ATC140915: 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

NCOP Economic and Business Development


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 3 rd 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 4 th 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 5 th 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 g oods 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 2 nd 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 3 rd 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 5 th 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.


No related documents