant of execution from the Municipal Workers Retirement Fund (R3 million). Payments for the first outstanding three months have been made, and the objective is to have all pension funds paid up by end of July 2021.

SARS has declined the municipality’s proposed payment plan of R1.5 million per month, but request that it be increased to R2.5 million.

The municipality is facing a challenge of going into further payment arrangements, against the background of an influx of summons’ and warrant of execution from various creditors, since this results in over-commitments itself against its limited cash resources, and lower revenue collection rate.

The audit opinion for the past five financial years, 2014/2015 to 2018/19 was a disclaimer. Irregular expenditure was caused by SCM processes not being followed and the required written quotations were not sourced.

The lack of restraint in budget management controls has resulted in misappropriation of budget and other resources and little linkage between the budgeted and actual spending could be found.

A lack of oversight, risk management and control coupled with leadership inefficiencies have created an opportunity for misappropriation of funds which resulted in non-value for money spending and excessive occurrences of irregular, fruitless and wasteful and unauthorised expenditure.

Financial challenges have resulted in the municipality finding itself in a dismal financial position with creditors.

The municipality received a disclaimer of opinion from the AG since the 2013/14 financial year to date, further emphasising that the financial affairs of the municipality were not in order.

The municipality’s key challenges where support is required are: refuse collection, fixing sewer spillages and cleaning the sewer network, road maintenance, water reticulation, development of master plans on water, electricity, roads and sanitation, the cleaning and eradication of illegal dumping sites, the Ipelegeng Housing Project which is unfinished and the replacement of Asbestos.

[See presentation for further detail]

Discussion

Mr C Brink (DA) said that a representative from AG indicated that R150 million from Dr Ruth Mompati District was deposited into VBS Bank. This is one of the largest municipal deposits at VBS. At the time Mr Jerry Mononela was implicated in a forensic report and the municipality did not take action on this. Why was there no accountability for this? It is absolute madness that people get away without any investigation or facing any disciplinary action. Of course it would become a trend of poor governance that will be followed by others.

He asked the municipality to present an account of what happened in this instance. The Municipal Manager in the District is on suspension, but not for the VBS matter, but some other matter. Mr Brink said that this will not cut it and the Committee needs to understand the situation around why the R150 million was lost. This is capital project money meant for water, electricity and service infrastructure. He was mindful that the province was under national government administration.

Another point of contention was that there was non-transfer of pension funds in Mamusa Municipality. Why was this happening? The non-transfer of deducted pension money is an offence in terms of the Pension Fund Act. Has this been reported to the police and what is the progress in fixing the situation? This situation does not only affect workers, but also communities, because if the municipality is accountable for outstanding pension contributions, this money has to come from somewhere which makes it likely that this money will come from funds intended for service delivery.

The province has approached the courts to have the appointment of municipal officials who are not properly qualified reversed. Mr Brink asked to be provided with examples of where this has happened in Mamusa Municipality and the District. The AG indicated that 39% of the equitable share of the district is spent on salaries. Concerns were raised that the district was burning money without really delivering value. Does this not raise concern about district municipalities in general as they do not have their own sources of revenue, in most instances? Even in this case, Municipalities spend a lot of money on paying salaries and in many instances consultants that are paid to do the work that is meant to be done by officials. This is not unique to this particular district, but does it not prompt questions about the centrality of district municipalities in relation to the District Model. These institutions should be imbued with shared services functions if at present it cannot add any real value and is completely dependent on transfers.

Mr Gotsilekgosi Batsi, Executive Mayor and Speaker: Mamusa Local Municipality, confirmed that the transfer of pension funds of municipal workers had begun. The municipality was under administration and the new Council took over in late January 2020. The Council now took over this mess. He pointed out that Mamusa Municipality was a Category B municipality. The Council met to discuss the municipality’s challenges and planning. Even though medical aid was a challenge, medical aid payments had begun after receiving the equitable share. It is a criminal matter to deduct money from municipal workers and not do justice for them.

Ms Mkhaliphi said that the Mamusa Municipality had by-elections last year in January 2020 and the Council was dissolved. It seems as if the by-elections did not resolve anything, because the Committee is still receiving the disturbing news given in the presentations made to the Committee. This means that there needs to be a proper explanation from CoGTA on how the municipality is properly managed. She agreed with Mr Brink on the pension fund issues. The EFF has a very direct interest when funds for workers are being misused. If workers are not entitled to get their money, this means that the poverty already experienced in society will be worse. The Committee was told that the municipality was dealing with a payment arrangement. She asked for clarity on this and how the matter would be addressed.

SARS had declined the municipality’s proposed payment plan of R1.5 million per month and requested it to be increased to R2.5 million. It is very clear that the municipality owes many people. How will it meet all its creditors? The AG said financial controls were lacking in all municipalities. R15.6 million was used to pay consultants, but the AG reports are still regressing. She asked for a proper explanation on this. Consultants are milking resources, but there are no good results. Someone needs to account for why consultants are used when they are not helping or yielding any good results to achieve a clean audit. The district is very rich and the Committee was told that it was producing beef and peanuts, but the District was also the first home of corruption after the Eastern Cape. North West is also the home of corruption as its leaders do not want to account. This scenario of the meeting being delayed shows how some leaders are disrespectful. There is no government in the North West. It is not operating. Presentations are made to the Committee, but it does not yield any results. Why is there leadership such as the Mayors, Municipal Managers and Premiers? It seems as if the Committee is wasting its time listening to beautiful presentations on paper, but the fact of the matter is that the situation on the ground is something else. Someone needs to account on proper intervention plans. Something needs to happen if we are serious about servicing the people on the ground.

Mayor Batsi confirmed that the Municipal Manager and Acting CFO have noted the questions and would respond.

Ms Direko said the Provincial Treasury’s presentation indicated the following challenges: reporting, MSCOA implementation and a lack of consequence management. She asked when the Provincial Treasury identified these challenges and when it started to provide support to municipalities? Is the support provided producing positive results or are there any challenges when providing this support? How is this being addressed? Provincial CoGTA indicated that it is assisting municipalities with the LED programmes. We are aware that Dr Ruth S Mompati is a rural municipality. She asked for a detailed report on the support provided for the LED Programmes. Who assisted Mamusa Municipality with its financial statements? Was it using consultants and how much were they paid? Was this value for money? What challenges contributed to Mamusa Municipality receiving a disclaimer? Does the municipality have a consequence management plan and financial recovery plan? What is the state of service delivery in Dr Ruth S Mompati and Mamusa municipalities and how are the challenges being addressed?

Mr Groenewald pointed out that the Municipal Manager in Mamusa Municipality was the Acting Municipal Manager between 2009 and 2012. His employment was terminated in February 2017 and he was again appointed with the concurrence of the MEC of North West. A legal opinion was obtained from an Advocate and it indicated that although Mr Kigane does possess a law degree, he does not qualify to be in the position of a Municipality Manager as he lacks the necessary certificate in municipal finance management. He asked why he was still employed in the municipality. It was his second appointment in one term. It is an indication of political favour and in-fighting is inevitable. If the municipality does not act, the community will. He asked about the re-appointment of three employees and what he would find if he accessed court documents on this.

Mamusa municipality has had a disclaimer for the past 11 years. There are two forensic reports. He asked for its findings and if the Committee could see these reports. What are the names of the consultants used by the various municipalities? It was advised that VBS was a bad investment and that it was irregular. What caused the investment from the municipalities to be made to VBS? He asked when the last ordinary council was in all municipalities.

Mayor Batsi responded and confirmed that three workers were reinstated and he had followed up on this. There has been a court case and a settlement agreement was reached with these workers. Mamusa Council went through the process of shortlisting and conducting interviews. It had reached the point where it made appointments. The municipality awaited concurrence from the MEC. After the municipality was dissolved, he wrote to many officials demanding the National Council of Provinces (NCOP) report. The investigating report from the NCOP was still not received. He was not defending the wrongdoing of the municipality or pointing fingers at the past administration, but said he wanted to take responsibility. It is important for the municipality to be held accountable where things were not correct. We are ready to be corrected as we are not representing ourselves, but the masses of South Africa. It is about time that we correct things. If there is a need for investigations, this may take place.

The Chairperson allowed Mr M Montwedi (EFF), Member of the Portfolio Committee on Agriculture, Land Reform and Rural Development, to ask questions. SALGA said it participated in recruitment processes as part of the support it offered to municipalities. He asked for clarity on this and whether SALGA was saying it was a part of the process to appointment unqualified municipal and senior managers in various municipalities in the Dr Ruth S Mompati District. The report indicated that most senior managers lack the necessary skills, yet SALGA has participated in this process. Local government said it was assisting municipalities in spending its MIG grants and as at December 2020, Dr Ruth S Mompati had spent 22% of its MIG. (Mr Montwedi was disconnected due to connection issues).

The Chairperson said there was a court order issue at the North West High Court in September 2020. Remedial action must be taken on water resources. R80 million was provided by the Department of Water and Sanitation to upgrade the water and sanitation services. She asked for a breakdown on the expenditure of funds and what companies were employed for this service? Why are the people of Mamusa Municipality still having problems with the overflow of toilets and water issues?

After reconnecting, Mr Montwedi asked how local government was assisting municipalities since only some of Dr Ruth S Mompati municipality’s MIG grant was spent. It has been said that appointments of those who do not meet the requirements was reversed. Asking about other appointments, he questioned if the minimum requirements were met. There are four senior appointments in Dr Ruth S Municipality where those persons do not meet the minimum requirements as required by law. He asked about the inability to recruit competent officials. SALGA suggested that the internal audit committee be improved. How has this incompetency contributed to the current financial situation that can be seen in municipalities? The national fresh produce market has raised concerns that municipalities are unable to reinvest municipal revenue. He welcomed the AG’s report. It painted a sad state of affairs when it referred to the systematic breakdown of financial control. Municipalities paid service providers after 762 days. Why are Dr Ruth S Mompati and Mamusa municipalities unable to settle their supplier invoices within 30 days as dictated by National Treasury regulations?

The Chairperson read out Mr Ceza’s questions. He asked why the Mamusa municipality could not fill the posts of senior managers. The municipality remains unable to address the issues raised by the AG year in and year out and asked why this was the case? Why is the municipality unable to render basic services? He was concerned that Dr Ruth S Mompati municipality has regressed on the audit opinion it received from the AG and has not addressed this. The municipality is also unable to provide water and sanitation to communities. He asked what actions were taken to improve internal controls. The MPAC plays an important role in strengthening preventative control. What input has CoGTA made on this?

The Chairperson said she was also concerned about some issues raised by Mr Ceza. She referred to the R100 million MIG and R29 million for regional bulk infrastructure that was lost. She asked what projects were affected and what its current state was. Which projects could not be completed? She asked about Councils who took illegal decisions. She asked about irregular, unauthorised and fruitless expenditure. The AG highlighted awards to the value of R67 million that was not submitted for audit. She asked for the status on this as it seemed like blunt non-compliance with laws and regulations. Who were the beneficiaries of the awards? She asked about procurement issues and six awards to the value of R401 000 which were awarded without having the minimum prescribed number of quotations from prospective suppliers flagged by the AG. What remedial steps will be taken against the officials implicated? Another two awards to the value of R205 674 which were also procured without the minimum number of quotations. Who benefitted from this? Was there consequence management? What is the relationship between the beneficiaries and the officials in municipalities? Dr Ruth S Mompati municipality needed to account for its lack of consequence management and inability to keep proper records so that financial misconduct can be followed up. There were four investigations on certain people. Who are the people and what is the nature of the investigation? There is lawlessness in municipalities.

Mr Phihadu Motoko, COGTA Head of Department: North West, said he was covered by the comments Members made. He disagreed with submissions made by the Provincial CoGTA . Contesting appointments not in line with requirements has not taken place in all municipalities. The representative from Mamusa municipality has given a somewhat contradictory account on the appointment of the Municipal Manager. The municipality submitted legal opinions disagreeing with the appointment. We must say things as they are so the municipality can be assisted. He said he found it strange to give concurrence where there is no documentation. If there is concurrence, no documentation is issued. If documents are not submitted it is assumed an applicant does not have the required documents. Dr Ruth S Mompati and Mamusa municipalities are in this state with issues starting from way back.

Each time the municipalities experienced political or administrative issues, the Department was quick to intervene and dissolve it instead of handling the issue. The dissolution did not necessarily take place due to the state of affairs, but was done to satisfy political achievement as opposed to ensuring service delivery. This district municipality does not comply in assisting local municipalities in the provision of revenue and equitable share. Part of the allocation of equitable share should go to the municipalities to subsidise the delivery of water. Instead, grants are allocated for water projects which are planted and left. He said there should not be a rush to dissolve a municipality, but rather to hold it accountable as it received grants. The money does not follow the function and the function does not follow the money which is why the district hired huge amounts of staff assuming it had money at its disposal, but this money was meant for subsidising indigent people. He said this honeymoon of excessive spending caused the VBS investment. The Municipal Manager that was suspended was not the only one who had invested money in VBS. His predecessor also did the same. The Mamusa water project was first launched in 2000. The District used its discretion on which issues to prioritise. Project launches are only done 5kms out of the town and it would be years before water issues are dealt with in these areas. All the Finance MECs from the past and present have the powers to make recommendations to the Minister on its assessments and suggest that allocations are made directly to municipalities.

Ms Kgalalelo Sereko, Executive Mayor: Dr Ruth Segomotsi Mompati District Municipality applauded the presentations and questions. The burning issue is on the suspension of the Municipality Manager who was later brought back. She said despite the Municipality Manager being re-appointed, disciplinary proceedings on the R150 million invested in VBS are still continuing. There was a problem when he was brought back as the then Executive Mayor derailed the disciplinary hearing process and accountability to the full Council. The Executive Mayor was suspended along with the Municipality Manager. The new administration is going to take the matter forward to turn around the organisation.

There are many issues in the organisation. “I am happy to have been invited to this session to get the full picture of what is going on. Some information I have only heard here for the first time which means that some information was not brought to the attention of the full Council”. At some point we may need to have a strategic session with the Office of the MEC, SALGA and National Treasury. This presentation needs to be unpacked in a full Council meeting. She stressed that some issues heard today were not brought to the attention of the full Council.

The Chairperson said she was worried by the Executive Mayor’s response. She said the Executive Mayor had been the MMC for Corporate Services before 2016 and asked what she was hearing for the first time and what she meant? She asked if the Mayor was being honest with the Committee.

Executive Mayor Sereko said the Chairperson was incorrect as she was the MMC before the 2016 Council.

The Chairperson confirmed that she could hear what someone was whispering to Executive Mayor Sereko. She had been in the current Council for two years and asked if she read her responsibilities to become Executive Mayor. This is not helpful. The issues being raised are centred around the AG report which the Council has access to. This confirms what the Committee raised earlier about the lack of appetite from the political leadership to appreciate what the AG has said. The AG also said there was no response. This is a Chapter Nine institution which means you need to comply. “Do not reduce us to another talk shop. We are doing oversight”. She said she wanted this to be on record as all Members were concerned about this.

Executive Mayor Sereko said the Chairperson was correct in saying that she was part of the Council previously, but from 2016, she was an ordinary Council Member. She emphasised that sometimes she got a helicopter view of the municipality which gave an in-depth view. She was hearing some things for the first time today.

The Chairperson asked if Executive Mayor Sereko had perused the AG reports prior to attending the meeting. She said it was a straight forward question. She asked if Executive Mayor Sereko had perused the annual reports of the municipality before attending the meeting.

Executive Mayor Sereko said she did.

The Chairperson asked if she read and comprehended the AG’s report.

Executive Mayor Sereko said she had done this.

The Chairperson asked again why she was saying she heard some things for the first time if she had read the AG report. All the issues raised are based on the municipality’s annual reports. These are public records. You are causing Members to be agitated. She said no effort had been put into the meeting by the Municipality to interact with the Committee. Other municipalities who need to account must desist from what they are doing. This is contempt of Parliament.

Mr Ceza said this was pure laziness from Executive Mayor Sereko to deny a clear presentation from different stakeholders who had just presented to the Committee. What kind of leadership does not know these issues which are in the public domain? The Executive Mayor must not insult the Committee.

The Chairperson said she would give Executive Mayor Sereko time to respond in the evening and would not allow her to be contemptuous of the sitting. “We are not playing games here and take strong exception to these kinds of responses. I don’t think the Committee needs to be taken for a ride with the way these things are happening”.

Mr Groenewald referred to a legal opinion obtained by the municipality and asked if it would be correct to hear the Municipality Manager speaking.

The Chairperson asked what the issues were surrounding the Municipality Manager that Executive Mayor Batsi did not disclose.

Mr Groenewald said the forensic reports which Executive Mayor Batsi claims he does not have, implicates the Manager. He is alleged to have led some people to try to burn down a municipality and Executive Mayor Batsi omitted this information. On the MEC’s concurrence and the legal opinion, it indicates that the Manager cannot be appointed. If he is appointed, it will be null and void. On the basis of the municipality’s own opinion, is the Committee able to move forward and hear him in the meeting?

Mr Montwedi asked what weight the legal opinion had in nullifying the appointment made by Council. Should the MEC office take this to court to set aside the appointment of the Municipality Manager? In terms of the law, we cannot rely on a legal opinion. It must be pronounced in court. Only a court can set aside this appointment.

The Chairperson said these were new issues that the Committee was not privy to. She asked why Executive Mayor Batsi did not process the legal opinion.

There was a report from the NCOP which the municipality had not received. She asked for clarity on the NCOP report and the issues raised by Mr Groenewald.

The Speaker said he did not request the report from the NCOP, but the NEC. He said this was perhaps why he did not get it. He has been advised to write to the NCOP for the report to understand why the municipality was dissolved. The municipality is still experiencing the same challenges as when the municipality was dissolved and faces a lot of litigation.

Mr Batsi said he was the Speaker of the Executive Mayor.

The Chairperson said in 2016, the Standing Committee on Public Accounts (SCOPA) released a statement that Mamusa Municipality was unable to effect consequence management. Subsequent to this, on 15 November 2016, the Municipal Manager was suspended. This also led to the arson attack on the municipal building which was allegedly led by him. It is also in media records that the same Municipality Manager organised a protest where Deputy Minister Bapela accepted a memorandum and the then Minister Dr Zweli Mkhize responded. She asked for clarity on this. She referred to case number 368 of 2018 wherein the Manager was the second respondent. What came of this? She thought Mr Groenewald meant an interim court order.

The Speaker said he did not understand and that he was not aware of some issues and thought that the Manager could respond. The municipality has received a notice of motion from the Mahikeng High Court from people who refer to themselves as the Centre of Good Governance from Mamusa Municipality. The Council has entertained the matter. The municipality did not get a legal opinion for the attention of the Council. A legal opinion was received after Mr Jonas was not appointed. He said he had no insight on the burning of municipalities.

The Chairperson asked if the Speaker was a member of Council in 2016.

The Speaker said he started in 2020 as a first-time counsellor.

The Chairperson said it was the duty of the Speaker to brief itself as issues were inherited. He should know what was happening in his municipality as he was also a resident. She said he should not come to the Committee and plead ignorance. These issues are historical and you cannot say something happened prior to you being sworn in. She emphasised that accountability did not start when the official started, but that he inherited everything.

Mr Groenewald asked for clarity on whether the Speaker was saying he did not know of a legal opinion. He said the Committee received information from Mamusa municipality the previous day and has more information than the Speaker. He asked for clarity on this.

The Chairperson said the Speaker needed to gather as much information as possible when attending such engagements. From January up until now he has had enough time to gather information on contentious issues. What did your 100 day program look like in that Office?

The Speaker said a legal opinion was received.

The Chairperson asked if the legal opinion was dated 24 November 2020.

The Speaker said he was aware of this.

The Chairperson asked if Council met to consider the legal opinion between November 2020 and now. How much did it cost to secure the legal opinion?

The Speaker said the municipality’s legal team was used.

The Chairperson said the Speaker was not telling the truth. The Advocate was from the Grayston Chambers in Sandton. She asked why the legal opinion was not processed.

The Speaker said he did not want to lie to the Committee.

The Chairperson asked who processed the legal opinion as it affected the Municipality Manager. Was the Speaker not aware of this? The legal opinion is referenced to the Speaker, Mr Batsi.

She pleaded with the Speaker to familiarise himself with the legal opinion and explain to the Committee why it was not processed when the Committee reconvened in the evening. She said this was very critical. She said that officials in North West should be honest with the Committee and respect the decorum of the House.

The meeting was adjourned until 19:00.