ATC141111: Report of the Select Committee on Cooperative Governance and Traditional Affairs, on the oversight visit to Umvoti Local Municipality, dated 11 November 2014

REPORT OF THE SELECT COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS, ON THE OVERSIGHT VISIT TO UMVOTI LOCAL MUNICIPALITY, DATED 11 NOVEMBER 2014

1. Background

1.1 On the 17 ^th July 2013, the Provincial Executive Council resolved to intervene at Umvoti Local Municipality in terms of section 139(1 )( b) of the Constitution, and assumed the functions specified in terms of section 51 of the Local Government: Municipal System Act (Act 32 of 2000). Then on the 04 ^th December 2013, the Provincial Executive Council noted progress and some challenges which still remained. The critical challenges that are still prevalent included the election of the office bearers in respect to the Mayor and Deputy Mayor, and the establishment and effective functionality of section 79 and 80 committees and the Local Labour Forum. On that basis, it resolved to extend the intervention until 30 September 2014. The intervention was further extended on 10 September 2014 until 31 March 2015, due to the current challenges that existed.

1.2 On the 9 ^th September 2014, the MEC for Cooperative Governance and Traditional Affairs in KwaZulu-Natal, tabled to the Office of the Chairperson of the National Council of Provinces (NCOP), a notice of the request for extension of intervention in terms of section 139(1 )( b) of the Constitution at Umvoti Local Municipality.

1.3 The Chairperson of the NCOP subsequently referred the notice of intervention in terms of Rule 101 to the Select Committee on Cooperative Governance and Traditional Affairs, for consideration and report. On the 23 ^rd October 2014, a multi-party delegation of the Committee conducted an oversight visit to the Umvoti Local Municipality.

2. Objective of the Oversight Visit

2.1 The objective of conducting the oversight visit was to consult and interact with the internal and external stakeholders of the Municipality, in order to solicit their opinion with regard to the request for the extension of intervention in the Municipality in terms of section 139(1 )( b) of the Constitution, and also to report back to the NCOP in terms of Rule 101.

3. Overview of the Oversight Visit to Umvoti Local Municipality

3.1 On the 23 ^rd October 2014, the delegation of the Select Committee on Cooperative Governance and Traditional Affairs had interaction and consultative meeting with the internal and external stakeholders of the Municipality. The stakeholders the delegation interacted with included the Speaker, Chief Whip, senior official of the Provincial Department of Cooperative Governance and Traditional Affairs, the Ministerial Representative and representatives of the Organised Labour and Ward Committee members, youth organisation, women and members of municipal political parties.

4. Presentation on the Justification for Request of Extension of Intervention in Umvoti

Local Municipality

4.1 The Provincial Department of Cooperative Governance and Traditional Affairs briefed the Members of the Select Committee on the background of the constitutional intervention and the resolution of the KwaZulu-Natal Provincial Executive Council, dated 10 September 2014, to extend the intervention in terms of section 139(1 )( b) of the Constitution. Its presentation focused on the background, reason for the intervention and the terms of reference of the Ministerial Representative in Umvoti Local Municipality.

5. Context

5.1 On the 17 ^th July 2013, the Provincial Executive Council resolved to intervene at Umvoti Local Municipality in terms of section 139(1 )( b) of the Constitution, and assumed the functions specified in terms of section 51 of the Local Government: Municipal System Act (Act 32 of 2000).

5.2 Then on the 04 ^th December 2013, the Provincial Executive Council noted progress and some challenges which still remained. On that basis, it resolved to extend the intervention until 30 September 2014. The intervention was further extended on 10 September 2014 until 31 March 2015, due to the current challenges that existed.

6. Reasons for the Intervention

6.1 Since November 2012, there were continuous political struggles in the Umvoti Council, stemming from political differences and “power plays”, which led to a total collapse of governance structures, resulting in the Municipality being unstable and dysfunctional. This was evident from the numerous walk-outs in council which rendered the meetings not to quorate , wherein critical matters were to be tabled, including the passing of the budget, Auditor-General’s report and IDP matters. There were also unlawful removals of office bearers, legally flawed election of office bearers and reported acts of violence and intimidation at the Municipality.

6.2 The state of dysfunctionality at the Municipality had also resulted in the presence of SAPS at council meetings, to dissipate the chaos that prevailed at most meetings, and a request from the Municipal Manager to “close” the municipal offices until 18 July 2013.

6.3 The Municipal Manager had also advised that there had been acts of violence at the Municipality, which included a group of people who were walking in and out of the offices, and making political statements to staff members and passing threatening words of violence. An exchange of firearms had been seen inside the municipal offices. Staff members were unable to move from one office to another, as they feared to walk across unknown people who sat in the premises from morning until noon.

6.4 The challenges impacted negatively on the administration, compromised the functionality of the Municipality and the achievement of critical statutory obligations. That fostered a culture of distrust and disharmony resulting in a negative impact on council’s obligation to provide democratic and accountable government to the local community. The Municipal Manager had also indicated that some staff members were also politically affiliated, and that was also causing pressure and internal fights. It was clear that service delivery and functionality were being seriously compromised as a result of the instability and dysfunctionality of the council.

6.5 The lack of stability and political tensions had also skewed the adherence by council to the principle of legality, which was indicative in the unlawful decisions taken at certain meetings. As a result of the unlawful decisions taken, the Municipality has been in a state of confusion, without any clarity as to whom the Speaker was and who legitimately constitutes the executive committee as a result of court actions. The unlawful election of the executive committee, Mayor and Deputy Mayor as well as the removal of the Speaker and the election of a new Speaker, was indicative of the failure of council to fulfill its executive obligation to govern lawfully.

7. Terms of Reference of the Ministerial Representative at Umvoti Local Municipality

7.1 The Ministerial Representative was appointed to achieve the following terms of reference:

· To undertake all fiscal and financial management functions at the Municipality, including him being a signatory on the municipal banking account;

· To ratify all decisions of the municipal council and its committees, prior to implementation;

· To ratify all decisions taken by the Municipal Manager and managers contemplated in section 57 of the Local Government: Systems Act (Act 32 of 2000), in terms of delegated or original authority;

· To undertake all steps in terms of section 54A and section 56 of the Act;

· To devise a turn-around strategy for the Municipality;

· To ensure implementation of council resolutions by the administration;

· To implement a system to control and approve all expenditure;

· To implement all governance systems and procedures including appropriate councillor oversight mechanisms;

· To ensure implementation of financial systems, policies and procedures; and ensure implementation of the Local Government: Municipal Property Rates Act (Act 6 of 2004);

· To set out a specific strategy for addressing the municipalities financial problems, including a strategy for reducing unnecessary expenditure and increasing the collection revenue;

· To prepare the adjustment budget for the 2013/2014 financial year;

· To review the organizational structure of the municipality; and

· To implement the findings of any forensic investigations undertaken by the Municipality or the MEC in terms of section 106 of the Local Government: Municipal Systems Act, including criminal, disciplinary and civil action.

8. Reasons for Request of Extension of Intervention

8.1 The Provincial Department of Cooperative Governance and Traditional Affairs reported that, although substantial progress has been achieved in terms of the recovery plan, the political structures of the Municipality still remained in a state of chaos. For example, in respect of litigation matters, the Department’s legal representatives sent correspondence to the parties in the legal matters requesting that the matter be settled out of court. A draft settlement proposal was drafted for acceptance by the parties to the litigation, along the lines of the above request. All parties to the litigation dispute and political parties represented in Council were engaged on various occasions by the Department and the Ministerial Representation. Despite the engagements, the parties to the dispute have still not accepted the settlement proposal in writing.

8.2 Although the settlement proposal has not been finalized pending acceptance by the parties, the Ministerial Representative had received letters from three major political, parties all agreeing to settle the matter in the council chamber. A meeting was then scheduled for the 10 ^th October 2014, at which councillor Yengwa from the IFP was elected as the Speaker of Council. Due to a walk-out, the meeting could not proceed to elect other office-bearers as it could no longer quorate . The meeting was postponed to re-convene on the 17 October 2014.

9. Presentation on the Municipal Recovery Plan and Turn-Around Strategy

9.1 The Ministerial Representative briefed the delegation of the Committee on the municipal recovery plan in relation to the request of extension of intervention. The presentation focused on the five key performance areas of the five-year Local Government Strategic Agenda, namely, institutional development and municipal transformation; municipal financial viability and management; good governance and public participation, basic service delivery and local economic development.

10. Institutional Development and Transformation

10.1 The Municipality has reviewed its staff establishment and has aligned it with the IDP. The challenges however were the placement of staff at senior management level. Most critical positions have been filled with relevant and adequately qualified and experienced personnel. The position of the Technical Director has been approved for advertisement.

10.2 The audit committee members have been shortlisted, however, there was still a challenge in ensuring effective communication with staff. However, disciplinary matters have been attended to and the Municipality has commissioned a forensic investigation.

11. Financial Viability and Management and Revenue Collection

11.1 The verification and valuation roll has been successfully finalised and the exploring of alternative income streams like vehicle testing station project, has also been identified. However, the challenge was increasing the collection to at least 80%, and curbing loses due to theft.

11.2 The Municipality was still in the process of acquiring a new financial system that would ensure accurate financial reporting. However, conditional grants have been cash backed and ring-fenced. The supply chain management processes have also been reviewed.

12. Good Governance and Public Participation

12.1 The Municipal Speaker has been elected to deal with some of the governance matter. However, the outstanding governance challenge has been to elect the Deputy Mayor and the Mayor. The new Standing Rules and Orders have been developed, work shopped and adopted by the council. The terms of reference for all governance statutory and administrative structures have been compiled and adopted by the council.

12.2 The roles and responsibilities for all governance structures, office bearers, Municipal Manager and senior managers have been compiled and adopted by the Council. The delegation of authority framework has been compiled and adopted by the Council. The code of conduct by all councilors and staff has been signed by all staff and councilors. The Municipality has reviewed the ward committee policy framework.

13. Local Economic Development

13.1 The Municipality has ensured the finalization and adoption of local economic development strategy. It has also ensured the participation in the provincial initiatives of establishing developmental agencies. Further, it facilitated the formation of co-operatives and access to the markets and benefits to initiatives like small town rehabilitation, as well as the corridor development.

14. Basic Service Delivery

14.1 The Municipality has established landfill site and introduced waste management opportunities. It has implemented rural roads rehabilitation project, and eradicated the backlogs on electricity access and introduction of alternative energy. An infrastructure maintenance plan was compiled to ensured smooth implementation of planned capital projects.

14.2 The resuscitated of blocked projects to ensured new projects are implemented especially in

rural areas has begun. Further, all non-performing projects and contracts has been reviewed. It has made guaranteed that all technical positions were filled with suitably qualified personnel. Support to all demands of township residence, farm dwellers and other possible hot spots have been provided.

15. Operation Clean Audit and Governance

15.1 With regard to clean audit and governance, annual financial statement and draft annual reports were compiled and submitted to the Office of Auditor-General by the 31 ^st August 2013. Monitoring and updating of GRAP compliant asset registry was done monthly.

15.2 Preparation and submission of credible section 71 monthly reports was done, and the queries of Auditor-General was timeously attended. Equally important, staff and councillors were appraised of operation clean audit and governance.

16. Outstanding Intervention Matters in Relation to Request of Extension of Intervention

16.1 The critical issues which remained outstanding are as follows:

· The election of the executive committee and two office bearers (Mayor and Deputy Mayor).

· Formation of section 79 and 80 committees and Local Labour Forum.

· Implementation of the recommendations of the forensic investigation reports.

· Filling of vacant positions at senior management levels.

17. Opinion of the Member of Democratic Alliance (Party Whip)

17.1 The councillor of the Democratic Alliance welcomed the request of the extension of intervention and the progress made in respect of the implementation of municipal recovery plan.

18. Opinion of the Member Inkatha Freedom Party (Party Whip)

18.1 The Inkatha Freedom Party councillor, welcomed the request of the extension of intervention and the progress made by the Ministerial Representative.

19. Opinion of the Member of National Freedom Party (Party Whip)

19.1 The councillor of the National freedom Party welcomed the request of the extension of intervention, and emphasised that the Municipality would not function well in the absence of the formation of section 79 and 80 committees.

20. Opinion of the Member of African National Congress (Party Whip)

20.1 The African National Congress councillor, welcomed the request of the extension of intervention and the progress made in respect of the implementation of municipal recovery plan, facilitation of public participation and further requested the continuous support of the national and provincial government to build the municipal capacity in terms of section 64 of the Constitution.

21. Opinion of the Representative of Organised Labour

21.1 The representative of South African Municipal Workers Union (SAMWU) expressed support to the request of the extension of intervention. However, the Union representative raised concerns and challenges with regard to the wage-gap between management and line managers, the payment of councillors at the level of grade 3 and employees on category 3, downgrading of the Municipality from level 3 to level 2 and lack of functional Local Labour Forum.

22. Opinion of the Representative of the Ward Committee Members

22.1 The representative of the Ward Committee members welcomed the request for the extension of intervention, and further emphasised the importance of social cohesion and implementation of programmes to deal with challenges related to women and youth healthy life style, as well as the environment.

23. Committee General Observations and Opinion

23.1 The Committee has observed and noted that the KwaZulu-Natal Provincial Department of Cooperative Governance and Traditional Affairs has failed to comply with the resolution passed by the NCOP during the Fourth-Parliament, which required the Department to table quarterly progress reports in respect of the intervention issued in terms of section 139(1 )( b) of the Constitution in Umvoti Local Municipality.

23.2 The Committee has also noted that on 20 March 2013, the Provincial Executive Council resolved to intervene at Umvoti Local Municipality in terms of section 139(1 )( b) of the Constitution and assumed the functions specified in terms of section 51, of the Municipal System Act.

23.3 On the 04 December 2013, the Provincial Executive Council noted progress and the challenges which remained. On that basis, it resolved to extend the intervention in terms of section 139(1 )( b) of the Constitution at the Municipality, until 30 September 2014. The intervention was further extended on 10 September 2014 until 31 March 2015, due to the outstanding key intervention matters.

23.4 The Committee has observed and noted that the intervention priority areas which becomes justification for the request of the extension of intervention until March 2015 related to the strategic objectives of local government namely, institutional development and municipal transformation, municipal financial viability, good governance and public participation, local economic development and basic service delivery.

23.5 The Committee has noted and welcomed the progress made by the Municipality in implementation of municipal recovery plan and its alignment with governance, institutional development, revenue collection, service delivery and operation clean audit and governance.

23.6 Despite the progress made in respect of the implementation of municipal recovery plan, the Committee has observed and noted that the Municipality required the extension of intervention as requested by the Provincial Executive in order to deal with the outstanding intervention matters such as the election of executive committee, formation of section 79 and 80 committees, implementation of the recommendations of forensic investigations and the filling of vacant positions at senior managerial level.

23.7 The Committee has further observed, noted and welcomed the support of all political parties of the justification to request extension of intervention, so as to deal effectively and efficiently with the outstanding governance matters more especially the election of the Deputy Mayor, the Mayor and formation of section 79 and 80 Committees.

23.8 Furthermore, the Committee noted and welcomed within the spirit of cooperative governance and inter-governmental relations, the oversight role played by the South African Local Government Association and the part played by the Provincial Monitoring Task Team on the interventions in the KwaZulu-Natal Province.

24. Committee Recommendations to the NCOP

24.1 Having conducted the oversight visit to Umvoti Local Municipality in response to the request of the extension of intervention terms of section 139(1 )( b) of the Constitution, the Select Committee recommends to the Council as follows:

24.1.1 The NCOP approves the notice of request of the extension of intervention in terms of section 139(1 )( b) of the Constitution in Umvoti Local Municipality, until March 2015.

24.1.2 The Ministerial Representative should fast track the processes of implementing the recommendations of the forensic investigations and prioritise the filling of vacant positions at senior managerial level in the Municipality.

24.1.3 The KwaZulu-Natal Provincial Department of Cooperative Governance and Traditional Affairs should table an exit report on the intervention in Umvoti Local Municipality to the NCOP by April 2015.

20.1.4 On cross-cutting issues with regards to women and youth that were raised during the oversight visit, to be referred to the Department of Women in The Presidency and the National Youth Development Agency (NYDA).

Report to be considered.