ATC200902: Report of the Select Committee on Cooperative Governance and Traditional Affairs, Water, Sanitation and Human Settlement on Consideration on the notice of Intervention in terms of Section 139 (1) (C) and 139 (5) of the Constitution in Renosterberg Local Municipality, Dated 2 September 2020

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

REPORT OF THE SELECT COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS, WATER, SANITATION AND HUMAN SETTLEMENT ON CONSIDERATION ON THE NOTICE OF INTERVENTION IN TERMS OF SECTION 139 (1) (c) AND 139 (5) OF THE CONSTITUTION IN RENOSTERBERG LOCAL MUNICIPALITY, DATED  2 SEPTEMBER 2020

 

1.         Background and Overview

 

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

 

1. On the 24 August 2020, the Northern Cape MEC of the Department of Cooperative Governance, Human Settlement and Traditional Affairs tabled a notice of intervention in terms of section 139 (1) (c) of the constitution in Renosterberg Local Municipality to the Chairperson of the National Council of Provinces

 

1.3        Subsequent to the tabling, the Chairperson of the National Council of Provinces, in terms of NCOP Rule 101, referred the section 139 (1) (c) and 139 (5) notice of dissolution by the Northern Cape Department of Cooperative Governance, Human Settlement and Traditional Affairs to the Select Committeefor consideration and reporting.

 

1.4        On 2 August 2020, the Select Committee scheduled a virtual consultative stakeholder’s meeting with the Northern Cape Department of Cooperative Governance, Human Settlement and Traditional Affairs and the internal and external stakeholders of the Renosterberg Local Municipality.

 

2.         Objective of the Virtual Consultative Stakeholder’s Meeting

 

2.1        The main objective of the meeting 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)(c) of the Constitution.

 

3.         General Overview of the Virtual Consultative and Stakeholders Meeting

 

3.1        On the 2 September 2020 at 17;00, the Select Committee engaged the Northern Cape Department of CoGHTA; the Minister of the Department of Cooperative Governance and Traditional Affairs, the political parties within the municipality and the provincial legislature as well as the representatives ofthe South African Local Government Associationon the constitutional, procedural and substantive matters relating to the invocation of section 139 (1) ( c)  and 139 (5) in Renosterberg Local Municipality

 

4.         Presentation by the Northern Cape Department ofCooperative Governance, Human Settlement, and Traditional Affairs 

 

4.1.       The Department of CoGHSTA made a presentation on the background and progress on the unsuccessful monitoring and support intervention efforts made by the Departments of Cooperative Governance, Human Settlements and Traditional Affairs (“CoGHSTA”), Finance / Provincial Treasury (“PT”) and the Pixley ka Seme District Municipality (“PKSDM”) and the respective MECs to RenosterbergLocal Municipality

 

4.2.       The Department further reported on governance, administrative and financial challenges observed at the municipality which resulted in the Municipal Council failing to fulfil its executive, statutory and financial obligations and/or to meet its financial commitments in relation to:

(a)        The Organisation of the Administration of the municipality in terms of section 51 of the Local Government: Municipal Systems Act, 32 of 2000 and Regulation;

(b)        The provision of uninterrupted electricity services to the communities of van der Kloof and Keurtjiekloof in terms of the Electricity Regulations Act, 4 of 2006; and

(c)        The provision of effective and efficient oversight in the administration and management of the financial affairs of the municipality through proper and diligent financial accountability and compliance with the Local Government: Municipal Finance Management Act, 56 of 2003 and Regulation.

 

5.         Procedural matters in relation to the request to Provincial Executive Council

 

5.1.       The Provincial Executive Council was requested to: aapprovethe intervention by dissolving theMunicipal Council of RenosterbergLocal Municipality in terms of section 139(1)(c) and 139(5)(b) of the Constitution of the Republic of South Africa, 1996(“Constitution”);

 

5.2.      Impose a Financial Recovery Plan at Renosterberg localmunicipality in terms of sections 139(5)(a) of the Constitution;

 

5.3.       Authorize the MEC for Cooperative Governance, Human Settlements and Traditional Affairs (“CoGHSTA”) in terms of sections 139(5)(b)(I) of the Constitution to appoint an Administrator at Renosterberg local municipality until a new Municipal   Council has been declared elected

 

5.4.       Authorise the MEC ofCoGHSTAto facilitate the Election of the New Municipal Council and to designate the Administrator to undertake all the necessary measures to convene the first meeting after the Municipal Council has been declared elected; and

 

5.5.       Authorise the MECs for CoGHSTAand Finance to conclude all other necessary formalities related to the intervention.

 

5.6.       Provincial Government agreed to urgently intervene and committed to a number of tasks. MEC of CoGHSTA& MEC of Finance agreed to send a team of officials on the 06 July 2020 to the municipality to commence the “status quo” assessment/investigation [NB: NOT A SECTION 106] to determine the state of affairs of the municipality

 

5.7.       06 July 2020 Assessment Team arrived at municipality – Mayor and Municipal manager absent;

 

6.         Municipal Electricity Crisis

 

6.1.       On the 30 June 2020 the Hon Premier, Dr. Z. Saul and MEC for COGHSTA were invited and attended a meeting at the van der Kloof Community Hall to discuss severe electricity crisis in the municipality.

 

6.2.       During the meeting the community raised various issues about governance, administrative, financial challenges and possible failure by the municipality to fulfil statutory obligations binding on it or maladministration, fraud, corruption or some serious malpractice which has occurred or is occurring in the municipality some being

 

 

 

7.         Failure of Intergovernmental Cooperation

 

7.1.       The municipality has since the 06 July 2020 to date, displayed a posture of being dishonest and secretive about information to the extent that they provided their own terms of when and how they will provide the information and yet during the said dates reneged under the guise of a COVID-19 incident and closed the municipality for ten (10) days [22 July to 03 August 2020] allegedly to decontaminate the building.

 

7.2.       Since late 2019 the Municipal Council has failed to implement and support the National Treasury’s discretionary Financial Recovery Plan commenced in 2018 and was ongoing until November 2019;

 

7.3        Since June 2020 the Municipal Council has failed to accept the FREE assistance by the onsite, direct technical capacity support and technical adviser on Municipal Finance Improvement Programme (“MFIP”) tasked to facilitate improved local government financial management capacity, enhancing budget and financial management practices and improved audit outcomes instead approved that the “Municipal manager implement an Enhanced Revenue, Financial Recovery and Financial Sustainability to be developed by able change agents (consultants – possibly from Cape Town/George/Western Cape)

 

 

 

7.4.       On the the 06 July 2020 the Municipal manager and Mayor were not present to meet the team of nine (9) officials of CoGHSTA, Provincial Treasury and Pixley ka Seme District Municipality who went to the municipality to commence with the “status quo” assessment/investigation. This was allegedly because they did not receive the notification – another ploy not to cooperate. The Municipal Manager was allegedly still in transit from his home in Cape Town/George/Western Cape;

 

7.5.       On the same day [06 July 2020] the team met with Counsellor Posthumus who arranged for the compilation of the documents and their collection on the 08 July 2020. He also reiterated his “strategy of the sale of immovable property of the municipality” to some of the members of the team.

 

7.6.       On the 08 July 2020 the Municipal Council held a Special Council meeting. On the same date the Mayor and the municipal manager failed to attend a virtual meeting (which they were aware of) with the Premier, MECs of CoGHSTA and Finance and Eskom (to resolve the electricity crisis), arranged as per the commitment on the 30 June 2020 – instead they sent a consultant to the meeting with a “mandate to sign and negotiate on behalf of the Mayor and the Accounting Officer”.

 

1. The Municipal Council and Municipal Manager have refused to provide information and allowed access to the Provincial Governments status quo assessment/Investigation team on subsequent meetings despite numerous visits to the municipality on the 10, 20 and 22 July 2020;

 

1.  Municipal Governance Challenges

 

8.1.       Failure to appoint senior managers accountable to the municipal manager and instead appointed the Municipal Manager as the Acting Chief Financial Officer and the Acting Director: Corporate Services in contravention of the Local Government: Municipal Systems Act 32 of 2000 and Regulations (“Systems Act”);

 

 

8.2.       The Council held a total of nine (9) Special Council meetings taking resolutions, decisions that are unlawful, unreasonable and prejudicial to the interest of the municipality, other municipalities and the province as they are not in accordance with applicable legislative framework – e.g. Sale of immovable properties;

 

8.3.       Failure to appoint a Municipal Public Account Committee (“MPAC”) that will exercise oversight over the executive by considering and resolving on irregular and wasteful expenditures at the municipality - in terms of sections 129 of the MFMA, 21A of the Systems Act and section 79 of the Local Government: Municipal Structures Act, 117 of 1998 (“Structures Act”);

 

8.4.       Failure to appoint a Disciplinary Board in terms of the Local Government: Municipal Finance Management Act 56 of 2003and Regulations (“MFMA”);

 

8.5.       Failure to implement the adopted discretionary Financial Recover Plan by National Treasury and timeous submission of the section 71 reports thereby in terms of the MFMA and the Municipal Budget Reporting Regulations (MBRR);

 

1. Failure to Cooperate with National and Provincial governments in the monitoring and provision of support of their respective constitutional responsibilities by providing information required in terms of section 106 of the Systems Act, section 154(1) of the Constitution, the Systems Act, and the Intergovernmental Relations Framework Act, 13 of 2005 (“IGRF Act”);

 

1. Failing to acceptance the support provided by National Treasury’s appointed expert on Municipal Finance Improvement Programme (“MFIP”) to provide the necessary financial support and advice in terms of MFMA;

 

1. Failing to ensure that the Accounting Officer enter into a repayment agreement with Eskom and service the debt which increased astronomically from R1.5 million to R88 million in contravention of the MFMA and acknowledged by the municipal managerper letter to Eskomthat “Renosterberg Municipality owe Eskom a significant amount in arrears”;

 

1. Councillors are involved in Supply Chain Management processes in contravention of the LG: Municipal Finance Management Act and item 2 of the Code of Conduct for Councillors;

 

9. Municipal Administratve Challenges

 

9.1.       The Municipal manager is indirectly refusing the officials of theDept. of   CoGHSTA, Provincial Treasury and Pixley ka Seme District municipality to conduct a status quo         assessment of the municipality;

 

9.2.       The Municipal manager is also playing delaying tactics with the submission of assessment documents which he agreed on Wednesday 08 July 2020 to collate and make available on the same day;

 

9.3.       The Municipal manager is preforming the functions of the           ChiefFinancial Officer and Director: Corporate Servicesin contravention of the MFMA and the Directive by the MEC of CoGHSTA;

 

9.4.       There are allegations of irregular payments and/or salary adjustments to the remuneration of the municipal manager and other officials;

 

9.5.       Irregular appointments take place at a huge financialcost to the municipality without ensuring that effective, efficient and transparent process are followed and humanresources policies are implemented; and

 

9.6.       The Municipality (Mayor and the Municipal manager) have also failed to attend a virtual meeting of the NCPL’s joint oversight PC on CoGHSTA and the SCOPA scheduled for the 12 August 2020;

 

9.7.       The Mayor and the municipal manager have failed to attend a District Development Model (DDM) and the preparation of the State of Local Government which was held in De Aar (a mere 111 km) for the Pixley ka Seme District municipalities on the 18 August 2020;

 

9.8.       In is evident from the above actions of the municipality is vehemently refusing to cooperate, accept support and subject itself to monitoring by the two arms of government – the NT, CoGHSTA, PT and the NCPL.

 

 

10.      Financial Misconduct and Mismanagement

 

10.1.     Section 71 reports are not tabled before the Municipal Council in contravention of the MFMA. The Municipal Council is not holding the Municipal manager accountable on prudent effective and efficient financial management of the finances of the municipality through the MPAC and the Disciplinary Board thereby contravening the MFMA;

10.2.     Underspending of conditional grants yet the unspend funds are not in the bank account of the municipality. Irregular expenditure is not reported, tabled before Council and consequently not investigated;

10.3.     The Eskom debt has increased astronomically from R1.5 million to approximately R89 million is less than 10 years – and there is no payment agreement;

10.4.     Municipality is failing to pay 3rd parties notwithstanding the fact that they have deducted the due amounts from employees salaries;

10.5.     The pension fund company is unable to pay retiring employees the required pension gratuity and employees are unable to utilise their medical aid due to lack of payment by the municipality.

10.6.     There are allegations that deceased employees are still paid their monthly salaries or is deposited into a fictitious account

1. Councillor Posthumus indicated that some former employees who have reached retirement age have not been paid their pension gratuity and as a result their services have not been terminated and continue to earn salaries in the place of pension gratuity; and
2. The Municipal manager previously worked for or had a relationship with RSK consultants  which has been appointed without following supply chain management processses.

 

1. The Municipal Council has failed to accept the FREE assistance by the onsite, direct technical capacity support and technical adviser on Municipal Finance Improvement Programme (“MFIP”) instead approved hat the “Municipal manager implement a Enhanced Revenue, Financial Recovery and Financial Sustainability to be developed by able change agents (consultants)”;

 

1. The purported Enhanced Revenue, Financial Recovery and Financial Sustainability to be developed by “able change agents (consultants)” – is the basis for the  Council  resolution to approve a “Revenue Plan” and the         “Sale of Immovable Property” without following due legal process as outlined in the MFMA;

 

 

1.     Municipal infrastructure and Service Delivery challenges

 

 

 

11.1.     The communities of Keurtjiekloof and van der Kloof are constantly without electricity for 16 hours in a day [NB: Not due to the usual load shedding] whereas they pay their rates and taxes including electricity to the municipality without fail [their payment constitute 90% of the revenue for the municipality];

 

11.2.     The Eskom transformers are no longer being services/maintained and the electricity crisis has adversely affected service delivery to the extent that the Police station has no electricity which makes their working conditions unbearable during summer and winter. The police station is inaccessible to the community through telephones.

 

1.  Opinions of Internal and External Stakeholders of the Local Municipality

 

 

12.1.     The member of Economic Freedom Front serving in the Northern Cape Provincial Legislature welcomed the invocation of section 139 (1) (c) of the Constitution in the local municipality. The member indicated that the problems experienced by the local municipality emanated decades ago. The member made recommendations that the municipality should be provided with financial support  

 

12.2.     The member of the Freedom Plus Front serving in the Northern Cape Provincial legislature tabled and opinion that support the dissolution of the local municipality in terms of section 139 (1) (c) of the Constitution

 

12.3.     The Councillor of the African National Congress serving in the local municipality supported the invocation of the intervention in terms of section 139 (1) (c) and 139 (5) of the constitution in the local municipality 

 

12.4.     The Councillor of the Democratic Alliance serving in the local municipality did not support the placement of the municipality under section 139 (1) (c) of the constitution 

 

1. South African Local Government Association

 

13.1.     SALGA has made several attempts to meet with the Renosterberg leadership.  SALGA was supposed to have met with the municipality but due to the ill-health of the municipal manager the meeting could not take place.

 

13.2.     On the 26th July 2020, SALGA received an e-mail from CoGHSTA on Section 106(1) for information and (3) motivation to NCOP. There has not been an engagement with CoGHSTA beside the e-mail that was send on the 26th July 2020.

 

13.3.     Whereas serious allegations of service delivery and governance challenges are raised, we have not been able to confirm / deny the allegations.

 

13.4.     The questions to be answered in taking the decision to dissolve or not to dissolve Renosterberg Council, will it advance: currently the municipality is not financially stable and the community is not receiving quality services especially on the issue of electricity; the council is not sitting as it supposed to and there is allegation of corruption in the municipality that contribute to the poor services in the municipality

13.5.     In implementing Section 139 (5) Intervention a two-stage process must be followed: The imposition of a financial recovery plan: Must be developed in terms of national legislation (MFMA); Implementation of the financial recovery plan: To be implemented by municipality or dissolution of the council or the assumption of the responsibility by the province

 

13.6.     In order to meet the objectives of local government, the following basic actions are necessary: (1) development of a clear, concise and detailed financial recovery plan should be developed; (2) clear and elaborate Terms of Reference for the appointment of the Administrator together with Team of Experts – very important that a team is deployed; (3) Team to be appointed to possess necessary expertise, experience and qualificationsto assume responsibility for the implementation of the financial recovery plan;(4) regular and structured reports on implementation of the Intervention; (5) convening peaceful by-elections and reconstitution of new Municipal Council

 

1. It is recommended that the Select Committee resolve to: place the fulfilment of the Objects of Local Government at the centre of taking a decision to approve or disapprove the Provincial Executive Council decision to dissolve the Renosterberg Council; Should the decision to dissolve be supported, it would be critical for the necessary actions as outlined herein to be executed

 

14.                    Opinion and Observations of the Select Committee

 

14.1.     The Select Committee has noted that the Northern Cape MEC of the Department of Cooperative Governance, Human Settlement and Traditional Affairs informed Ministers of CoGTA, Finance, National Council of Provinces, the NC Legislature & SALGA of reasons for invoking section 106(1) of the Systems Act(24 July 2020);

 

14.2.     The Select Committee has also noted that the Municipal Council and Municipal manager have failed to respect and respond to the MEC’s “Directive” (10 July 2020);

 

14.3.     The Select Committee has further noted that Municipal Council and Municipal manager have failed to respect and respond to the MEC’s sec 106(1) statutory requests for information (13 July 2020);

 

14.4.     The Select Committee has also noted that Municipal Council and Municipal manager have failed to respect and respond to the MEC’s request for reasons why the Provincial Executive Council should not be requested to intervene at the municipality (23 July 2020);

 

14.5.     That senior managers accountable to the municipal manager are appointed and the decision to appoint the Municipal manager as the Acting Chief Financial Officer and the Acting Director: Corporate Services in contravention of the Local Government: Municipal Systems Act 32 of 2000 and Regulations (“Systems Act”) is rescinded;

 

15.                    Recommendations of the Select Committee

 

The Select Committee on Co-operative Governance and Traditional Affairs, Water, Sanitation and Human Settlement, having considered the intervention notice invoked in the Renosterberg Local Municipality in terms of section 139(1) (c) of the Constitution, recommends that:

 

15.1.                 The National Council of Provinces approves the invocation of section 139 (1) (c) and 139 (5) of the Constitution in Renosterberg Local Municipality

 

15.2.                 The Northern Cape MEC of the Department of Cooperative Governance, Human Settlement and Traditional Affairs should ensure that; 

 

15.1.1.              Manager positions are in the interim filled with Acting and/or secondment of senior government officials to assist the intervention;

 

15.1.2.              Review, rescind, amend all Council Resolutions, decisions of the Municipal manager and terminate all unlawful appointments of consultants in accordance with applicable legislative framework;

 

15.1.3.              Appointment of a Disciplinary Board in terms of the Local Government: Municipal Finance Management Act 56 of 2003 and Regulations (“MFMA”);

 

15.1.4.              The municipality immediately implement the adopted discretionary Financial Recover Plan by National Treasury and timeous submission of the section 71 reports thereby in terms of the MFMA and the Municipal Budget Reporting Regulations (MBRR);

 

15.1.5.              The municipality cooperates with National and Provincial governments in the monitoring and provision of support of their respective constitutional responsibilities by providing information required in terms of section 106 of the Systems Act, section 154(1) of the Constitution, the Systems Act, and the Intergovernmental Relations Framework Act, 13 of 2005 (“IGRF Act”);

 

15.1.6.              The municipality accept the support provided by the National Treasury’s appointed expert on Municipal Finance Improvement Programme (“MFIP”) to provide the necessary financial support and advice in terms of MFMA;

 

15.1.7.              Make necessary arrangements to meet financial obligations and/or commitments of payment to third parties (e.g. Pension Funds, UIF, Medical Aid Schemes), and the AG in terms of the MFMA;

 

15.1.8.              Terminate the sale of movable and immovable properties undertaken due to unlawful council resolutions disguised as a purported “Recovery Plan” that generates income and recover all proceeds associated therewith in terms of MFMA and any applicable legislative framework;

 

15.1.9.              Enter into a repayment agreement with Eskom and service the debt which increased astronomically from R1.5 milion to R88 million in contravention of the MFMA and acknowledged by the municipal manager per letter to Eskom that “Renosterberg Municipality owe Eskom a significant amount in arrears”;

 

15.1.10.            The municipality appoint a Municipal Public Account Committee (“MPAC”) that will exercise oversight over the executive by considering and resolving on irregular and wasteful expenditures at the municipality - in terms of sections 129 of the MFMA, 21A of the Systems Act and section 79 of the Local Government: Municipal Structures Act, 117 of 1998 (“Structures Act”); and

 

15.1.11.            The Department, where necessary take the necessary actions including instituting forensic investigation, reporting all unlawful actions, activities of fraud, corruption, malpractice and maladministration to the relevant law enforcement agencies, intelligence community in the form of the SIU, Hawks, Asset Forfeiture Unit, Financial Intelligence Centre to recover all irregular payments made to service providers, law firms, councillors and officials, sale of movable and immovable assets of the community – in terms of the MFMA, Systems Act and any applicable legislation.

 

15.1.12.            The MEC for Cooperative Governance, Human Settlement and traditional affairs should table quarterly report and termination report to the NCOP on the status of the intervention in the Municipality.

 

15.1.13.            The Select Committee on Co-operative Governance and Traditional Affairs (Water, Sanitation and Human Settlement should in co-operation with the relevant Portfolio Committee in the Northern Cape Provincial Legislature, conduct a follow-up oversight visit to the Municipality after the by election in order to evaluate the progress made in respect of the intervention in the Municipality

 

The majority of the political parties serving in the Select Committee support the invocation of

the section 139 (1) (c) and 139 (5) of the constitution in the local municipality with the

exception of the members of Democratic Alliance.

 

Report to be considered.