Consideration of Terms of Intervention in Wedela & Stilfontein

SUMMARY
The committee approved the intervention in the Stilfontein and Wedela TLCs.

MINUTES
Pursuant to a request from the North West government in terms of S139 (1)(b) of the Constitution the Committee sent a delegation to Stilfontein and Wedela to investigate intervention of these local councils. From the investigations a report was compiled by the Committee (Appendix 1 and 2). SALGA also furnished a report on the investigations in Stilfontein and Wedela (Appendix 3). For purposes of this meeting the Committee had to decide firstly whether there should be intervention and secondly, if approved, what form and terms the intervention should have.

Stilfontein
Ms P Majodina (Eastern Cape, ANC) moved that the Committee should approve the intervention and was fully supported by other provinces.

The Committee also agreed that the terms of intervention, as set out in the report, are sufficient.

Wedela
Mr Durr (Western Cape, ACDP) expressed his satisfaction with the report, but said the report must reflect that Wedela is in no position to meet its obligations and the administrators are asked to do the impossible. The Chairperson admitted that the achievement of viability will be difficult and replied that the measures introduced are only to mitigate the problem in the area.

All Provinces agreed to the intervention and also to the terms of intervention.

On 14 September 1999 the intervention is to be debated in the NCOP for approval. Since there were no further matters to discuss the meeting was adjourned.

Appendix 1
Intervention in the Stilfontein TLC - Report

The current situation in the Stilfontein Local Council (the Council) is such that it cannot fulfill its executive obligations in terms of the Local Government Transition Act of 1993 (Act 209 of 1993).

The financial problems of the Council cover the period C 1/074998 - 31/ 05/1999. During this period a shortfall in income of R7, 746, 252,00 was incurred and it is estimated that the shortfall may increase to +- R8, 5 million for this financial year. Currently the Council has an amount of +- RI, 2 million available to pay its creditors. More than R7 million is needed to pay the Council's outstanding debts, which include contributions to employees' pension and medical funds.

The main cause of the Council's financial problems is that residents of Khuma Township are unable to pay for the services because of a high rate of unemployment, allegedly 80 -90 %. The closure of some mines is the main cause of the growth in unemployment.

The financial situation has been exacerbated by a lack of financial and administrative skills to run the Council.

There are allegations that councilors have abused the assets of the Council, and have awarded contracts to their relatives and friends. This has resulted in the community losing trust and confidence in the Council, thereby affecting the Council's credibility. We found that the main cause of the allegations of misconduct and corruption against the councilors is that the affairs of the Council are not run in an open and transparent manner.

Services are being rendered because of the Provincial Government's financial assistance.

TERMS OF THE INTERVENTION

The Northwest Provincial Government intervened in the Stilfontein Transitional Local Council (the Council) on 03 August 1999. An Administrator has been appointed to take over the executive functions of the Council. The Minister for Provincial and Local Government approved the intervention on 12 August 1999 in terms of the provisions of section 139(2)(a) of the Constitution.

The MEC for Developmental Local Government and Housing on behalf of the Provincial Government notified the National Council of Provinces (NCOP) of the intervention in terms of section 139(2)(b) of the Constitution, on 13 August 1999.

The Northwest Provincial Government is seeking approval for its intervention on the following terms:

The Administrator must ensure that -

The Administrator must ensure that --

The Administrator must ensure that -.

The Administrator must ensure that -

The Town Clerk must co-operate fully with the Administrator and must render all reasonable assistance to the Administrator in carrying out his or her functions.

The councillors and the Administrator must meet at least once a month to discuss matters of mutual interest and to allow the Administrator to submit a progress report to them. The councillors must keep the community abreast of developments during the intervention.

 7. Co-operation between Councillors and Administrator

The Administrator and councillors must carry out their respective duties in a co-operative manner. However, in the event of a dispute between the parties, such dispute must be resolved by mediation by a representative of SALGA. Should the matter remain unresolved, it must be decided by the MEC for Developmental Local Government and Housing.

The Administrator must submit a business plan to the MEC for Developmental Local Government and Housing by 30 September 1999.

The Administrator must provide the Member of the Executive Council for Developmental Local Government and Housing with a monthly report on the Intervention and the readiness of the Council to resume its normal functions.

Councillors remain competent to carry out their legislative functions.

The intervention must end when the NCOP is satisfied that the Council is able to resume its executive responsibilities, that the Council is financially viable and that financial control policies are in place and consistently implemented.

The NCOP recommends that the intervention in the Stilfontein Transitional Local Council by the North West Provincial Government be approved.

Intervention in the Wedela TLC - Report

The current situation in the Wedela Local Council (the Council) is such that it cannot fulfil its executive obligations in terms of the Local Government Transition Act of 1993 (Act 209 of 1993).

Wedela is a mining town which began to experience problems when the mines started to downsize its workforce, resulting in retrenchments. As a result most of the residents could not afford to pay for their services. Those who could afford to pay, complained of incorrect billing of accounts. This situation impacted or the revenue that the council was able to generate.

The Council was not able to pay its creditors, like ESKO'M, which resulted in power cuts.

At present, the Council's expenditure exceeds its monthly income. However, the Council has a +- 58% payment of services. Despite this, it is still not able to meet its debts, which are estimated at R2,8 million.

There are allegations that councillors have abused the assets of the Council and that salary advances have been given to councillors and officials. This has resulted in the community losing trust and confidence in the Council, thereby affecting the Council's credibility. We found that the main cause of the allegations of misconduct and corruption against the councillors is that the affairs of the Council are not run in an open and transparent manner.

There are allegations of electricity theft on the part of the community. All services are being rendered.

The Northwest Provincial Government intervened in the Wedela Transitional Local Council (the Council) on 03 August 1999. An Administrator has been appointed to take over the executive functions of the Council. The Minister for Provincial and Local Government approved the intervention on 12 August 1999 in terms of the provisions of section 139(2)(a) of the Constitution.

The MEC for Developmental Local Government and Housing on behalf of the Provincial Government notified the National Council of Provinces (NCOP) of the intervention in terms of section 139(2)(b) of the Constitution, on 13 August 1999.

The Northwest Provincial Government is seeking approval for its intervention on the following terms:

The Administrator must ensure that -

The Administrator must ensure that -

The Administrator must ensure that -

Councillors remain competent to carry out their legislative functions.

The NCOP recommends that the intervention in the Wedela Transitional Local Council by the North West Provincial Government be approved.

Letter from SALGA to Select Committee Chairperson regarding Stilfontein and Wedela intervention:

Mr Mohammed Babha

Chairperson Select Committee

National Council of Provinces

Parliament

Date: September 2, 1999

After consultation with the North West Local Government Provincial Association, we hereby wish to make the following suggestion for consideration by your committee when approving the terms of intervention in Stilfontein and Wedela.

1. Expenditure/ Finance

The provincial government in terms of section 154(1) must ensure, within its financial capacity to undertake all capital expenditure necessary for the provision of the basic infrustructure for debt collection mechanism in particular electricity and water.

The clause can be structured in terms of sect 154(1) of the constitution if needs be.

"The national and provincial government, by legislative and other measures, must support and strengthen the capacity of municipalities to manage their own affairs, ….., to perform their functions"

2. Time frames

The administrator within 60 days must develop a business plan outlining the time frames required for the intervention, the budget and the strategies necessary to execute his/her mandate. The business plan must target to end the intervention within a reasonable time.

A copy of the business plan must be submitted to the MEC, NCOP and Organised Local government.

 

3. Corruption

The administrator must report allegations and practices of corruption to the MEC, for further investigation.

The MEC upon receipt of the report on corruption must institute necessary steps to investigate and deal with corruption.

4. Code of conduct

The administrator within the confines of the Local Government Transitional Act must implement and enforce the code of conduct for councillors. Any violation of the code of conducted must be dealt with in terms of the LGTA and be reported to the MEC with immediate effect.

Thanking you in advance.

Regards

Thabo Mokwena

CC: I Motala Chairperson NOWELOGA

A Ratlou NOWELOGA

C Matjila Chairperson SALGA