Noupoort Intervention; Extention of Warrington Intervention

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LOCAL GOVERNMENT & ADMINISTRATION SELECT COMMITTEE

LOCAL GOVERNMENT & ADMINISTRATION SELECT COMMITTEE
13 September 1999
CONSIDERATION OF NOUPORT INTERVENTION AND WHETHER TO EXTEND THE INTERVENTION OF WARRENTON

Documents handed out:
Intervention in Nouport: Report (see below - Appendix 1)
Extension of the intervention: Warrenton (see below - Appendix 2)

SUMMARY
The committee decided that they could not decide whether to extend the intervention in Warrenton or not based on the report because it was an old report dated 22 July 1999. It was agreed that the committee has to go to Warrenton to get a first-hand report but not time frame was specified. SALGA would be asked what is their view on the matter.

The committee agreed that the Chairperson and two other members, one from the ruling party and one from an opposition party, would go to Nouport on 15 September to investigate the intervention. The committee would meet on 20 September to discuss the terms of intervention

MINUTES
Extension of Warrenton Intervention
The NCOP Legal Adviser, Mr Palmer, presented the report to the committee (hereunder attached).

Question from the members
A committee member asked for clarity on the fact that a letter from the MEC ask for extension of intervention for the period of six months and the report from the provincial government asks for two months extension. The member believed that the six months period will not do the job. The chairperson said that this would be looked at.

More information was requested on the issue of the training of councillors and on what areas the training team focused on. It was noted that there was a lot of in-fighting and it was queried what the impact of the training was in this regard?

The chairperson indicated that Mr Palmer would not be able to answer the question because the report before them was an old report.

The meeting decided that since this was an old report, they needed to go to Warrenton to get first-hand information. The committee agreed that they should not deliberate on the issue and as SALGA was involved in these negotiations they should send a letter to it and ask what is their view on the matter.

Nouport Intervention
A committee member, having regard to the committee's budget, requested that the delegation to Nouport should be a small delegation. Another member asked why the NCOP had to carry the burden of the costs. He commented that it is the provinces which task the NCOP and therefore the provinces should carry the costs. The Chairperson said that since the approval of an intervention is an NCOP task, they have to carry the costs.

The committee decided that a delegation of the committee should go to Nouport on Wednesday (15 September) to investigate the problem and the committee should meet on Monday (20 September) to discuss the terms of intervention. On Tuesday, 21 September the issue would be placed before the NCOP plenary. The committee agreed the delegation would compose of the chairperson and two members, one from the ANC and one from the opposition parties.

The meeting was adjourned.

Appendix 1:
TO : CHAIRPERSON

FROM: DES LE ROUX (MANAGER: PROCEDURAL SERVICES)

DATE : 6 SEPTEMBER 1999

SUBJECT : INTERVENTION INTO NOUPOORT MUNICIPAL COUNCIL

On 20 August 1999, you received a fax from Minister Mufamadi's office informing you that the intervention into the Noupoort Municipality had not been approved. The province did not seek the Minister's approval of the intervention within the 14-day period as stipulated in the Constitution and the intervention therefore ended.

On 20 August 1999, the Northern Cape Provincial Government again intervened in the Noupoort Municipality in terms of section 139(1)(b) of the Constitution. On 26 August Minister Mufamadi approved the intervention in terms of section 139 (2)(a) of the Constitution.

Notice of the intervention must be tabled in the NCOP within 14 days of its first sitting after the intervention began. This sitting of the NCQP took place on 23 August 1999. Therefore the notice must be tabled by 6 September 1999. We will ensure that the notice is tabled today.

Please note that we received the notice today, only after I enquired from Mr. R Maponya of the Provincial Department of Housing and Local Government. He seemed to be under the impression that the onus was on Minister Mufamadi's office to inform the NCOP about the Minister's approval. I reminded him that it is the province and not the Minister seeking approval for the intervention.

The NCOP must approve the intervention by 23 September 1999 - within 30 days of the NCOP's first sitting after the intervention began.

In terms of the NCOP Rules, the matter should now be referred to the relevant select committee, which has 10 days within which to report to the House. If the matter is referred to the committee this week, it will not be able to meet the deadline, since members are in the provinces.

Recommendation

I propose that we refer the matter to the committee on Monday 13 September, to allow the committee time to investigate and report on the matter. The committee will then have until 23 September to report, in time for its deadline and the plenary scheduled for 23 September. This will also allow enough time to arrange a trip to Noupoort, should the committee so decide.

________________________

NORTHERN CAPE PROVINCE

TO: THE CHAIRPERSON
NATIONAL COUNCIL OF PROVINCES
AND THE MINISTER [MR.S.F. MUFAMADI]
DEPARTMENT OF PROVINCIAL AND LOCAL GOVERNMENT

NOTICE IN TERMS OF SECTION 139 (2) (b] OF THE CONSTITUTION
OF SOUTH AFRICA1 1996 (ACT 108 OF 1996):
NOUPOORT MUNICIPALITY: NORTHERN CAPE PROVINCE

BE INFORMED THAT the Provincial Executive of the Northern Cape
Provincial Legislature, acting in terms of Section 139 (1) (b) of the
Constitution aforesaid, has intervened into Noupoort Municipality on the 21
July 1999.

BE INFORMED further that the Memorandum hereto attached and marked
Annexure "M" is in support of the intervention and in compliance with Section
139 (2) [a) and (b) of the Constitution.

DATE: 28/07/99

FROM: MEC: HOUSING AND LOCAL GOVERNMENT
NORTHERN CAPE PROVINCE

___________________

ANNEXURE "AA"

MEMORANDUM

INTERVENTION IN TERMS OF SECTION 139 (1)(b) OF THE CONSTITUTION
OF SOUTA AFRICA ACT, 1996 (ACT 108 OF 1996) INTO NOUPOORT
MUNICIPALITY: NORTHERN CAPE PROVINCE

BACKGROUND

1. Noupoort Transitional Local Council is a local council as defined in the Local Government Transition Act, 1993 (Act 209 of 1993), hereinafter referred to as 'the Act". The Municipality of Noupoort derives its status, powers and functions (and duties) from Chapter 7 of the Constitution of the Republic of South Africa Act, 1996 (Act 108 of 1996) hereafter referred to as "the Constitution". The Council consists of 7 councillors. Presently only 4 councillors remain on the Council. The circumstances that led to such a diminished number on the Council shall be explained later in this memorandum.

2. The financial as well as the general administrative position of the Municipality is now in a state of chaos. The financial control Systems as well as the administrative functions have reached such a state of disintegration that an intervention in terms of the provisions of the Constitution referred to above has become inevitable and necessary, more particularly in that:

2.1 The lack of proper management and financial systems has led the Municipality in being unable to collect revenue to acceptable levels. The billing system is not being done timeously or at all.

2.2 The non-collection of revenue has resulted in the Municipality failing to pay its creditors. In this regard, ESKOM, as one of the municipality's major creditors has taken legal steps against the Municipality for payment of outstanding debts. All revenue collections made by the Council were to be attached by the Sheriff and paid directly to ESKOM on the strength of a Court Order.

2.3 The Municipality has landed itself in a situation where it could not pay salaries and wages for its employees for the months of May and June 1999. Coupled with this was the inability of the Municipality to pay over employees' benefits to the respective institutions. There was then a labour unrest within the Municipality and the employees embarked on a strike. The Department intervened and the strike was resolved. The document marked Annexure "BB" hereto attached represents a report of the negotiations held on 8-9 July 1999 and the agreement signed thereat.

2.4 Prior to this strike the MEC had as a result of allegations received, ordered an investigation into Noupoort in terms of Section 10H(5)(a) of the Act. The investigation was carried out on 28-30 April 1999 and a report thereto is hereto attached and marked Annexure "CC".

2.5 A further investigation was conducted into the financial position of the Municipality on 8-9 June 1999 and a report to that effect is attached hereto as Annexure "DD".

2.6 It is apparent that although the contents of all these reports were brought under the attention of the Municipality, with a view of taking corrective measures as therein recommended, this was not to be.

2.7 Hence as a further corrective measure the MEC appointed a task team as per document marked Annexure "EE" and hereto attached, which document outlines specific instructions to the Council and the team's terms of reference.

3. The situation presently prevailing in the Council is such that the Council cannot fulfill its obligations in terms of the Act and the Constitution, in that:

3.1 The Council has failed to hold regular full council meetings since March

1999 and this fact was unearthed during the investigation of 28-30 April

1999. Where the Council managed to meet, such meetings could not

proceed because of no quorum.

3.2 There were no proper minutes of Council meetings kept. The fact that the Council was not holding regular meetings was never reported to the MEC. Coupled with this was the failure on the part of the Town Clerk to report vacancies on the Council to the MEC as required by the relevant by-election regulations.

RECOMMENDATION

That the intervention be approved by the Minister as well as the National Council of Provinces in terms of Sections 139 (2)(a) and (c) of the Constitution, as the case may be.

Appendix 2:
PROGRESS REPORT ON THE STATE OF THE ADMINISTRATION OF THE
WARRENTON MUNICIPALITY AFTER THE INTERVENTION OF THE
PROVINCE OF THE NORTHERN CAPE IN TERMS OF SECTION 139(1) (b)
OF THE CONSTUTION OF SOUTH AFRICA ACT, 1996 (ACT 108 OF1996)

1. INTRODUCTION

Because of the situation that prevailed in the Warrenton Municipality from as far back as 1995/96 up to February 1999, and despite the financial assistance provided by the provincial department of Housing and Local Government during the said period, no improvement in the financial situation prevailed. Accordingly, it therefore became necessary for the MEC to invoke legal proceedings to avert the total collapse of municipal services in Warrenton in terms of Section 139(1) (b) of the Constitution of South Africa Act, 1996 (Act 100 of 1996).

2. APPOINTMENT OFAN ADMINISTRATOR

On the 11th February 1999, the MEC for Housing and Local Government appointed an administrator in terms of Section 10H (5) (a) of the Local Government Transition Act, Second Amendment Act 1996 (Act 97 of 1996), to conduct an investigation into the affairs of the Warrenton Municipality.

3. PROBLEMS ENCOUNTERED AND REMEDIAL ACTION

3.1 PROVISION OF SERVICES.

(a) The water infrastructure was up to standard. However, there was no maintenance or provision in the budget for the maintenance of the infrastructure. There were no control measures in place, which resulted in leakages, illegal tapping of water on private property, and broken meters which could not record water consumption.

The following remedial actions were taken:

· Monthly audits on water consumption.

· All illegal by-passes were fixed.

· Broken meter boxes were replaced.

(b) ELECTRICITY

The same problems as those mentioned above (water) were discovered, which resulted in shortfalls on the electricity accounts. Electricity meters were tampered with, as a result consumers had unaccounted consumption on electricity.

The following remedial action was taken:

· Door to door inspections were done on meters, and replacements carried out where necessary.

(c) SUCTION TANK TRUCK

There was only one tank available for the whole town, which resulted in poor service delivery

The following remedial action was taken:

· A second-hand truck (suction tank) was purchased from the Kimberley City Council

3.2 FINANCIAL MANAGEMENT

Annexed hereto, is a report which indicates the poor financial management in the town at the time of intervention (see annexure "B" attached). There were no credit or debtors control policies in place, and inconsistent billing of accounts was common. This resulted in creditors taking legal action against the municipality of Warrenton e.g. Sanlam, the DBSA, and Eskom. Overtime payments

were R38 000-00 per month with a telephone account at R1O 500-00

The following remedial actions were taken:

- Letters and telephonic interactions with creditors were made in an effort to negotiate debt settlements, which was very successful. See annexure "C" attached.

At the time of the intervention, the outstanding Creditors were at R5,8m, and the current outstanding amount on the creditors is at R2 405 515-81 to date.

- At the time of the intervention, the bank overdraft was at R900 000-00, and has now been fully settled. There is now a credit of R26 141-60 in the bank account of the municipality (see Annexure "D")

- Overtime payment has been stopped' and telephone accounts have been reduced to R4500-00 per month. The intended limit on the telephone account is R3000-00 per month.

- Municipal services accounts to consumers are now sent out between the 21st and 25th of each month. In addition, a monthly debtors' control system is implemented which is intended to reduce the debtors.

3.3 ADMINISTRATIVE PROCEDURES

The immediate problems identified were the following:

· No proper filing system was in place, e.g. no records were kept of incoming mail.

· officials receive no training relevant to their daily tasks.

· There was neither a town treasurer nor an accountant in the employment of the municipality

· No staff development was in place.

· No Code of conduct, and/or disciplinary procedures existed

· There was no policy on leave or any management of the leave register. All of these resulted in a lack of commitment by administrative staff

The following remedial actions were taken:

- A new filing system has been adopted and implemented, and registry staff is receiving training.

- There is a training programme in place, which started with computer operators

- An accountant has been appointed on contract since the 15 June 1999, and the treasurer has been appointed on contract since the 1July 1999.

- A Code of Conduct, leave policy, sick leave, and disciplinary procedures and staff control measures are in place. Municipal staff are gradually been motivated in their job.

3.4 COOPERATION OF TOWN CLERK

Since the intervention, the Town clerk has still not demonstrated commitment and cooperation insofar as this process is concerned.

The following observation has been made:

· The town clerk does not spend sufficient time in office for effective and efficient management

· No open door policy exist, and thus denying accessibility to the public

· No interaction and motivation of staff occurs.

· Not able to manage his diary and/or daily programme.

· Although he has been provided with all the necessary legislation and policy documents he has still not been able to improve his performance, and

· Does not understand what it means to be a town manager.

The following remedial action was taken but to no avail.

· The administrator has always engaged the town clerk in his programme, and has persistently endeavored to train him on all aspects, but he (town clerk) has not responded positively i.e. he does not seem to be trainable as Town Clerk, and perhaps he will be more suitable in another position.

3.5 MEETING OF COUNCILLORS AND ADMINISTRATOR, AND COOPERATION BETWEEN COUNCIL AND ADMINISTRA TOR

The town Council met at regular intervals, in committees, EXCO, and full council. However, council does not have a CEO which could give them sound advice and guidance. There was no internal policies and/or standing orders. Procedures were virtually non-existent.

The following remedial actions were taken:

· Council has now adopted standing rules of order.

· Training on the above has been conducted.

· Training on the code of conduct for councillors have been provided.

· Training of councillors on management, policy formulation, budget control and implementation, and affirmative action was provided by the Administrator

3.6 COMPETENCY OF COUNCILLORS

The Council is still in office and is capable of executing their mandate.

However, Council committees have been restructured to involve each councillor on a committee which deals with a specific area, e.g. RDP, Public Works, Executive Committee etc. A schedule of the meetings of the different committees have been approved by the council (see Annexure "E')

4. DEBTORS

The council's policy on debtors only provided for referrals to Veri Credit. The referral of debtors amounted to R4,7m, and only R52 000 of the referral was received. This policy was not effective, and is under review as part of the action plans of the MST. It must also be noted that some of the debtors have since passed away or have disappeared. The council does however, implement the indigent policy.

5. CREDIT CONTROL POLICY

The latest, is that the EXCO of the Warrenton Municipality is to consider, after review; the credit control policy at its meeting on 99/07/27, whereafter it will be tabled before the full council on 99/07/29 for adoption.

6. MUNICIPAL SUPPORT TEAM

The MST has started with its work on 99/07/22. The credit control policy does form part of the team 's action plan for the Warrenton Municipality

7. Y2K COMPLIANCE

The NYTT has contracted Africon as part of the Provincial Programme Management team for the Northern Cape. An inventory has been conducted on the Mission Critical Systems as the first phase of the project (in all municipalities). The inventories have been referred to national as the second phase for an assessment based on the information received from Warrenton, which will include the costs involved to correct the systems. It can be mentioned at this stage, that according to the inventory, the only Mission Critical Systems affected is their IT, in Particular the hardware (software is Y2K compatible). No provision has been made in the budget of the municipality for the Y2K. The comprehensive assessment on Warrenton will only be ready by mid August 1999.

8. OUTSTANDING MATTERS

The following are outstanding matters which must be attended to by way

of implementation if the stabilization that has been achieved is to be

sustained.

· Training of councillors in respect of project management,

· Basic financial management, policy development and coordination

· Staff training in respect of report writing

· Budget and financial management in each department of the municipality

· Management of municipal assets and maintenance

· Labour relations, and conflict management

· Format for minutes of committees, council meetings, and implementation strategy

· Sustained community involvement in matters of local government; and Masakhane.

9. RECOMMENDATIONS

In view of the outstanding matters, as well as sustaining the stabilization of the financial situation of the municipality, and the fact that the Town Clerk has still not responded positively to on the job-training, and other measures intended to develop his management skills, it is strongly recommended that the intervention in terms of the Constitution remain in force for at least another two months (60 days).

10. CONCLUSION

The Provincial Department of housing and Local Government; through the above intervention has been able to stabilize the financial position and service delivery of the Warrenton Municipality. However, this does not necessarily mean that there is growth in the town. What needs to be done, based on the recommendations mentioned above, is that new methods to achieve sustainability and absolute administrative independence for the Warrenton Municipality will have to be formulated.

MEC: HOUSING AND LOCALGOVERNMENT

22 July 1999

___________________________

To: The Chairperson

National Council of Provinces

22 July 1999

PROGRESS REPORT ON THE STATE OF THE ADMINISTRATION OF THE
WARRENTON MUNICIPALITY AFTER THE INTERVENTION OF THE
PROVINCE OF THE NORTHERN CAPE [N TERMS OF SECTION 139 (1)(b)
OF THE CONSTITUTION OF SOUTH AFRICA ACT, 1996 (ACT 108 OF 1996).

It gives me great pleasure to present to you a progress report on the Provincial intervention into the affairs of the Warrenton Municipality in terms of Section 139(1)(b) of the Constitution of the Republic of South Africa.

As can be seen from the report, good progress has been made in improving the financial and administrative management of the Municipality. It was our initial intention to terminate the intervention on 30 July 1999.

However, in presenting the report to the Executive Council at its meeting held on 21 July 1999, it was decided to extend the intervention for a further four (4) months to six (6) months to ensure the stabilisation of the affairs of the Municipality. This decision is motivated by the fact management, and in particular the Town Clerk, still does not have the capacity to sustain the process forward.

I am therefore requesting you and / or the NCOP to approve the extention period This is done in the interest of ensuring a well-functioning Municipality capable of delivering services in the long term

Hoping you find this in order

FROM: O P DIKGETSI

MEC: HOUSING AND LOCAL GOVERNMENT

______________________

PROVINCE OF THE NORTHERN CAPE

Agenda Item: 8.1

21 July 1999

PROGRESS REPORT ON THE STATE OF THE ADMINISTRATION OF THE
WARRENTON MUNICIPALITY AFTER THE INTERVENTION OF THE
PROVINCE
OF THE NORTHERN CAPE IN TERMS OF SECTION 139(1)(b) OF
THE CONSTITUTION OF SOUTH AFRICA, ACT 1996 (ACT 108 OF 1996
)

RESOLVED

(1) To approve that the intervention in terms of the Constitution remain in force for at least another four-five months (120-150 day) in view of the outstanding matters, as well as sustaining the stabilization of the financial situation of the municipality, and the fact that the Town Clerk has still not responded positively to on the job-training, and other measures intended to develop his management skills.

(2) That a meeting with the community be held as soon as possible to inform them of the status of the municipality before and after the intervention.

EXECUTIVE COUNCIL RESOLUTION: NO.58/1999(07)

21 July 1999

CABINET SECRETARY

___________________________

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