ATC130910: Report of the Select Committee on Co-Operative Governance and Traditional Affairs on the Intervention in Mnquma Local Municipality – dated 10 September 2013

NCOP Economic and Business Development


1. Background and Overview

1.1 The Select Committee on Co-operative Governance and Traditional Affairs, having considered the request made by the National Council of Provinces (NCOP) on the 11 July 2013, to consider and report on the intervention notice invoked in terms of section 139(1 )( b) of the Constitution at Mnquma Local Municipality by the Eastern Cape Provincial Executive Council (PEC), reports as follows:

1.2 The Office of the Chairperson of the NCOP referred the notice of intervention in the affairs of Mnquma Local Municipality to the Select Committee of Co-operative Governance and Traditional Affairs, in terms of the NCOP Rule 101, for consideration and reporting. The Committee took a decision during its meeting to conduct an oversight visit to the above-mentioned Municipality on the 27 August 2013.

2. Purpose and Objectives of the Oversight Visit

2.1 The main objectives of the oversight visit was to determine whether procedural requirements had been met and to verify whether the PEC had used its discretion appropriately, before the Committee could recommend approval/disapproval of the intervention to the NCOP. Through the deliberations and interaction with internal and external stakeholders, the Committee wanted to determine how the PEC was intending to restore the fulfilment of the relevant obligations and ensure fulfilment in the long term. The aim was to ensure intergovernmental checks and balances aimed at guarding the integrity and efficiency of the intervention process.

3. Composition of the Delegation

3.1 The delegation of the Committee was composed of the following Members of Parliament and Officials: Hon MH Mokgobi , Limpopo (ANC); Hon AG Matila , Gauteng (ANC); Hon LPM Nzimande, KwaZulu-Natal (ANC); Hon B Nesi , Eastern Cape (ANC); Hon MV Manzini , Mpumalanga (DA); Hon J Bekker, Western Cape (DA); Hon MW Makhubela, Limpopo (COPE); Hon JJ Gunda, Northern Cape (ID); Hon. MMM.Zulu , KwaZulu-Natal (IFP); Mr NA Mfuku , Content Adviser (Committee Section); Mr MT Manele , Committee Secretary (Committee Section); Mr BM Mahlangeni , Committee Researcher (Research Unit); Mr MC Mbebe , Procedural Officer (NCOP) and Mr N Mangweni , Administration Assistant (Committee Section).

4. Introduction

4.1 On the 03 rd April 2013, the Eastern Cape MEC for Co-operative Governance and Traditional Affairs tabled a notice of intervention in Mnquma Local Municipality to the Office of the Chairperson of the NCOP. In terms of section 139 (2)(b)(ii) of the Constitution, the intervention must end if the NCOP does not positively approve the intervention within 180 days since the intervention began, in this case before the end of 15 September 2013.

5. Problems Identified by the PEC

5.1 On the 19 th March 2013, the Executive Council of the Eastern Cape Province resolved to intervene in the Municipality as contemplated in terms of section 139(1 )( b) of the Constitution. This follows a fact-finding exercise that was done by the Provincial Department of Local Government and Traditional Affairs. A report was then presented to the Municipal Council on the 14 th August 2012. The report revealed the following amongst other issues:

5.1.1 The Executive Mayor, the Speaker and the Chief Whip (Troika) were divided, to the extent that they always disagreed on items to be placed on the Council agenda.

5.1.2 There are two factions in the Council, with one being led by the Executive Mayor and the other by the Speaker and the Chief Whip – each group is acting in opposition of the other.

5.1.3 The two factions are operating parallel and the Municipality has two heads of administration, Mr Pakade who is considered as the Municipal Manager by the group led by the Executive Mayor and Mr Waxa who is considered as the Acting Municipal Manager by the group which is led by the Speaker.

5.1.4 The Executive Mayor has, from time to time, contravened the provisions of section 36(5) of the Local Government: Municipal Structures Act (Act No. 117 of 1998) which states that “a councillor may not hold office as speaker or executive mayor at the same time.” In that, the Executive Mayor has usurped powers of the Speaker by convening Council meetings.

5.1.5 The Speaker has, from time to time, contravened the provisions of section 36(5) which states that “a councillor may not hold office as speaker or executive mayor at the same time.” She has however, usurped the powers of the Executive Mayor by attempting to change the signatories to the Municipality’s bank account. Furthermore, on the 18 th September 2012 Council meeting, it stripped the Executive Mayor of his powers and imposed these on her in violation of the law.

6. Appointment and Functions of the Administrator

6.1 Mrs V Zitumane has since been appointed as the Administrator for Mnquma Local Municipality, to perform the disregarded obligations as stipulated within the following terms of reference:

· assist the Municipality to ensure that all Council meetings are convened in accordance to the applicable provisions of law and all resolutions are properly taken, processed and implemented.

· ensure that there is effective general administration within Mnquma Local Municipality.

· facilitate and monitor the finalisation of disciplinary hearings of the suspended officials to their logical conclusion.

· facilitate withdrawal of all pending cases instituted by the Municipality where councillors are parties to proceedings, as resolved at a Council meeting of 06 March 2013.

· facilitate the appointment of competent managers to act in positions left by senior managers that have been granted leave of absence, as stipulated in section 56 of the Local Government: Municipal Systems Act (Act 32 of 2000), and to assist the Administrator in the execution of their respective functions.

7. Oversight Visit to Mnquma Local Municipality

7.1 On the 27 th August 2013, the delegation of the Committee had interactive and robust engagements with the internal and external stakeholders of the Municipality. The thrust of the discussions was to encourage constructive debate and support the levels of meaningful public participation at every level that is at the centre of co-operative governance and intergovernmental relations.

8. Presentation by the Ministerial Representative for Co-operative Governance and Traditional Affairs

8.1 The Deputy Director-General for Developmental Local Government who was representing the MEC for Local Government and Traditional Affairs, indicated that there was instability in the Municipality on matters of governance, due to the non- sitting of the Council meetings. There was division among councillors and that led to eight High Court applications. The Troika was divided to the extent that they always disagreed on the items to be placed on the Council agenda.

8.2 The Council resolved to freeze the primary bank account of the Municipality, and this resulted in the Municipality failing to meet its financial and contractual obligations. However, the Department did intervene and resolved the matter. The Council also resolved on the 06 March 2013, to request the MEC to intervene in the affairs of the Municipality in terms of section 139(1 )( b) of the Constitution.

8.3 On the 19 th March 2013, the Department introduced the appointment of Mrs V Zitumane as Administrator of Mnquma Local Municipality. She assumed duties on the same date for a period ending 18 th September 2013. Since her appointment there has been a high level of stability within the Municipality. The Troika meets to discuss Council agenda, and it proceeds normally with high level of valuable debates. Lastly, the Municipality has managed to turn the tide and there is more focus in achieving the set objectives of delivering services to the community of Mnquma .

9. Structure of the Report

9.1 This report is structured based on the basis of the Key Strategic Performance Areas of the Local Government Strategic Agenda, which are: Municipal Transformation and Organizational Development; Basic Service Delivery; Municipal Financial Viability and Management, as well as Good Governance and Public Participation.

(A). Municipal Transformation and Organisational Development

9.2 Administrator: It was reported that administratively and politically there is significant stability since the intervention, although there are still some obvious traces of resistance to stability. What is of significant importance was the number of staff complaints that are emanating from labour relations and labour disputes which are dating back to many years without being resolved. Equally, the underlying currents of instability in the Municipality also relate to gross non-compliance with municipal legislation, policies and code of conduct.

9.3 All positions that have been vacated by the section 56 managers who were sent on a paid leave, and subsequently dismissed by Council, have been filled by acting incumbents and such appointment may be reviewed based on performance. There are various acting appointments which will be dealt with once the organogram has been approved by Council. These positions have been advertised, after discussions with the Department of Local Government and Traditional Affairs and interviews have commenced during the third week of August 2013.

9.4 It was reported that Council meetings were sitting in terms of the Rules, and the agenda is set by the Troika. Five special meetings have taken place thus far and one ordinary meeting. Council resolutions are subjected to quality assurance before they are signed by the Administrator and the Speaker of Council, and ultimately confirmed by the Council.

9.5 Municipal Council: During the Extra Ordinary Council Meeting held on the 06 March 2013, the Council resolved to accept the intervention in terms of section 139(1 )( b) of the Constitution. On the same meeting, the Council resolved to grant the Municipal Manager and three section 56 Managers leave of absence for a period of three months, with immediate effect. Thus leaving the institution without its top management.

9.6 SAMWU: The South African Municipal Workers Union supported the placement of the Municipality under administration. They further acknowledged the progress made thus far by the Administrator. Hence, they recommended the intervention to continue until the section 57 manager’ positions have been filled. On skills transfer, an appeal was made that the Administrator should ensure that there was skills transfer and mentoring of staff, to ensure that the intervention gains are not compromised.

(B). Basic Service Delivery

9.7 Administrator: In terms of infrastructure development and strategy, road regravelling has started in many wards, and continues on a weekly basis in different wards. There are intensive efforts on cleansing and refuse collection, and the Municipality has requested additional support of refuse trucks from Amatole District Municipality to intensify the cleansing effort. The Municipality is also repairing street lights in town and in the townships.

9.8 There has been a recent engagement with ESKOM, to ensure the intensification of electricity in rural areas. A meeting was arranged with the Deputy Minister of Water Affairs on the 30 August 2013, to discuss service delivery priorities like boreholes in areas that are in dire need of water and sanitation.

9.9 National African Federated Chamber of Commerce ( NAFCOC): NAFCOC submitted that the Department of Local Government and Traditional Affairs was dealing with the symptoms, and not the causes of the challenges in the Municipality. Business has been requesting monthly performance reports from the Municipality, and to date, it has received none. It was observed that the payments of rates were very low, and business does not see the point in doing business in Mnquma since there is no service delivery in the area. Further, NAFCOC requested the extension of the intervention.

(C). Municipal Financial Viability and Management

9.10 Administrator: The Municipality has a sound financial base, however it is mainly dependent on government grants. The CFO has been instructed to issue an expression of interest for the development and implementation of a Revenue Enhancement Strategy. In addition, statutory reporting is done accordingly and roll-overs are committed to projects and are currently being utilized.

(D). Good Governance and Public Participation

9.11 Administrator : The relationship between and Council and the administration has improved. The Council meeting are now stable and this is reflected in unanimous voting on agenda items. Equally, public participation has been revived and being driven from the Speaker’s Office, and this includes engagement with various stakeholders, e.g. Ward Committees.

9.12 The Audit Committee meetings are sitting and were very effective. The Committee is briefed by the Administrator on progress, including sensitive matters like the forensic audit.

(E) Local Economic Development (LED)

9.13 It was reported that all LED projects were currently under implementation and supported by the Municipality. The LED strategy would be updated once the spatial development framework is updated and completed. The Municipality has appointed four cooperatives for cleaning, and two of them have already started and the location was very clean due to this initiative. The model has been piloted in Butterworth and would be extended to Ngqamakwe and Centane .

10. Committee Observations and Opinion

10.1 Experts consider learning to have happened when skills and knowledge are gained can be leveraged for further advancement, and in order to build more complex skills and knowledge. The Committee is of the opinion that, since the Municipality was without its top management, the Administrator should focus on developing and transferring skills to the staff in order to rehearse their capacity to transfer their learning and skills across multiple domains, contexts and areas of application, and in response to service delivery challenges. This ability to transfer skills allows for flexibility in meeting service delivery requirements and performing tasks in the Municipality.

10.2 There’s a historical understanding of what has happened and what is happening in the Municipality. There’s a lack of leadership in top management, and there are acting Directors. In looking forward, a concern then arises about the picture and stability of the institution beyond the intervention period.

10.3 Where Municipal staff members and councillors have been implicated in cases of fraud and corruption, the Hawks should be brought in for the successful prosecution of those cases. This matter should be speeded up.

10.4 It was observed that some Councillors were irresponsible and not disciplined in the way they conducted themselves during the meeting with the delegation from Parliament. The Committee is of the opinion that n ational legislation, such as the Local Government: Municipal Structures Act, sets out how municipal councillors must behave. The Code of Conduct for municipal councillors sets out certain ethical and other standards to ensure the integrity of councillors. The conduct of some councillors raised questions on their seriousness in their commitment in providing leadership to the Municipality.

10.5. The Committee has noted with concern the inherent and illicit tendering and adjudication discrepancies in a contract concluded to handle and tackle road and streets infrastructure. Whereas the contractor was appointed at a cost price of R18m, it transpired however that the this company was paid a total of approximately R68m. This amounts irregular and fruitless expenditure that needs to be investigated.

11. Recommendations

11.1 Having conducted the oversight visit to Mnquma Local Municipality and interacted with all relevant stakeholders, the Select Committee on Co-operative Governance and Traditional Affairs recommends as follows :

11.1.1 The NCOP approves the intervention in terms of section 139(1 )( b) of the Constitution in Mnquma Local Municipality for a period of six months, after the adoption of this report.

11.1.2 The Minister for Co-operative Governance and Traditional Affairs should approach the Hawks to pursue criminal investigation in all cases of financial irregularities and fraud in Mnquma Local Municipality, as a matter of urgency. A progress report in this regard should be forwarded to the NCOP within three months after the adoption of this report.

11.1.3 The Administrator should fast-track the process of appointing skilled personnel, in order to facilitate the transfer of skills and to ensure continuity and stability in the Municipality.

11.1.4 The Eastern Cape MEC for Local Government and Traditional Affairs should table quarterly progress reports to the NCOP and the Provincial Legislature on the status of the intervention in the Municipality, including the challenges encountered.

Report to be considered.


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