ATC111122: Report on Consideration of Termination of Intervention in Thembisile Hani Local Municipality

NCOP Economic and Business Development



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 of intervention in Thembisile Hani Local Municipality, as tabled by the Mpumalanga MEC for Co-operative Governance and Traditional Affairs on 30 April 2010 to the to the Office of the Chairperson of the NCOP, reports as follows:


1.2        The main issues identified then by the Provincial Executive Council (PEC) to intervene in the Municipality, followed incidence of industrial actions which lasted for approximately three months, serious financial problems, collapsed public participation, non- compliance with supply chain management processes, collapsed service delivery, non-implementation of projects and the mistrust between the community and the Municipality.


1.3        In compliance with the NCOP referral in terms of Rule 101, the Committee conducted an oversight visit to the Municipality on the 27 May 2010, and recommended the NCOP on 2 June 2010 to approve the intervention. The NCOP did approve the intervention as well as other recommendations.


1.4        On 3 February 2011, the MEC tabled a notice of termination of intervention in the Municipality to the Office of the Chairperson of the NCOP, and the notice was subsequently referred to the Committee in terms of NCOP Rule 101 for consideration and reporting. In compliance with the NCOP referral, the Committee held a briefing session with the MEC on the progress made in respect of the intervention in the Municipality.  






2.         Report on the Termination of Intervention in Thembisile Hani Local Municipality


2.1        The Mpumalanga Provincial Department of Co-operative Governance and Traditional Affairs presented the termination of intervention report to the Committee. The presentation focused on the progress made as a result of the intervention, particularly on transformation and organisational development, service delivery, financial management, governance and public participation as well as the forensic investigations in terms of section 106 of the Municipal System Act, (Act 32 of 2000).       


3.         Transformation and Organisational Development


3.1        A comprehensive Municipal Turn-Around Strategy (MTAS) has been developed to cover all functional areas of the Municipality. The MTAS was included in the review of the municipal Integrated Development Plan (IDP) and the budget was approved by the Council on 14 June 2010.


3.2        A Project Management Unit was established to manage all capital projects funded by the Municipal Infrastructure Grant (MIG) and to liaise and co-ordinate all the projects earmarked by the Municipality with the Nkangala District Municipality.


 3.3       The municipal organisational structure has also been developed to ensure that the capacity of the Municipality addresses the mandate of the organisation.


4.         Service Delivery


4.1        Maintenance contractors have been appointed to deal with road maintenance issues. A response plan has been developed and implemented. The response time to emergencies has since improved.


4.2               In areas where there was no water supply, it was now supplied through water carts wherever it was not possible to supply through pipes. Since there were huge amounts of water loss experienced, control valves have since been installed to shut down the reservoirs when they are full. A number of water leaks have been attended to and all entities from where the Municipality purchases water were paid.

5.         Financial Management  


5.1        A financial turn-around strategy has been developed and was implemented.  All financial systems including the establishment of internal controls have been reviewed with the support from the Development Bank of Southern Africa (DBSA).


5.2        An action plan was compiled that details the road map which was followed for the compilation of the Annual Financial Statements (AFS). The cash flow situation has been improved which has contributed to a positive bank balance. The billing of consumers has resumed since the process was stopped in July 2009.


5.3        The Municipality has developed a revenue enhancement strategy that includes data cleansing, to ensure that the rates bills that are distributed are not returned as undeliverable. The strategy included the following: customer data cleansing; valuation roll; town planning and zoning services; indigent registration and ICT infrastructure update.


5.4        The new organogram that has been proposed to be endorsed by the incoming Council, made provisions for the senior positions to support the critical function of revenue management.


5.5        The business process for the revenue and receivables was developed. The reconciliations are currently done by the Acting Chief Financial Officer (CFO). The action plans to improve the audit outcomes were also developed.


5.6        The Municipality improved the budget consultation process with the 2010/11 budget and 2011/12 IDP budget processes. Meetings were held for each zone. The financial reporting to the National Treasury has improved, however full compliance could not be fully realised before the ICT project and the filling of vacant posts are realised. The action plans to improve the audit opinion included the process of clearing suspense accounts in the general ledger.




6.         Good Governance and Public Participation 


6.1        To enhance public participation in the Municipality, all Ward Committees have been re-established after the 2011 Local Government Elections. The public participation processes were re-engineered and implemented. The Municipal Public Accounts Committee (MPAC) was also re-established, consisting of 10 members and all section 79 and 80 Committees were now in place and functional.


7.         Forensic Investigations  


7.1        Initiatives were taken by the Administrator to deal with the irregularities as identified in the section 106 investigation report. Disciplinary proceedings against the nine implicated employees were instituted and criminal charges were opened with the South African Police Service (SAPS).


7.2        The Municipal Manager was found guilty and subsequently dismissed during May 2010. In order to root out corruption, the Administrator’s Team engaged the SAPS, the Criminal Investigation Unit and the Hawks to discuss and explore the possibility of criminal investigations against the Municipal Manager.


7.3        Four service providers have since been arrested regarding charges of corruption and fraud. The investigations were conducted with all recommendations having been implemented, which led to the following:

7.3.1 Mr WK Mahlangu’s Disciplinary Tribunal found him guilty and he was subsequently dismissed and the decision was endorsed by the Council on the 14 June 2010.

            7.3.2 Mr WK Mahlangu took the Municipality to the High Court and the case was postponed. 

            7.3.3 The Assistant Manager: Finance (S Mahlangu) and the Technical Manager (RS Ruiters) resigned.

            7.3.4 The Local Economic Development Co-ordinator (N Ndala) and the Secretary (E Skosana) received written warnings.

            7.3.5 The Manager: Social Development Services (WM Mawela) resigned.

            7.3.6 The Assistant Manager for Technical Services (TJ Skosana) and the Accountant (KT Mahlangu) received written warnings.

7.3.7 Around 10 criminal cases were lodged with the SAPS against the officials employed by the Municipality.

            7.3.8 Two people were arrested without bail with case no. 322/01/2010 (R282 000 fraud with Loba and Thami Travel).  One person was arrested without bail with case no. 177/10/2009 (R294 000 fraud with Sussus Trading Enterprise).


8.         Committee Observations


8.1        The Committee has observed that the Provincial Department of CoGTA in Mpumalanga   has made significant progress by intervening and appointing an Administrator in the Municipality.     


8.2        The major progress noticed by the Committee related to transformation and organisational development, service delivery, financial management, governance and public participation and the forensic investigations that were conducted.


9.         Recommendations


9.1   The Select Committee recommends that the NCOP approves the termination of intervention in Thembisile Hani Local Municipality.


9.2   The Select Committee in collaboration with the relevant Provincial Portfolio Committee in the Mpumalanga Legislature, should conduct a joint follow-up visit to the Municipality during the first-term of the 2012 financial year to verify and observe the extent of progress in the Municipality.


Report to be considered.


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