REPORT OF THE SELECT COMMITTEE
ON CO-OPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON CONSIDERATION OF THE NOTICE
OF INTERVENTION ISSUED IN TERMS OF SECTION 139(1)(c)
OF THE CONSTITUTION IN MPOFANA LOCAL MUNICIPALITY, KWAZULU-NATAL PROVINCE – DATED
15 SEPTEMBER 2014
The Select Committee on Co-operative Governance and
Traditional Affairs, having considered the directive of the National Council of
Provinces (NCOP), to consider and report on the notice of intervention issued
in terms of section 139(1)(c) of the Constitution in Mpofana
Local Municipality in KwaZulu-Natal
Province, reports as follows:
1. Introduction and Background
1.1 On the 3rd September 2014, the
MEC for the Department of Cooperative Governance and Traditional Affairs tabled
a notice of intervention issued in terms of section 139(1)(c) of the
Constitution in Mpofana Local Municipality, to the
NCOP.
1.2 On the
4th September 2014, the Chairperson of the NCOP referred, in terms
of Rule 101 of the Council, the notice of intervention to the Select Committee
on Cooperative Governance and Traditional Affairs for consideration and
reporting.
1.3 On
the 5th September 2014, the Select Committee on Cooperative
Governance and Traditional Affairs took a decision during its Committee
proceedings to call the MEC for the Department of Cooperative Governance and
Traditional Affairs to appear before the Committee on 15 September 2014, in
order to brief Members on the procedural, substantive and constitutional nature
of the notice of intervention in the Mpofana Local
Municipality. On 15 September 2014,
the MEC for the Department of Cooperative Governance and Traditional Affairs gave
a briefing to the Committee on the said matter.
2.
Briefing on Notice of Intervention in Mpofana Local Municipality
2.1
The MEC’s
presentation focused on the background; labour unrests; infighting amongst
councilors; credibility of the IDP; supply chain management; culture of
impunity; unlawful protests; non-submission of annual financial statements;
failure to execute executive functions and procedural and constitutional
aspects of the intervention.
3. Background
3.1 The
Mpofana Municipality had been in the limelight for a
number of reasons, particularly, its challenges which have created perceptions
of a state of anarchy and paralysis. The
state of the Municipality has been an uncomfortable situation for the Department
and most importantly, the communities that are served by the Municipality.
4. Labour
Unrests and Councillors’ Infighting
4.1 Since 2012, the Mpofana Local
Municipality has been plagued by a continuous series of labour unrest
incidents, including unprotected strikes, community protest actions and serious
financial difficulties. The Municipality
had also been mired in controversy, with allegations of bickering and
infighting amongst its councilors.
5. Auditor-General’s Opinion
5.1
In the
submission of the 2012/13 annual financial statements, the Auditor-General
issued an opinion on the audit report that regressed the Municipality to a
qualified audit. The Municipality did
not included particulars of irregular expenditure in the notes to the financial
statements, as required by section 40(3)(i) or
55(2)(b)(i) of the Local Government: Municipal Finance Management Act, 2003
(Act No. 56 of 2003) (“the MFMA”).
5.2
The Municipality
made payments in contravention of the supply chain management requirements
which were not included in the irregular expenditure, resulting
the irregular expenditure being understated by R26.43 million. No disclosures
were made in the financial statements regarding irregular expenditure or such
expenditure that was condoned. Irregular expenditure of R26.43 million is a
substantial percentage of the municipal budget which was used in an irregular
manner.
5.3
The
findings raised in the audit report of the Municipality reflected that Mpofana is steeped in cash flow problems, and a general
mismanagement of funds. The money owed by the Municipality was not always paid within 30 days or an
agreed period, as required by section 65(2)(e) of the
MFMA. Payments were made without the approval of the accounting officer or a
properly authorised official, as required by section 11(1) of the MFMA.
5.4
An effective
system of expenditure control, including procedures for the approval was not in
place, as required by section 65(2)(a) of MFMA. An
adequate management, accounting and information system were not in place which
recognised expenditure when it was incurred, as required by section 65(2)(b) of the MFMA. Reasonable steps were not taken to prevent
unauthorised, irregular and fruitless and wasteful expenditure, as required by
section 62(1)(d) of the Act.
6. Supply Chain Management
6.1
In respect
of supply chain management, sufficient appropriate audit evidence could not be
obtained that:-
6.1.1 goods and services with a transaction value below
R200,000.00 were procured by means of obtaining the required price quotations;
6.1.2 goods
and services with a transaction value above R500,000.00 were procured by means
of inviting competitive bids;
6.1.3 bid specifications for procurement of goods and
services, through competitive bids, were drafted in an unbiased manner that
allowed all potential suppliers to offer their goods and services;
6.1.4 contracts
and quotations were awarded to bidders based on points given for criteria that
were stipulated in the original invitation for bidding and quotation;
6.1.5 bid
adjudication was always done by committees which were composed in accordance
with SCM regulation 29(2);
6.1.6 the preference point
system was applied in all procurement of goods and services above R30,000.00 as
required by section 2(a) of the Preferential Procurement policy Framework act
and SCM regulation 28(1)(a);
6.1.7 contracts
and quotations were awarded to suppliers based on preference points that were
allocated and calculated in accordance with the requirements of the
Preferential Procurements Policy Framework Act and its Regulations;
6.1.8 contracts were only
extended or modified after tabling the proposed amendments in the Council of
the Municipality, as required by section 116(3) of the MFMA; and
6.1.9 construction
contracts were awarded to contractors that were not registered with the
Construction Industry development Board (CIDB) and qualified for the contract,
in accordance with section 18(1) of the CIBD Act and CIDB regulations 17 and
25(7A).
7.
Culture of Impunity
7.1
It would
appear that due to the lack of executive oversight, a culture of impunity was
prevalent within the Mpofana Local Municipality. The
staff members of the Municipality did not regard themselves as being
accountable to the public, whom they are supposed to serve. In a letter dated
20 September 2013, the newly appointed Municipal Manager stated that:-
7.1.1 He has witnessed with disbelief, high levels of
indiscipline and conduct by employees who have absolutely no regard for the
implications of their behavior, or the purpose of their existence as employees
and of the well-being of the Municipality;
7.1.2 The situation was turbulent, highly volatile and
life-threatening to the extent that urgent steps to ensure the safety of
councilors had to be taken;
7.1.3 The
conduct of municipal staff was totally unacceptable in that they openly make
threatening remarks to councilors and managers, and refer to previous incidents
where they have become a law unto themselves; and
7.1.4 The culture of non-performance was
prevalent and was the reason for the Municipality’s dismal performance. The Municipality
has become popular for the wrong reasons, to the extent that some officials
cannot draw the line between being politicians and being officials.
7.1.5 The behavior of staff has been
described as unbecoming, unruly, rebellious and mutinous, with a blatant
disregard of the laws that govern a Municipality as well as its Code of
Conduct. Indeed, staff members together with councilors are allegedly, in some
cases, leading protest marches against service delivery that they should be
providing.
8. Failure to Execute Executive Functions
8.1
The council
performed no effective executive oversight over its administration, the chaos
deteriorated in the presence of the council. Councilors and staff were part of
demonstrations against their own institution. They have failed to take
disciplinary actions, instead allowed staff who are on
strike to be paid. Committee meetings, on crucial matters emanating from the
Auditor-General report, were not seating regularly, despite the concerning
state of finances. The council failed in its executive obligation to ensure an
effective administration of the Municipality.
8.2
The Department submitted that the assumption of
certain functions in accordance with section 139(1)(b) of the Constitution
would have not been sufficient to address the prevailing circumstances in this
Municipality, and that the exceptional circumstances which prevailed, justify
an intervention in terms of section 139(1)(c) of the Constitution.
9. Procedural and Constitutional Aspects of
the Intervention
9.1 Given the prevailing circumstances at Mpofana Municipality, on 01 September 2014, the Executive
Council resolved to
place Mpofana Local Municipality under intervention
in terms of section 139(1)(c) of the Constitution.
9.2
The dissolution
of the municipal council would take effect 14 days after the Cabinet Minister
responsible for local government and the NCOP have been informed of the
resolution of the Executive Council, unless such resolution is set aside by
either the said Cabinet Minister or the NCOP within this period of 14
days. The 14-day period will expire on the
16 September 2014.
9.3
As the election
unfolds to re-elect the Council, it would be necessary to develop a
comprehensive and integrated plan to improve the social and economic situation
at the Municipality, including developing strategies for job creation,
eradication of poverty, economic growth and improved access to basic services
9.4
The MEC was also
authorised by the Executive Council to appoint an Administrator and to
facilitate the election of a new municipal council. The specific terms of reference of the Administrator are as
follows:-
9.4.1 Undertake all executive functions of the municipal
council except the legislative functions namely, the approval of by- laws, the
approval of the municipal budget and the
imposition of rates, taxes, levies, duties, service fees and surcharges on
fees;
9.4.2 Undertake all statutory executive functions of the
Mayor;
9.4.3 Undertake the functions referred to in section
67(1)(h) and Schedule 2 of the Municipal Systems Act, read with any other relevant
legislative provisions dealing with disciplinary matters, including criminal,
disciplinary and civil action;
9.4.4 Ratify all decisions taken by Municipal Manager and
section 57 Managers in terms of delegated or original authority;
9.4.5 Devise a turn-around strategy for the Municipality;
9.4.6 Implement a system to control and approve all
expenditure;
9.4.7 Ensure the implementation of financial systems,
policies and procedures;
9.4.8 Ensure the implementation of Municipal Property Rates
Act;
9.4.9 Set out specific strategy for addressing the Municipality’s
financial problems, including a strategy for reducing unnecessary expenditure
and increasing the collection of revenue;
9.4.10 Prepare of the adjustment budget for the 2014/15
financial year; and review the
organizational structure of the Municipality.
9.5
On the 2nd
September 2014, letters were drafted and dispatched to the Minister of
Co-operative Governance and Traditional Affairs, Chairperson of the NCOP,
Speaker of the Provincial Legislature and the Mayor and Municipal Manager of Mpofana Local Municipality. In addition, a letter was sent
to the IEC to alert the Commission of the need to conduct a full by-election
for the Council Mpofana.
9.6
On the 3rd
September 2014, the MEC for the Department of Co-operative Governance and
Traditional Affairs attended a meeting of the Mpofana
Council and conveyed the resolution of Cabinet to the Council. On the same day,
the MEC engaged the media on the circumstances giving rise to the intervention
and expanded on the process to be followed in going forward.
9.7
During 5th September 2014,
the MEC held a meeting with the Mpofana Business
Association, Rate Payers Association, Amakhosi,
farmers and other stakeholders and provided the reasons for the intervention
and requested their support in turning the Municipality around. The stakeholders
indicated their approval of the action taken and have pledged their support to
the Municipality and the community. A number of suggestions and contributions
were made relating to the revival programme of the Municipality.
9.8
On the
same day, the MEC engaged the community of Rosetta to listen to the challenges
experienced by the community and to convey the resolution of Cabinet to the
community. The community expressed their endorsement for the actions of
Cabinet.
9.9
Letters
were also sent to all MECs requesting support for the intervention and
requesting dates within the next 3 months for MECs to engage the community on
specific matters, including the implementation of projects, as resolved by
Cabinet on 01 September 2014. The Administrator has commenced with drafting a
comprehensive recovery plan for the Municipality, including input and projects
from other sector departments.
9.10
Upon the
expiry of the 14-day period, a notice outlining the determined functions and powers of the Administrator,
will be published on the Gazette,
as required in terms of section 35(2) of the Local Government: Municipal Structures Act, 1998.
9.11
The
resolution of the Executive Council was informed by the need to restore the
confidence of the communities. The challenges at the Municipality were
maladministration, power games, failure to govern and a lot of issues that have
nothing to do with the constitutional mandate of local government. The MEC will
be monitoring the activities of this council closely and will also be required
to report to the Executive Council regularly.
10. Committee Observations
10.1 The
question that has to be considered is whether the reasons advanced for the
intervention, complies with the criteria set out in section 139(1)(c) of the
Constitution, i.e. the existence of exceptional circumstances which warrants a
dissolution of the municipal council. Dissolution
should be an “appropriate” step to remedy the situation, if exceptional
circumstances existed, and such intervention was due to the unwillingness of
the municipal council to resolve the problems concerned. The challenges
prevalent in the Municipality and the alleged non-fulfilment of executive
obligations, based on the opinion of the Committee, does constitute or warrant a dissolution of the municipal council.
11. Committee
Recommendations
11.1 The
Select Committee on Co-operative Governance and Traditional Affairs recommends
as follows:
11.1.1 The NCOP approves the intervention
in Mpofana Local Municipality, as issued by the
KwaZulu-Natal Provincial Executive Council in terms of section 139(1)(c) of the
Constitution.
11.1.2 The South African Local
Government Association in co-operation with the Local Government Sector
Education and Training Authority, should facilitate
the training and capacity building for Municipal Councillors; to further deepen
their understanding of the oversight role; legal framework and policies that
govern the activities of the Municipality.
11.1.3 The Provincial Department of Cooperative Governance and
Traditional Affairs should assist the Municipality in fast-tracking the filling
of vacant senior managers’ positions.
11.1.4 The Administrator should take disciplinary steps against officials
implicated in terms of ill-discipline and misconduct in the Municipality.
11.1.5 The Select Committee on Co-operative Governance and Traditional
Affairs, in co-operation with the relevant Committee in the KwaZulu-Natal
Provincial Legislature, to conduct a follow-up visit to the Municipality.
11.1.6 The KwaZulu-Natal MEC for the Department of Co-operative
Governance and Traditional Affairs, should table quarterly progress reports to
the NCOP and the Provincial Legislature, including challenges encountered.
Report to be considered.