ATC111122: Report on Consideration of Termination of Intervention in Thabo Mofutsanyana District Municipality

NCOP Economic and Business Development

REPORT OF THE SELECT COMMITTEE ON CO-OPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON CONSIDERATION OF THE TERMINATION OF INTERVENTION IN THABO MOFUTSANYANA DISTRICT MUNICIPALITY – DATED 22 NOVEMBER 2011  

 

1.         Introduction and Background

1.1               The Select Committee on Co-operative Governance and Traditional Affairs, having considered the directive of the National Council of Provinces (NCOP) to consider and report on the notice of termination in Thabo Mofutsanyana District  Municipality, reports as follows:

 

1.2               On the 4 November 2009, the Provincial Executive Council (PEC) of the Free State Legislature resolved to intervene at Thabo MofutsanyanaDistrict Municipality in terms of section 139(1)(b) of the Constitution, as a result of failures to fulfill various executive obligations.

 

1.3       The main objective for intervening was due to the failure of the Municipality to function effectively as a District Municipality to render services to its local municipalities, high vacancy rate of section 56 managers, Council’s failure to execute executive obligations and its inability to resolve conflict between the then Municipal Manager and Chief Financial Officer.    

 

1.4       The then MEC for Co-operative Governance and Traditional Affairs was authorized to appoint an Administrator to undertake the functions in terms of section 51 of the Local Government: Municipal Systems Act (Act 32 of 2000), and 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.

 

2.         Report on the Termination of Intervention in Thabo Mofutsanyana District Municipality

 

2.1        On the 15 November 2011, the Free State Provincial Department of Co-operative Governance and Traditional Affairs, presented a report on the termination of intervention in Thabo Mofutsanyana District Municipality.

 

2.2        The presentation focused on the progress made as a result of the intervention, particularly in respect of transformation and organisational development, service delivery, financial management, good governance and public participation and the litigation and legal costs.      

  

 3.        Municipal Transformation and Organisational Development   

 

3.1        The annual performance report for 2008/09 has been finalised and tabled before the Council sitting of the 14th May 2010.

 

3.2        The Service Delivery and Budget Implementation Plans (SDBIPs) for the 2008/09 and 2009/10 were finalized.

 

3.3        It was expected that the performance management system will be implemented as soon as the other (4) section 56 managers have been appointed.

 

3.4        The IDP and Budget Process Plan for the period 2010/11 to 2012/2013 has been developed and adopted during the sitting of the Special Council Meeting.

 

4.         Service Delivery

 

4.1        Road paving was handed over to the local authority on the 28 May 2010.. The Zamani sewer network was completed at the end of July 2010. The Zamani Oxidation Ponds were completed on 30 August 2010 and the entire Municipal Infrastructure Grant (MIG) fund was spent.

 

5.         Local Economic Development

 

5.1        The post of the Manager has not as yet been filled, and it is critical to get external support whilst in the process of appointing relevant personnel in this component. The Department of Trade and Industry (DTI) through its Tourism Enterprise Support Programme (TEP) and the Free State Tourism Authority, were assisting in the training of the SMME’s in the District.

 

5.2        The Department of Environmental Affairs and Tourism (National and Provincial) are offering support to the District Municipality, in order to achieve its legislative mandate.

 

6.         Financial Management and Viability

 

6.1        The Municipality is now complying with the provision of section 71 of the MFMA, with regard to monthly budget statements.  The Draft Budget (Medium Term Revenue and Expenditure Framework) for 2010/11 has been developed and adopted by the Council.

 

6.2        An action plan to address audit issues raised by the Auditor-General for the 2008/09 financial year has been drawn up, and were currently being implemented.

 

6.3        Through the Operation Clean Audit Project which was implemented by national Department of Co-operative Governance and Traditional Affairs, the Municipality has managed to obtain an unqualified audit report for the financial year 2009/10.

 

6.4        The provincial Department of Co-operative Governance and Traditional Affairs and the Provincial Treasury are managing and supporting a financial recovery plan for the Municipality.

 

6.5        The current procurement or supply chain management (SCM) processes that were previously followed by the Municipality have been addressed.

 

6.6        A pilot standard operating process has been developed and rolled out, recommending the correct actions to be taken from the initiation of the transaction by SCM Department, through to payment thereof by the Finance Section.

 

7.         Good Governance and Public Participation

 

7.1        The Public Participation and the Presidential Liaison Officers have been appointed as from the 1st March 2010. Co-ordination of the local Public Participation Officers to establish a public participation forum was done. To date, the Participation Officer has attended various capacity building workshops.

7.2        The Office of the Speaker has conducted capacity building workshops for Ward Committees and the Community Development Workers inPhumelela Local Municipality. 

 

7.3        Public participation and consultation processes for the IDP and the Budget Plans have been successfully rolled-out in all the local municipalities. The IDP Representative Forum was conducted on the 7th May 2010.

 

8.         Litigation and Legal Costs

 

8.1        The Public Podbielski Mhlambi Incorporated was still continuing with the legal action against the remaining +/- 7 200 cases. Around 40 of these remaining cases related to Transnet, 2 of them are registered operations (Transnet Housing and Transnet PX-courier services), and the rest were not registered.

 

8.2        The summons issued by Podbielski Mhlambi Incorporated was based on the Regulations of the Regional Service Council Act. In a similar matter involving Tshwane Metro and Others in the Gauteng High Court, these Regulations were declared null and void. The Attorneys were obliged to amend the summons to be in line with the Gauteng High Court decisions.

 

8.3        The Defendants (The farmers) objected to the amended summons and took the matter to Court and the Court upheld the objection. The Attorneys then applied for leave to appeal against the Court’s ruling and it was granted. The appeal will be heard in the Supreme Court of Appeal later this year. 

 

8.4        As at 30 June 2011, Podbielski Mhlambi Incorporated has submitted bills to the tune of R16 386 428.76 for professional services rendered. Since the intervention, no legal fees were paid to the Attorneys, except an amount of R4 Million for expenses incurred in the litigation processes. The Department was still awaiting the outcome of the appeal and will proceed from there.

 

 

 

 

9.         Committee Observations 

 

9.1        The Committee has observed that the Free State Department of Co-operative Governance and Traditional Affairs has made progress in providing technical and financial support to the District Municipality.

 

9.2        Furthermore, the Committee has also observed that the decision to terminate the intervention in the District Municipality has received the support of the Municipal Council.       

 

9.3        The Committee hereby reaffirm that corruption, fraud and unethical conduct that was prevalent in the District Municipality, undermined our democracy and the local government strategic objectives.

 

9.4        Noting the commitment of the Provincial Government to provide support to the District Municipality, the Committee urges the South African Local Government Association (SALGA), councillors, municipal managers, management and all municipal officials and other role players to assist towards ensuring clean, transparent, effective and efficient governance, financial management and service delivery at local government level.         

 

10.        Recommendations 

 

10.1      The Select Committee on Co-operative Governance and Traditional Affairs recommends as follows:

 

10.1.1 The NCOP to approve the termination of intervention in the Thabo Mofutsanyana District Municipality.

 

10.1.2   The National Department of Co-operative Governance and Traditional Affairs should institute an investigation led by the HAWKS and the Public Protector, to investigate irregularities on the collection of debts and professional services rendered on behalf of the District Municipality.

 

10.1.3   The Free State Provincial Department of Co-operative Governance and Traditional Affairs should table the KPMG forensic report to the Select Committee within seven (7) days once it has been completed, and the report to be handed-over to the HAWKS for further investigation.

 

            10.1.4   The Select Committee, in collaboration with the relevant Portfolio Committee in the Free State Legislature, should conduct a joint follow-up visit to the District Municipality during the first-term of the 2012/13 financial year, to verify and observe the extent of progress made in the Municipality.

 

Report to be considered.