ATC150211: Report of the Select Committee on Cooperative Governance and Traditional Affairs, on Consideration of notice of Intervention in terms of Section 139(1)(C) of the 1996 Constitution in Mtubatuba Local Municipality – Dated 11 February 2015
Report of the Select Committee on Cooperative Governance and Traditional Affairs, on Consideration of notice of Intervention in terms of Section 139(1)(C) of the 1996 Constitution in Mtubatuba Local Municipality – Dated 11 February 2015
- In September 2011, the MEC for Cooperative Governance and Traditional Affairs (COGTA) in KwaZulu-Natal approached the Court to interdict the appointment of the Municipal Manager due legislative non-compliance and political divisions in the council. In June 2012 the Provincial Executive Council of KwaZulu-Natal resolved to institute a discretionary intervention at Mtubatuba Local Municipality in terms of sections 136-138 of the Local Government: Municipal Finance Management Act No. 56 of 2003 (“MFMA”). The discretionary intervention was in place for a period of three months. There was extremely low probability of the intervention support team in succeeding in respect of the financial recovery plan. This was due to the lack of political and administrative leadership, weak decision making and poor service delivery at Mtubatuba Local Municipality.
- For these reasons, the Executive Council resolved on 19 September 2012 to intervene in terms of section 139(1)(b) of the Constitution, which resolution included the appointment of a representative of the MEC for COGTA, to assume certain executive functions of the municipal council. As a result of poor progress, on 04 December 2013, the Executive Council resolved to further extend the intervention in terms of section 139(1)(b) of the Constitution until 30 September 2014. Although the scope of the intervention was extended, the Municipality regressed into a state of dysfunctionality.
- On 30 January 2015, the MEC tabled a notice of intervention at Mtubatuba Local Municipality to the Office of the Chairperson of National Council of Province (NCOP) which informed the Executive Council resolution to intervene in terms of section 139(1)(c) of the Constitution, in order to dissolve the municipal council and to appoint an Administrator until new elections are held.
- Subsequent to the tabling, the Chairperson of the NCOP referred in terms of Rule 101, the notice of intervention to the Select Committee of Cooperative Governance and Traditional Affairs for consideration and reporting. On 11 February 2015, the Select Committee called the MEC to brief Members of the Committee on the constitutional, procedural and substantive matters related to the intervention in the Municipality in terms of section 139(1)(c) of the Constitution.
2. Briefing on the Notice of Intervention in Mtubatuba Local Municipality
2.1 The MEC for COGTA briefed the Members of the Select Committee on the constitutional, procedural and substantive matters related to the intervention in terms of section 139 (1)(c) of the Constitution at Mtubatuba Local Municipality. The Departmental presentation mainly covered issues related to the discretional intervention, engagements with the Municipality, allegations against the Municipal Manager and investigation, non-compliance with the MPRA, council response to investigation and extension of intervention, progress on disciplinary case against the Municipal Manager, further engagement and communication by the Provincial Executive and the need for intervention in terms of section 139(1)(c) of the Constitution.
- Discretionary Intervention
3.1 Based on an assessment of the finances of the Mtubatuba Local Municipality by COGTA in terms of section 131(2)(a) of the MFMA, as well as the assessment of the Provincial Treasury of the reports of the Municipality in terms of section 71 of the MFMA and the annual financial statements it was established that the Mtubatuba Local Municipality was facing serious financial problems.
3.2 The Municipality continuously recorded unauthorized, irregular, fruitless and wasteful expenditure incurred by the Municipality and which was certified by Council without conducting an investigation in accordance with the requirements of section 32(2) of MFMA, and irregular expenditure was also not regularized as required. Conditional grant funding was utilized for daily operating expenditure, which is contrary to the requirements of the Division of Revenue Act. 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.
3.3 The Municipality operated their waste disposal site without a waste management licence or permit in contravention of section 20(b) of the National Environmental Management: Waste Act, 2008 (Act No. 59 of 2008) (NEMWA) and section 20(1) of the Environmental Conservation Act, 1989 (Act No. 73 of 1989). The Municipality also regressed to a disclaimer audit opinion for the 2011/12 financial year. The MEC for COGTA in consultation with the MEC for Finance, commenced the process towards a discretionary intervention by consulting the Mayor of the Municipality in terms of section 136 of the MFMA, in February 2011.
3.4 In June 2012, the Executive Council resolved to institute a formal discretionary intervention at Mtubatuba Local Municipality in terms of sections 136-138 of the MFMA, for a period of three months as a result of unfavorable financial conditions, which were identified by the Members of the Executive Council responsible for Local Government and for Finance. An assessment of progress after 3 months showed an extremely low probability of the intervention support team succeeding in implementing the financial recovery plan. Notwithstanding, some progress was achieved in the area of financial recovery and implementation of internal financial controls. Although the Financial Administrator attempted to implement the financial recovery plan, it was clear that problems persisted as a result of lack of co-operation by the municipal management, weak performance and lack of accountability.
3.5 The council was failing in fulfilling its executive obligations, necessary for the effective functioning of the Municipality. The council failed to exercise effective, transparent, accountable and coherent corporate governance or to conduct effective oversight over the affairs of the Municipality. This was as a result of a lack of political and administrative leadership, weak decision-making and contributed towards the perpetuation of poor service delivery.
3.6 Based on these reasons, the Executive Council resolved on 19 September 2012, to intervene in terms of section 139(1)(b) of the Constitution, which resolution included the appointment of a representative of the MEC for COGTA to assume certain executive functions of the municipal council.
- Intervention in Terms of Section 139(1)(b) of the Constitution
4.1 On 19 September 2012, the Executive Council resolved to intervene in terms of section 139(1)(b) of the Constitution, which resolution included the appointment of a representative of the MEC for COGTA, to assume certain executive functions of the municipal council. The MEC was authorized to appoint a ministerial representative to undertake the function in terms of section 51 of the Municipal Systems Act to establish and organize the administration in a manner that would enable the Municipality to achieve the objects of local government as set out in section 152 of the Constitution. The MEC conveyed the decision of the Executive Council at a meeting held on 03 October 2012.
4.2 The Mayor and Executive Committee, failed in terms of section 99 of the Systems Act, to exercise supervisory authority in relation to the implementation and enforcement of the Municipality’s credit control and debt collection policy and by-laws and in terms of section 52 of the MFMA, to take all reasonable steps to ensure that the Municipality performs its constitutional and statutory functions within the limits of the Municipality’s approved budget.
4.3 The Municipal Council had, amongst others, failed to fulfil the executive obligations relating to the administration of the municipality: by not including measurable priorities, objectives and performance targets for certain functions as reported by the Auditor-General; by not providing adequate performance information in the annual report of the municipality for the 2010/11 financial year as reported by the Auditor-General; by not recovering unauthorised, irregular, fruitless and wasteful expenditure, and not informing the MEC responsible for local government and the Auditor-General of such expenditure.
- Extension of Intervention and Change of Ministerial Representative
5.1 As a result of poor progress of the intervention, on 04 December 2013, the Executive Council resolved to further extend the intervention in terms of section 139(1)(b) of the Constitution until 30 September 2014. The Ministerial Representative was replaced by Mr. B. Ndwandwe in January 2014, and he immediately reviewed and amended the Recovery Plan to deal with pressing matters and instituted various checks and balances to control expenditure. Based on various challenges, on 06 August 2014, the Executive Council further resolved to extend the intervention until 31 December 2014 and the scope of the intervention by assuming 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 and the function of preparing the municipal valuation roll in terms of section 32(3) of the MPRA.
5.2 In November 2014, it was obvious that little progress was being been made in resolving the fundamental challenges of weak governance and administrative systems in Mtubatuba and on 19 November 2014, the Executive Council further resolved to extend the intervention until 31 March 2015 to provide further time and opportunity for it to succeed. Despite all these efforts, the Municipality continued to deteriorate which informed the decision of the Executive Council, on 30 January 2015, to dissolve the Municipality in terms of section 139(1)(c) of the Constitution.
- Achievements of Section 139(1)(b) of the Constitution
6.1 The intervention achieved positive progress at its inception in respect of removal of the overdraft, addressing the MIG deficit of R1.2 million as well as the R2.4 million for electrification, development of the audit action plan to address findings raised by the Auditor-General for the year ended 30 June 2012, filling of all four top management positions, improved oversight role played by the relevant Portfolio Committees and MPAC, functionality of council committees, improved participation by Sector Departments during the IDP process, development of an audit of Ward Committees and a comprehensive Ward Committee support plan and introduction of municipal newspaper.
- Challenges of Section 139 (1) (b) of the Constitution
7.1 Despite the progress achieved, the Municipality faced challenges with regard to progress of in five key performance areas such as leadership and oversight, governance and compliance, basic service delivery, financial viability and management as well as institutional development and transformation.
7.2 The leadership and oversight challenges faced by the Municipality included exclusion of organisation performance management system in the draft Integrated Development Plan (IDP), preparation of draft and final budget without council approval, lack of evidence for three consecutive financial years of quarterly and annual performance information review, failure to monitor the performance of the management and under-expenditure on MIG and electrification grants.
7.3 The governance and compliance challenges included the failure to conduct investigation on unauthorised, irregular, fruitless and wasteful expenditure; non tabling of 2012/13, 2013/14 and 2014/5 report on the budget from the Provincial Treasury in the council; non functionality of Audit Committee; non-implementation of the 2012 recommendations forensic investigation report; and non-implementation of the recommendations of the Internal Audit Unit and Audit Committee.
7.4 The basic service delivery challenges included delivery of the completed construction which cost about R4000 000, collapsing of taxi rank roof structure, lack of evidence from the municipal manager to demonstrate commitment to pursue the relevant service provider and failure by the council to make the Municipal Manager to account on dereliction of duty.
7.5 The financial viability and management challenges included poor budgeting and budget control, poor expenditure management, failure to pay creditors on time and staff and councillors salaries and allowance accounting for 46.6% of the operating budget. The institutional development and transformation challenges included the lack of functional performance management system; growth of staff complement without a work study and failure of the organogram to address issues of over-staffing and over-graded posts
- Allegations and Findings against the Municipal Manager
8.1 The allegations against the Municipal Manager which the Department investigated included staff overtime payment without the ratification of the Administrator; non-payment of creditors within 30 days; attachment by the Deputy Sheriff of five municipal vehicles; non-compliance with supply chain management procedures; extortion of donations from service providers. The investigation conducted by the Department found that the Municipal Manager had disregarded the authority and powers vested in the Administrator by authorizing overtime payments; failed to exercise effective expenditure management resulting in the Municipality incurring fruitless and wasteful expenditure; violated laws, regulations and council policies governing supply chain management and failure to implement the new general valuation roll on the 1st of July 2014, as required in terms of the MPRA.
- Progress on the Disciplinary Case of the Municipal Manager
9.1 On 10 October 2014, the Ministerial Representative issued a letter to the Municipal Manager informing him of an intention to be placed on suspension, pending an investigation into allegations of misconduct and requesting his representations thereto. The Municipal Manager did not submit his representations to the Ministerial Representative, but instead questioned the authority of the Ministerial Representative to institute disciplinary processes against him in a letter addressed to Council. The disciplinary hearing was scheduled for 28 November 2014 but postponed to 12-13 February 2015 due to non-availability of the suspended Municipal Manager’s legal representative due to serious illness.
- Dysfunctionality of the Municipal Council
10.1 The dsyfunctionality and friction within Council had been prevalent from the appointment of the Municipal Manager in September 2011. On 2 December 2014, a special Council meeting was convened by the Acting Municipal Manager at the request of the majority of councillors of Mtubatuba Local Municipality. Only one item was the subject of discussion, namely, the resignation of the former Speaker of council and the election of the new Speaker.
10.2 At the commencement of the Council meeting, all 38 councillors were present, before the meeting could proceed to elect the Speaker, the ANC requested a caucus but however did not return to the Council Chamber. The remaining 22 councillors continued with the meeting and Councillor Nyawo was elected as the Speaker of Council. A further Notice of Motion was submitted on 4 December 2014, which provided that Notice was being given in terms of section 48(4)(b) and 53 of the Structures Act to remove the Mayor, Councillor M. R. Ntuli from EXCO. This Motion served at a Council meeting held on 12 December 2014. The Ministerial Representative enquired whether the Motion was to remove the Mayor from both EXCO and the Office of Mayor. The Proposer of the Motion replied that the intention was to remove the Mayor from the Office of the Mayor only.
10.3 The Ministerial Representative then informed Council that the motion was flawed. The motion was nonetheless voted on, and 18 Councillors voted that the Mayor be removed from the Office of Mayor. Based on the above, the Ministerial Representative declined to ratify the decision to remove Councillor Ntuli from the Office of Mayor, and Councillor Ntuli accordingly remained the Mayor of the Council.
- Departmental Communication and Engagement
11.1 On 19 August 2014, COGTA invited the mayor, Municipal Manager and the EXCO of the Municipality met to communicate the resolution of the Provincial Executive Council dated 06 August 2014. On 16 September 2014, the Premier also visited the Municipality to address councillors, members of the Mtubatuba community and Mtubatuba community stakeholders on the prevalent challenges at the Municipality and to ascertain the reasons for the lack of progress on the constitutional intervention. Most community stakeholders registered dissatisfaction with the state of the Municipality and requested that drastic steps be taken to alleviate the challenges. The community stakeholders were concerned that service delivery at the Municipality which has deteriorated yet the town is entirely dependent on tourism.
11.2 On 20 January 2015, the MEC for CoGTA visited the Municipality and met with all councillors to ascertain the reasons for the lack of progress with the intervention and the prevalent challenges. Most councillors agreed that governance at the Municipality is dysfunctionality and that there is a low level of co-operation with the Ministerial Representative. It was also notable that councillors were not intent in dealing with discipline at the Municipality.
11.3 The MEC emphasized the importance of ensuring co-operation with the intervention to ensure implementation of the recovery plan, highlighted service delivery challenges and requested councillors to prioritize service delivery solutions. It was apparent that the general feeling amongst most councillors was that political intolerance, tensions, instability, disregard of the rule of law, weak political leadership, in-fighting, finger-pointing and blame-shifting had rendered the Municipality dysfunctional, and several Councillors openly requested a dissolution of the Council in terms of section 139(1)(c) of the Constitution.
- Committee Observations and Opinion
12.1 The Cabinet Member responsible for local government affairs, the National Council of Provinces and the KwaZulu-Natal Legislature have been informed of the dissolution in keeping with section 139(3) of the Constitution, 1996.
12.2 The Minister for the Department of Cooperative Governance and Traditional Affairs has approved the dissolution in terms of section 139(1)(c) of the Constitution.
12.3 All Committee Members unanimously agreed on the need to support the dissolution of the Municipality, since all forms of support in terms of other interventions were exhausted.
- Committee Recommendations
13.1 The Select Committee on Cooperative Governance and Traditional Affairs recommends as follows:
13.1.1 The NCOP supports the decision by the Provincial Executive Council of KwaZulu-Natal Province to dissolve the Municipal Council in Mtubatuba Local Municipality in terms of section 139(1)(c) of the Constitution.
13.1.2 The MEC for the Department of Cooperative Governance and Traditional Affairs in KwaZulu-Natal Province should table quarterly reports to the NCOP on progress made in respect of the dissolution of the Municipality.
Report to be considered.
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