ATC190327: Report of the Select Committee on Cooperative Governance and Traditional Affairs in Loco Inspection on the Notice of Intervention in terms of Section 139 (1) (b) of the Constitution in Endumeni Local Municipality, dated 27 March 2019

NCOP Cooperative Governance & Traditional Affairs, Water and Sanitation and Human Settlements

Report of the Select Committee on Cooperative Governance and Traditional Affairs in Loco Inspection on the Notice of Intervention in terms of Section 139 (1) (b) of the Constitution in Endumeni Local Municipality, dated 27 March 2019
 

1.         Background and Overview

 

1.1        The Select Committee on Co-operative Governance and Traditional Affairs, having considered the request by the National Council of Provinces (NCOP), to consider and report on the intervention notice invoked in Endumeni Local Municipality in terms of section 139(1)(b) of the Constitution, the Select Committee reports as follows:

 

1.2        In terms of NCOP Rule 101, the Office of the Chairperson of the NCOP referred the notice of intervention by the KwaZulu-Natal MEC for Cooperative Governance, and Traditional Affairs (CoGTA), to the Select Committee for consideration and reporting. On 14 March 2019, the Select Committee conducted in loco inspection in Endumeni Local Municipality.

           

2.         Objective of the in Loco Inspection in Endumeni Local Municipality

 

2.1        The main objective was to interact with the internal and external stakeholders of the Municipality in order to solicit their opinions on the constitutional, procedural and substantive matters related to the invocation of section 139(1)(b) of the Constitution.

 

3.         Composition of the Delegation

 

3.1        The Select Committee delegation was composed of the following Members of Parliament and officials: (ANC); Hon J Mthethwa, KwaZulu-Natal (ANC), Hon T Wana, Eastern Cape (ANC); (ANC); Hon D Ximbi, Western Cape (ANC); Hon M Chetty, KwaZulu-Natal (ANC) Hon B Engelbrecht, Gauteng (ANC), Mr TM Manele, Committee Secretary (Committee Section), Mr B Mahlangeni, Researcher (Research Unit, Ms T Mathews, Researcher (Research Unit), Mr P Bongco, Committee Assistant (Committee Section) and Mr M Mbebe, Procedural Officer (NCOP)

 

4.         General Overview of the in Loco Inspection at Endumeni Local Municipality

 

4.1        On 14 March 2019, the delegation of the Select Committee interacted with senior officials of the Department of CoGTA, representatives of the Political Parties within the municipality and the representatives of the organised labour and the youth forum.

 

4.2.   The Departmental Official made a presentation on the constitutional, procedural and substantive reasons for the intervention. The representatives of the political parties and Organised Labour, shared their opinions with regard to the intervention as tabled by the MEC for CoGTA.

 

5.      Presentation on substantive matters related to intervention by Department of CoGTA

 

5.1.    The Head of the Department of Cooperative Governance and Traditional Affairs briefed the delegation of the Select Committee on constitutional, procedural and substantive matters related to the intervention.  The presentation on the substantive matters related to the invocation of the intervention focused on service delivery, governance and financial management

 

5.2.    Endumeni is a hung municipality with 13 Councillors broken down as follows: 6 from ANC, 4 from IFP, 2 from DA and 1 from the EFF.  The municipality has seen a fair share of instability over the past 12 months including instability in the management of the municipality. On 05 December 2008, the Provincial Executive Council resolved to intervene at Endumeni Local municipality, due to the municipality’s failure in a number of areas including financial weaknesses, governance and service delivery failures.

 

 

 

 

6.          Governance

 

6.1.       Council and its Committees, with particular reference to the Executive Committee, Portfolio Committees and MPAC had not functioned optimally over the past few months due to political instability at the municipality.

 

6.2.       The committees of council were unable to provide oversight over the administration particularly with reference to financial management and the service delivery programme of the municipality.

6.3.       Following the tabling of the forensic report on the 4th of October 2018, Council had not been able to consider and process the report and, in particular, the recommendations.

 

6.4.       On the 19th of November 2018 the municipal council resolved to request the MEC to extend the 21day period within which to develop an implementation plan and notify the MEC of such. Both the new Mayor and Speaker had committed themselves to ensuring that the recommendations of the report are implemented, speedily so.

 

6.5.       However, it became abundantly clear that due to the instability in the municipal council and municipal administration, there was no or very little appetite to implement the findings and recommendations of the report

 

6.6.       The forensic investigation identified various instances of irregular, fruitless and wasteful expenditure, procurement irregularities, conflicts of interest, fraud, theft, maladministration and non-compliance with relevant legislation, regulations, circulars and policies.

 

6.7.       It was normal for Endumeni Local Municipality to avoid implementing the findings of a forensic investigation, as on one occasion, the MEC had to approach the courts to compel the municipal council to comply with legislative requirements in respect of implementing consequence management, arising from the findings of the then section 106 investigation.

 

6.8.       Following the tabling of the forensic report, the Mayor resigned while the Speaker Councillor Mbatha-Makhathini was expelled by her party. It then became abundantly clear that the municipality was on a verge of collapse, as despite support, the municipality remained unstable and challenged due to poor/absence of leadership and management

7.         Finance Management

 

7.1.       The municipality also failed to pass its 2018/2019 budget within the prescribed timeframe, as the former Mayor had been arrested for plotting to murder the former Speaker which resulted in further instability at the municipality. The budget was subsequently passed when the Mayor was released from his incarceration.

 

7.2.       The municipality received an unqualified audit report with other matters during the previous audit cycle (2016/17). During the last quarter, the municipality had still not addressed all the issues raised by the Auditor-General which contributed to an unfavourable 2017/2018 audit.

 

7.3.       This also made it abundantly clear that Council had failed to exercise oversight over its administration to the detriment of the community of Endumeni.

 

8.         Service Delivery

 

8.1.       The Endumeni Civic Association (ECA) lodged an application in the High Court against Endumeni Municipality, concerning the enforcement of access to housing. The ECA operates within Endumeni municipal area. The association had been approached by communities in wards 4 & 5 of Endumeni. The communities had accused councillors and officials alike of impropriety, fraud and corruption in the allocation of RDP houses.

 

8.2.       It was alleged by the association, that people who deserved to be allocated houses, were overlooked and people who had been allocated houses were later changed or substituted arbitrarily. There were further allegations of fraud and corruption directed at municipal officials, relating to unjust allocations of RDP houses, including unlawful renting out of the said houses.

 

8.3.       The association made several attempts to engage with the municipal councillors and officials in an effort to get answers regarding the allocation of houses, all in vain. They then approached the Legal Resources Centre, which ultimately represented the association in lodging the application in the High Court, which culminated in the judgment against the municipality.

 

8.4.       The verdict gave permission to the Department of Human Settlements to take over the function, which had been delegated to the municipality. Both the municipality and the Department are opposed to the takeover of the projects and are back in court contesting the matter.

 

8.5.       The municipality was also taken to court by disgruntled contractors over housing projects which were awarded without due process having been followed. The municipality was ordered by the court to hand over that project to the Department of Human Settlements. The municipality failed to adequately implement the court order.

 

9.     Progress Report on the Status of the Intervention in the Local Municipality  

 

9.1.    Konke Solution has been deployed by the Department of Cooperative Governance and Traditional Affairs to assist the municipality in increasing and accurately reporting on generated and billed revenue  

 

9.2.    Debt concession item has been tabled to the council for all debtors prepared to settle their rates, electricity and housing rental accounts   

 

9.3.    Letters of demand have been issued to municipal employees and councillors owing the municipality

 

9.4.    The municipality has formed rules committee composed of the legal service manager and corporate service director to draft terms of reference to be presented to the council of consideration and adoption.

 

9.5.  the municipality has ensured that all requisitions and orders are approved at the interim finance committee meetings which are chaired by the Administrator.

 

9.6.  In order to ensure the functionality of the council and portfolio committees, a schedule of meetings has been drafted and circulated to all the councillors

 

 

 

10.      Opinions of Political Parties and Stakeholders of the Municipality  

 

10.1      During in loco-inspection, the Select Committee interacted and solicited opinions of the political parties, internal and external stakeholders of the Municipality. Their opinions are tabled below:   

 

11.        Opinion of the African National Congress (ANC)

 

11.1      The representative of the ANC tabled opinion that supported the invocation of section 139 (1) (b) of the constitution in the municipality However, the member of the ANC raised concerns with regard to political instability. The representative further acknowledged the progress made by the administrator on matter related to administrative stability and functionality of the council and the municipal portfolio committees.

 

12.        Opinion of the Democratic Alliance (DA)

 

12.1      The representative of the DA tabled an opinion that rejected to invocation of section 139 (1) (b) of the constitution in the local municipality. However, concerns were raised with regard to implementation of the recommendations of the forensic investigation conducted in terms of section 106 of the municipal system act, loose of investors, 40% operational cost of municipality, allocation of VIP services without conducting security threat analysis,  

 

13.      Opinion of the Economic Freedom Fighters (EFF)    

 

13.1      The representative of the Economic Freedom Fighters tabled an opinion that supported the intervention. The representative raised concerns with regard to the implementation of forensic investigation reports conducted in terms of section 106 of the Local Government: Municipal System Act.  

 

 

 

 

14.      Opinion of Inkatha Freedom Party (IFP)

 

14.1.  The representative of the Inkatha freedom Party tabled opinion that welcomed and   supported the issuing of intervention in terms of section 139 (1) (b) of the Constitution. 

 

14.2.     The representative further raised concerns with regard to suspension of municipal workers, service delivery, delays on the appointment of senior managers and lack of financial support to the municipality  

 

16.        Opinion Business Forum

 

16. 1     The representative of business Forum abled the opinion that support the invocation of section 139 (1) (b) of the constitution in the municipality. However, the representative raised concerns with regard to lack of consultation. The representative emphasised the importance of strengthening the relations through the application of private-public partnership (PPP).  

   

17.        Select Committee Observations and Opinion

 

17.1      In terms of the constitutional and procedural matters, the Select Committee has observed that the National Minister for CoGTA, the NCOP, the KwaZulu Natal Provincial Legislature and the Municipality were notified of the intervention and its substantive reasons

 

17.2.     On the basis of the serious challenges prevalent at the municipality, the Provincial Executive Council resolved to intervene in terms of section 139(1)(b) of the Constitution, 1996 at Endumeni Municipality, by assuming the functions specified in sections 51 of Local Government Municipal Systems Act in order to organise 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.

 

17.3      The Provincial Executive Council authorize the MEC for Cooperative Governance and Traditional Affairs to appoint suitably qualified person(s) to develop turn around in line with terms of reference:

 

17.4.     The Select Committee has noted that the terms of reference of the administrator included preparation and implementation of a recovery plan to be approved by the municipal council;

Implementation of governance systems and procedures including oversight over the administration, ratification of decisions taken by the Municipal Council, the Executive Committee, Committees, Municipal Manager and Section 56 Managers, in terms of delegated or original authority; Ensuring  the implementation of findings arising from any investigations into fraud or maladministration or corruption; and Ensuring  implementation of remedial action plans dealing with negative findings from the Auditor General.

 

18.        Recommendations of the Select Committee

           

18.1      Having conducted the oversight visit to Endumeni Local Municipality and interacted with representative of the Political Parties, the Union, Youth Formation. the Select Committee on Co-operative Governance and Traditional Affairs recommends as follows:   

 

18.1.1   The NCOP approves the intervention in Endumeni Local Municipality in terms of section 139 (1) (b) of the Constitution  

 

18.1.2   The Administrator should fast-track the process of implementing the municipal turn-around plan, in accordance with the terms of reference assigned by the KwaZulu-Natal MEC for CoGTA.

 

18.1.3 The Administrator should ensure the implementation of the forensic investigation report conducted in terms of section 106 of the Local Government Municipal System Act  

 

18.1.4   The KwaZulu-Natal EC for CoGTA should table quarterly progress report to the NCOP on the status of the intervention in the Municipality; including challenges encountered.

 

18.1.5   The Select Committee on Co-operative Governance and Traditional Affairs, in co-operation with the relevant Portfolio Committee in KwaZulu Natal Provincial Legislature, should after 2019 National Election and during the 6 Parliamentary period conduct a follow-up oversight visit to the Municipality in order to evaluate the progress made in respect of the intervention in the Municipality.

 

Report to be considered.