ATC201105: Report of the Portfolio Committee on Cooperative Governance and Traditional Affairs on Oversight Visit to the Limpopo Province, 10 – 16 October 2019, Dated 4 November 2020

Cooperative Governance and Traditional Affairs

REPORT OF THE PORTFOLIO COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON OVERSIGHT VISIT TO THE LIMPOPO PROVINCE, 10 – 16 OCTOBER 2019, DATED 4 NOVEMBER 2020
 

Having conducted oversight to the Limpopo Province on the VBS Mutual Bank matter, and having subsequently called to Parliament other implicated municipalities from the Gauteng Province, the Portfolio Committee on Cooperative Governance and Traditional Affairs reports as follows:

1. BACKGROUND

 

The Municipal Investment Regulations, published in 2005, prescribe what investments are permissible for municipalities to make, and make it clear that only banks registered in terms of the Banks Act, namely, commercial banks are safe for municipalities to place deposits – not mutual banks such as VBS Mutual Bank. Despite this prohibition, 16 municipalities invested money with the VBS Bank during the 2016-17 and 2017-18 financial years.

However, two of these municipalities managed to withdraw their investments before the North Gauteng High Court ordered the liquidation of the Bank on 13 November 2018. The remaining 14 municipalities lost their investments and have disclosed impairments totalling R1.6 billion (including interest). As tabulated below, the bulk of this loss (72 percent) involved investments by eight municipalities in Limpopo: Makhado, Greater Giyani, Collins Chabane, Elias Motsoaledi, Vhembe District, Ephraim Mogale, Fetakgomo Tubatse, and Lepelle – Nkumpi municipalities.

Four municipalities also suffered losses in the North West (Dr Ruth S Mompati District, Mahikeng, Moretele and Madibeng), and two in Gauteng (West Rand and Merafong). An estimated 32 percent of the money lost was from grants intended to fund infrastructure projects. The funds invested in VBS were a combination of conditional grants, equitable share and own revenue.

1. OVERSIGHT OBJECTIVES

 

Against the foregoing background, the Portfolio Committee on Cooperative Governance and Traditional Affairs embarked on an oversight visit to the affected municipalities, starting in Limpopo. The purpose of the oversight visit was twofold. The first was to ascertain the service delivery impact of the lost investments in the affected municipalities. The second objective was to follow up on the issues emerging in Parliament during the Portfolio Committee’s joint meeting with the Standing Committee on Public Account (SCOPA) on municipalities that had received disclaimed/adverse audit opinions over the previous three financial years.  In this regard, the Committee held meetings with,

• The auditors of Collins Chabane, Vhembe District, Mogalakwena, Fetakgomo-Tubatse, Mopani District, Elias Motsoaledi, Greater Giyani, and Ephraim Mokgale municipalities;
• The MEC responsible for Cooperative Governance, Human Settlements and Traditional Affairs in Limpopo;
• The Mayors, Municipal Managers, Members of the Mayoral Committee (MMC’s) and other officials from Greater Giyani, Mopani District, Vhembe District, Makhado,  Collins Chabane, Elias Motsoaledi, Ephraim Mogale, Fetakgomo-Tubatse, Lepelle-Nkumpi, Mogalakwena, Thabazimbi, Merafong and West Rand District municipalities;
• Other stakeholders, including community representatives, representatives of traditional leaders, political parties, and the labour movement.

Source: Limpopo Department of Cooperative Governance, Human Settlement and Traditional Affairs (2019).

 

Portfolio Committee Delegation: Ms F. Muthambi (ANC) Chairperson; Ms D. Direko (ANC); Ms M. Tlou (ANC); Mr G. Mpumza (ANC); Ms P. Xaba-Ntshaba (ANC); Mr B. Hadebe (ANC); Mr H. Hoosen (DA); Mr C. Brink (DA); Mrs G. Opperman (DA); Inkosi B. Luthuli (IFP); Mr M. Groenewald (FFP); and Ms H. Mkhaliphi (EFF).

Support Staff: Mr A. Sokomani (Committee Researcher); Ms S. Cassiem (Committee Secretary); Mr M. Erasmus (Committee Assistant); Mr M. Molepo (Parliamentary Communication Services).

 

1. OVERSIGHT FINDINGS

 

In line with its oversight objective, the Portfolio Committee drew findings in respect of both the lost investments in the VBS Mutual Bank, as well as the disclaimed/adverse audit opinions, which the municipalities received in the last three financial years.  Both issues affected all the visited municipalities, except for Mopani, Mogalakwena, Thabazimbi, Greater Giyani and Ephraim Mogale.Mopani, Mogalakwena and Thabazimbi had no investments in the VBS, while Ephraim Mogale, Greater Giyani, Merafong and West Rand District had no consecutive adverse/disclaimed finding in the last three financial years.

Findings in respect of both VBS and disclaimed/adverse audits:

1. Collins Chabane Municipality

 

Impact of VBS Investment on Service Delivery	Chief Financial Officer approved an investment of R120 million in VBS, which the municipality could not recover – along with an interest of R2 million. The material loss resultingfrom the investment affected the appointment of staff. The vacancy rate was 69 percent. Projects were not possible to complete in line with scheduled dates.
Consequence Management	Municipality dismissed the Municipal Manager, but the MM is still contesting the dismissal. The MM is still in Council’s payroll. The municipality has not instituted any civil claims against the individuals implicated in the VBS matter. No steps taken against individuals awarded contracts while in the service of the state. The municipality failed to discipline a manager who failed to declare that his wife was among the list of the municipality’s tender beneficiaries.
Causes of Consecutive Disclaimed and Adverse Audit Findings	Excessive reliance on consultants to prepare Annual Financial Statements, as well as insufficient monitoring and review of the consultant’s work. No underlying records supported financial statements. Awarding of contracts to suppliers who were in the service of the state.

 

1. Vhembe District Municipality

 

Impact of VBS Investment on Service Delivery	Investment loss affected the filling of vacancies. The positions of Municipal Manager and Chief Financial Officer were vacant, as the incumbents who approved VBS investment to the value of R300 million are no longer in the employ of the municipality. The overall vacancy rate was 38 percent, while the finance division was at 52 percent. Procurement of emergency vehicles and replacement of infrastructure assets was not possible. Lack of funds affected the rehabilitation of boreholes. Projects were not possible to complete in line with scheduled dates, including the construction of the Nandoni bulk water pipeline.
Consequence Management	Municipality suspended Municipal Manager in October 2018 and subsequently reached a settlement agreement to the value of approximately R1 million, while Chief Financial Officer resigned. The municipality has taken no disciplinary action against any employee despite the litany of disclaimers. There were no consequences for abuse of petrol cards despite a forensic investigation to the value of R6.5 million.
Causes of Consecutive Disclaimed and Adverse Audit Findings	Municipality received disclaimers for three consecutive years despite hiring consultants to prepare Annual Financial Statements. There were still material misstatements in the Annual Financial Statements despite the use of consultants to the value of R18.5 million in 2017/18. The municipality did not procure this service through the normal supply chain management processes. Requested information to support financial statements was not forthcoming, which made it impossible for the Auditor-General to audit the municipality. Awarding of contracts to suppliers who were in the service of the state, and awarding of tenders without advertising. No investigation had taken place with regard to unauthorised, irregular, fruitless and wasteful expenditure.

 

1. Makhado Local Municipality

 

Impact of VBS Investment on Service Delivery	Invested funds diverted from the Equitable Share, which affected the implementation of capital projects.
Consequence Management	Municipality aborted the disciplinary process against the Acting Municipal Manager, when the contract expired. Municipality allowed the Chief Financial Officer to leave without accounting for the monies lost. The CFO found employment in other municipalities.
Causes of Consecutive Disclaimed and Adverse Audit Findings	Management did not respond timely to audit queries. Paid Moonsoft R7 million in 2017/18 to prepare Annual Financial Statements but there were still errors in the AFS and the Annual Performance Report.

 

 

 

 

 

 

1. Fetakgomo-Tubatse Municipality

 

Impact of VBS Investment on Service Delivery	There was ahigh vacancy rate at senior management level as the lost funds constrained the appointment of personnel. Municipality is yet to lift the moratorium on appointments. Municipality experiencing cash flow problems due to the lost investment. Municipality cannot pay service providers.
Consequence Management	Municipal Manager resigned in September 2019 following a period of suspension. The Chief Financial Officer resigned on 04 January 2019
Causes of Consecutive Disclaimed and Adverse Audit Findings	Leadership did not apply consequences management. Council did not investigate instances of unauthorised, irregular, fruitless, and wasteful expenditure. There was a lack of daily reconciliations and monitoring of day-to-day transactions, resulting in misstatements in the financial statements. Six million rand worth of tenders awarded to individuals in the service of the state. A weak Information Technology environment.

 

1. Elias Motsoaledi Municipality

 

Impact of VBS Investment on Service Delivery	Municipality lost R48 000 in interest to the VBS. The responsible Chief Financial Officer resigned, and the municipality has been unable to find a suitable replacement. The lost interest reportedly did not affect capital projects materially.
Consequence Management	Limpopo Provincial Treasury appointed forensic investigators who recommended that the municipality must recover the amount from the responsible municipal employees. Municipality suspended the responsible Municipal Manager on 07 December 2018. The suspension period exceeded the 60-day legal limit. Municipality was still incurring costs in respect of the full salary to the suspended MM, the allowance to the Acting MM, as well as the legal fees (R1.1 million)incurred in the course of the MM disciplinary process. The Disciplinary Committee had not set since 30 April 2019, which creates a suspicion of collusion between Council and the Acting MM. Municipality also instituted disciplinary proceedings against the Deputy CFO. No investigation of unauthorised, irregular, fruitless and wasteful expenditure.
Causes of Consecutive Disclaimed and Adverse Audit Findings	Municipality disposed assets without Council approval. Municipal officials awarding tenders to themselves.

 

1. Lepelle-Nkumpi Municipality

 

Impact of VBS Investment on Service Delivery	The R150 million lost to VBS negatively affected:   The electrification of households and erection of high masts. Construction of Waste Transfer Stations, Community Halls and Storm Water Drainages. The tarring of internal street zones.
Consequence Management	Council adopted all the applicable findings and recommendations in the Provincial Treasury forensic Report into the VBS matter. Council resolved to place the Municipal Manager and Chief Financial Officer on precautionary suspension, pending an investigation. The MM and CFO subsequently resigned. The CFO resigned on 24 June 2019 and the MM in December 2018. Municipality appointed a firm of attorneys to pursue civil recovery of funds from the MM and CFO. The Disciplinary Board was not functional and there is a need to operationalise it.
Causes of Consecutive Disclaimed and Adverse Audit Findings	There is no system in place to manage poor performance. The municipality did not always investigate unauthorised, irregular, fruitless and wasteful expenditure. Use of consultants without concomitant skills transfer.

 

Findings in respect of VBS investments only

 

1. Greater Giyani Municipality

 

Impact of VBS Investment on Service Delivery

The critical posts of Chief Financial Officer and Technical Services Director had been vacant for more than 12 months following the dismissal and resignation of the incumbents in the wake of VBS-related disciplinary processes. The overall vacancy rate was 47 percent and 38 percent in the finance department. Municipal officials insisted that the lost investment did not affect current projects, as they had earmarked the funds for future projects. According to the Auditor-General, the municipality is postponing projects or undertaking them in phases due to the lost investment. The lost investment also affected the municipality’s debt collection.

Consequence Management

There was a R1.6 million‘handshake’ to the municipal manager implicated in the VBS matter. There were no consequences for the irregular expenditure incurred in the previous financial year. Municipality reportedly referred unauthorised expenditure to the MPAC for investigation. The individual who was the Mayor during the VBS saga is still a member of the Municipal Council.

 

1. Ephraim Mogale Municipality

 

Impact of VBS Investment on Service Delivery

Municipality invested R80 million with VBS, and officials insisted that the municipality was financially viable, despite the loss of the R80 million. Officials also insisted that the investment loss did not affect budgeted projects as the investment was from surplus cash. The R80 million would only have impact on the future sustainability of the municipality. Investment loss caused community unrest.

Consequence Management

Municipality suspended the Municipal Manager and the Chief Financial Officer resigned on 04 December 2018. Municipality paid (R9.8 million plus R2.7 million) for consultants to prepare annual financial statements despite having a full-time Chief Financial Officer.

 

 

 

 

 

 

1. Merafong Municipality

 

Impact of VBS Investment on Service Delivery	Although there was no impact on the capital projects for 2017/18, the lost investment will have a negative impact on future capital projects.
Consequence Management	Council suspended the responsible mayor on 25 July 2019 Instituted disciplinary action against two officials, including summons for civil recovery as well as criminal proceedings against the official responsible for instructing the investment.  However, the municipality could not conclude the disciplinary process against the other official, as she was no longer in its employ. Municipality did not undertake sufficient measurers to recover the funds
Risks	The municipality was not dysfunctional but at risk due to:   Mining benefits not accruing to the municipality West Rand economy does not support financial viability of municipalities in the area Control environment across the board is weak, including in provincial treasury Gross understaffing of the MPAC (No Researcher, Legal Advisor or Manager).

 

1. West Rand District Municipality

 

Impact of VBS Investment on Service Delivery

The municipality suffered an impairment loss amounting to R76m because of investments held with VBS Mutual Bank. The municipality did not budget for this impairment loss. The loss included a Neighbourhood Development Partnership Conditional Grant to the value of R43m. The loss meant that projects funded under this grant could not be completed by year-end. National Treasury also reduced conditional funding to the municipality to recover the lost grant money, which worsened the municipality’s financial position.

Consequence Management

The MPAC recommended that Council should align itself with the Deloitte and Touché Report and the COGTA forensic as the matter was sub judice. MPAC also recommended that the municipality takes the same approach as Merafong and report the matter to the South African Police Service. Following the implementation of these resolutions, the municipality became aware that a similar case had already been opened with the SAPS and that the SAPS national office was investigating the matter.

 

 

Findings in respect of consecutive disclaimed/adverse audits:

1. Mopani District Municipality

 

Consequence Management	Despite receiving four adverse findings for four consecutive years, the municipality had not undertaken any consequence management in respect of non-compliance.
Causes of Consecutive Disclaimed and Adverse Audit Findings	Poor implementation of the Post-Audit Action Plan Used R100 million of drought relief funds without following proper supply chain management processes. Poor record keeping, which assisted in hiding the money trail, especially in relation to the construction of boreholes.

 

1. Mogalakwena Local Municipality

 

Consequence Management

Municipal administration often responded poorly to the findings of the Auditor-General. Despite disclaimed and adverse audits, and non-compliance with supply management processes, the municipality has not meted out any consequences. Officials responsible for non-compliance were still in the employ of the municipality.

Causes of Consecutive Disclaimed/Adverse Audit Findings

The administration appears to start getting involved in the finances of the municipality only when the audit process commences. There were inconsistencies between the Annual Financial Statements submitted to the Auditor-General for audit and those submitted to consultants. The Municipal Public Accounts Committee was not functional as there were still unprocessed reports submitted to the Committee dating back two to three years. In the joint meeting with SCOPA, the municipality had insisted that it had reconfigured the MPAC, which was now doing its job effectively. There was yet no replacement for the assassinated Chairperson of the MPAC.

 

 

 

 

1. Thabazimbi Local Municipality

 

Consequences Management

The Speaker of the municipality resigned on his own accord following the joint meeting with SCOPA, where it emerged that a Councillor did not declare that he/she was involved in a transaction with the municipality. The Speaker was that Councillor.

Causes of Consecutive Disclaimed/Adverse Audit Findings

Late submission of Annual Financial Statements. Information that went missing when Sheriff confiscated municipal documents and assets hampered the conducting of a full municipal audit. Leadership inaction created a culture of no consequences. Council did not investigate prior years’ unauthorised, fruitless and wasteful expenditure. The municipality had been operating on unfunded budgets since 2016

 

1. Meetings with stakeholders

 

Vhembe District

Matters arising included:   Insufficient communication regarding the Portfolio Committee oversight visit to the District meant that some stakeholders were ill prepared to contribute meaningful inputs, as they were ignorant of the meeting’s objectives. A recommendation that the Portfolio Committee gives notice of stakeholder engagements meetings well in advance. Lack of safetydue to the assassination of individuals in relation to the VBS matter. A concern that there was no implementation of the recommendations of the VBS forensic report. Community heard nothing about consequence management. Spillage of wastebecause of sewer infrastructure bursting to the rivers and resulting in a foul stench. General lack of progress in the municipality, as well as arrogance from the District’s Technical Director when communities attempt to raise issues. No sufficient attention given to poor members of the community who also lost monies to VBS. Upgrading of gravel roads to tar roads, including linking Majozi, would contribute immensely to peace and stability in the District. In this regard, the MEC had made empty promises. Some communities in Vuwani are tired of demarcation politics. All they want is service delivery.

Fetakgomo-Tubatse

Matters arising included:   Some level of satisfaction with service delivery outside Fetakgomo, but poor services within Fetakgomo itself. Councillor related problems including lack of cooperation between councillors from the municipality and traditional council areas. Community consultations, including Ward Committee meetings, were not taking place as legislated. Communities heard about the VBS matter from the media.

 

1. COMMITTEE OBSERVATIONS

 

From the foregoing findings, the Portfolio Committee notes the following:

 

1. Vhembe District. The Council Resolution to award the District’s former Municipal Manager a settlement of close to R1 million was wrong and should not have been allowed. The municipality seemed to have no appetite for implementing the Auditor-General’s recommendations, including investigating unauthorised, irregular, fruitless and wasteful expenditure. The issue of safety was also of great concern to the Portfolio Committee as it heard of rampant assassinations taking place in the Districtin connection with the VBS matter. People are on the run for their lives, torn away from their families. The District is in need of urgent intervention from law enforcement authorities.

 

1. Greater Giyani. The municipality also seemed to have no appetite for implementing the Auditor-General’s recommendations, including investigating unauthorised, irregular, fruitless and wasteful expenditure. It was concerning that, the municipality spent large amounts of money in legal disputes with the Municipal Manager implicated in the VBS matter – only to reach a settlement agreement at further cost to the taxpayer.

 

1. Mopani District. It was perhaps too ambitious for the Portfolio Committee to expect the municipality to coordinate the provisions ofbasic services within its jurisdiction while it could not fix light bulbs in the elevators and provide decent sanitation facilities within its own premises. The municipality also did not seem to have made much progress since the joint meeting with SCOPA. The Portfolio Committee found the responses from the municipal leadership, particularly the Acting Municipal Manager, evasive and long-winded. This gave the impression that the Acting MM was not completely honest with the Committee.All the adverse findings against the municipality had occurred under the watch of the Acting MM in his capacity as the Chief Financial Officer. As in the joint meeting with SCOPA, the Portfolio Committee could not make any headway with the Acting MM. The municipality had also made very little progress since the joint meeting with SCOPA.

 

1. Mogalakwena. This was one of the most volatile municipalities visited, with all the characteristics of a war zone.The municipality appears to be under serious capture. A culture of intimidation also seemed to pervade the municipality.Hostility and aggression from the Mayor made it difficult for the Portfolio Committee to resolve matters conclusively, including the issue relating to the granting of a supposed three months study leave to a Municipal Manager who had just joined the municipality.The municipality sabotaged the planned engagements with stakeholders, as part of the oversight, including barring people from entering municipal premises.Furthermore, there was no indication that the municipality had followed up on its undertaking to SCOPA, including taking corrective measures to ensure that the municipality operated normally. There seemed to be no appetite for consequence management. The municipality also reported a debt collection rate of 73 percent, but had no cash reserves for operating expenditure. 

 

1. Elias Motsoaledi. The Portfolio Committee did not find the responses emanating from the municipal leadership satisfactory. While the Committee notes the improved audit outcomes in the municipality, there are still serious challenges, including R162 millionunauthorised expenditure, and R82 million in irregular expenditure. The Committee also learnt that the Acting MM had earned an acting allowance amounting to R148 000, but that his material possessions were worth millions of rand. The Acting MM has also been in the acting position for more than ten months, which was not reasonable. The municipality also seemed to have no appetite for consequence management, including following up on wasteful and fruitless expenditure. The municipality also did not withhold the pension of the CFO implicated in the illegal investment in VBS.

 

1. Ephraim Mogale. The municipality tended to downplay and minimise the gravity of the illegal investment in the VBS by emphasising that the invested funds were surplus cash and did not affect planned capital projects. This made it seem like the lost R80 million was of no consequence to the municipality. The presentation to the Portfolio Committee was extremely sparse and did not provide a proper account of the state of the municipality.

 

1. Fetakgomo-Tubatse. The municipality was not holding regular council meetings, as there was a gap of nine months between the last council meeting and the one preceding it. There were still simmering tensions arising from the poor handling of the amalgamation of Fetakgomo and Greater Tubatse municipalities, including pay disparities among employees in the same grade. The municipality also seemed to have no appetite for disciplining people involved in wrongdoing.

 

1. Lepelle-Nkumpi. The Portfolio Committee appreciated that this was the first municipality, among all the visited municipalities, that had an administrative leadership with a clear plan of action towards the transformation of the municipality towards a fully functional institution, following the loss of R150 million to the VBS. This was the only municipality that had a full, credible Financial Recovery Plan in line with the requirements of Section 142 of the Municipal Finance Management Act (MFMA). The municipality also took proactive steps and followed up with law enforcement agencies regarding progress on cases opened for investigation. Other municipalities, on the other hand, tended to sit and wait for the investigators to provide updates. The Committee appreciates the cooperation from the Acting MM, and encourages and urges the political leadership of the municipality to support the municipal administration, especially the Acting MM.

 

1. Thabazimbi. The municipality appointed some councillors on a full-time basis. After a certain period, it retracted the full-time appointments and turned them into part-time appointments. It further deducted the monies, which the councillors earned while serving Council full-time. The Portfolio Committee is of the view that the municipality acted unfairly in relation the deduction of the monies. The councillors should not be penalised because they did not appoint themselves on a full-time basis. It was the municipality’s fault. There were also serious litigations in the municipality amounting to hundreds of millions of rand, and these were becoming the breeding ground for fictitious and fraudulent claims.However, compared to Mogalakwena, Thabazimbi gave to the Portfolio Committee a better account of the state of the municipality and progress made thus far.

 

1. Merafong. The Report tabled to Council on the outcome of the investigation into the VBS Mutual Bank matter recommended a written warning valid for a year. Council sought to review the Report but obtained legal opinion to the effect that it did not have a legal standing to undertake the review. The Portfolio Committee noted that this was a wrong legal opinion. The sanction of a written warning valid for a year was not a good precedent. Council must review it and set it aside.

 

1. West Rand. It cannot correct that the R76m VBS impairment loss had no effect on the finances of the municipality. The presentation the National Department of Cooperative Governance and Traditional Affairs was not convincing in this regard. The municipality was not among the ‘basket cases’ and had the potential to perform better. The Committee needs to understand better the R76m impairment loss on the operations of the municipality.

 

1. Role of National Treasury and the Reserve Bank. The illegal investments in the VBS occurred for a considerable period before National Treasury and the Reserve Bank took notice and intervened. It is therefore pertinent to ask whether these institutions had adequately performed their oversight responsibility in the VBS matter. It also relevant to question whether the intervention, in the form of writing letters to the concerned municipalities, was adequate. The role of Provincial Departments of Cooperative Governance, Provincial Treasuries, Mayors and Accounting Officers also needs scrutiny.

 

1. Reliance of consultants. The Portfolio Committee is concerned that in most of the municipalities visited there was excessive reliance on external consultants to perform work that municipal officials are supposedly qualified to do.

 

1. Political-administrative stability. At the heart of the observed challenges and problems confronting the visited municipalities, was a lack of a clear separation of roles and responsibilities in the political-administrative interface. Politicians interfered in administration and officials were involved in political matters.

 

1. Lack of consequences management and compliance with legislation. Observed in the majority of the visited municipalities was a sheer lack of consequences for the abuse and misuse of public finances, as well financial management laws and regulations. There was no regard, whatsoever, for the findings and recommendations of the Auditor-General as the same issues arose for three consecutive financial years.

 

1. COMMITTEE RECOMMENDATIONS

 

 

1. The Portfolio Committee should summon to Parliament the leadership of the Mogalakwena Local Municipality, and any other implicated official in the municipality, to account further on the matter relating to the supposed study leave of the Municipal Manager,the appointment of the Acting MM, and the appointment of 400 staff members outside the municipal organogram. The municipal leadership should also provide an explanation on why it failed to mobilise stakeholders to participate in the Portfolio Committee’s oversight programme. A threat analysis with the South African Police Services in relation to the Municipal Manager is also necessary for the municipality to undertake.  (The Committee has since implemented this recommendation)

 

1. The Portfolio Committee, in cooperation with the Minister of Cooperative Governance and Traditional Affairs, should consider serious intervention into Mogalakwena in order to normalise the municipality and bring back stability. (The Committee has since implemented this recommendations)

 

1. The Portfolio Committee should improve on its stakeholder mobilisation strategy for oversight, and not rely on municipalities to invite stakeholders.

 

1. The Portfolio Committee should work with law enforcement agencies to investigate the close to R1 million settlement awarded to the former Municipal Manager of the Vhembe District.

 

1. The political leadership of the Lepelle-Nkumpi Local Municipality should provide the Municipal Manager with all the necessary support and cooperation in his efforts to steer the municipality back towards sound financial management and effective governance.

 

1. The Thabazimbi local municipality should refund the monies deducted from the part-time councillors whom the municipality had erroneously appointed full-time. This was the municipality’s fault, not the councillors.

 

1. The Portfolio Committee further urges the relevant Thabazimbi councillors to pay their rates and desist from contravening the provisions of the Municipal Systems Act.

 

1. Thabazimbi should not only investigate those municipal employees doing business with the municipality but also those in the employ of the state doing business with the municipality.

 

1. The Portfolio Committee should follow up on the issue relating to the upgrading of roads in the Vhembe District, as this would be an immense contribution to Local Economic Development in the District.

 

1. The Makhado Local Municipality should institute civil proceedings to recover monies from the Chief Financial Officer whom the municipality should not have allowed to leave.

 

1. The Ephraim Mogale Local Municipalityshould follow up with the police regarding progress in the petrol cards fraud case, where the municipality lost R197 000. The Mayor should take all the necessary steps to ensure that the municipality pursues this follow-up, including considering the option of lodging a civil claim against the responsible individual.

 

1. The responsible law enforcement agencies should accelerate the pace of finalising the cases of malfeasance opened against the implicated individuals in the visited municipalities.

 

1. All the visited municipalities should strive to minimise reliance on external consultants for the preparation of Annual Financial Statements and Asset Registers. The Provincial Legislatures should consider providing support in the form of deploying a team of financial experts to provide training and alleviate the shortage of financial skills.

 

1. A clear separation of roles and responsibilities - as envisaged in Chapters 7 and 8 of the MFMA -is necessary to enforce, in order to curb political interference in the municipal administration, limit the involvement of officials in politics, and bring about political-administrative stability in the municipalities in question.

 

1. The Collins Chabane Local municipality should institute consequence management, including civil recovery proceedings, against those members of the Executive Committee who got the MM to sign the VBS investment instruction while hospitalised.

 

1. Merafong Local Municipality should furnish the Committee with the name of the Senior Counsel who advised that Council could not review the lenient disciplinary recommendation on the VBS matter. Municipality should also furnish Committee with council resolution relating to the secondment of Rand West District CFO to Merafong. Municipality must also submit a financial recovery plan.  The MPAC should furnish the Committee with the VBS Report, which Council reportedly rejected for no apparent reason.

 

1. The West Rand District Municipality must furnish the Committee a comprehensive report on the impact of the R76m impairment loss on municipal operations.

 

1. APPRECIATION

 

The Portfolio Committee appreciates the dedication of Portfolio Committee Members who worked extraordinary hours to ensure that the Committee’s oversight objectives in Limpopo are realised. The Committee also extends gratitude to those municipalities who interacted with the Committee cordially, respectfully and cooperatively. The inputs from stakeholders, including traditional leaders, enriched the Portfolio Committee’s oversight findings. The Committee further appreciates the support from the Office of the Auditor-General, officials of the Department of Cooperative Governance, the Department of Traditional Affairs, the Municipal Infrastructure Support Agent,law enforcement, as well as Parliamentary support staff.

 

Report to be considered.