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

REPORT OF THE SELECT COMMITTEE ON CO-OPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON THE INTERVENTION IN MAQUASSI HILLS LOCAL MUNICIPALITY – DATED 10 SEPTEMBER 2013

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 02 ^nd May 2013, to consider and report on the intervention notice invoked in terms of section 139 (1 )( b) of the Constitution at Maquassi Hills Local Municipality by the North West Provincial Executive Council (PEC), reports as follows:

1.2 The Committee took a decision during its meeting to conduct an oversight visit to the Municipality on the 21 ^st August 2013. This visit was precipitated by the referral of the notice of intervention by the Office of the Chairperson of the NCOP, with regard to the affairs of Maquassi Hills Local Municipality.

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 TMH Mofokeng , Free State (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 19 ^th March 2013 the North West Provincial Executive Council (PEC) resolved to intervene in the affairs of Maquassi Hills Local Municipality, in terms of section 139(1 )( b) of the Constitution. This intervention was intended to last for a minimum period of six months, with effect from the 1 ^st April 2013. 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 28 September 2013.

5. Problems Identified by the PEC

5.1 The Provincial Department of Local Government and Traditional Affairs has identified areas in the Municipality where there was a need to intervene through other legislative measures, as there were evident signs of poor administration and governance in the Municipality which would ultimately affect service delivery.

5.2 The main reasons cited by the Department were that the Council was highly dysfunctional, and meetings did not take place regularly since there were conflicts and infighting. There was also poor administrative leadership and the leadership it was highly politicized, there was poor work ethic, non-compliance to legislation and a high disregard to regulations and poor financial management. Therefore, on the basis of the poor state of the Municipalty , the PEC resolved to invoke the provisions of section 139(1 )( b) of the Constitution.

6. Appointment and Functions of the Administrator

6.1 Mr I Motala was appointed on the 12 ^th April 2013 as the Administrator for Maquassi Hills Local Municipality, and he was subsequently introduced to the Mayor on the 13 ^th April 2013 and on the same date he assumed his duties. He was supported by three professionals in finance, corporate and technical services.

6.2 The Administrator was appointed to execute obligations and functions of the Municipality, including the implementation of recommendations of past investigations and reviewing of the recently awarded contracts.

7. Oversight Visit to Maquassi Hills Local Municipality

7.1 On the 21 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 MEC for Local Government and Traditional Affairs

8.1 The MEC stated that in 2011, her Department conducted as assessment of the challenges in the Municipality, following concerns about the state of governance and administration in the Municipality. The then MEC wrote to the Municipality to direct them to develop and submit an action plan to remedy the situation within seven working days. This was never done by the Municipality.

8.2 There was then a request from the Speaker to second an Acting Municipal Manager, since the Council did not agreed on the person to be appointed as the Municipal Manager. The former MEC then acceded to the request by recommending a person to be appointed by the Council, to act in the position. Unfortunately, due to the infighting in the Council, the appointment was never done.

8.3 The appointment of the then Acting Municipal Manager expired in March 2012, and in terms of the Local Government: Municipal Systems Act (Act No. 32 of 2000), the Council must motivate to the MEC for an extension of the acting appointment, while the recruitment of a substantive Municipal Manager was in progress. However, the Council failed to comply with these legal provisions and continue to have the then Acting Municipal Manager, acting in the position without the MEC’s concurrence.

8.4 The then MEC then resolved to establish a team to conduct an investigation in the governance and administration matters of the Council and the Municipality. The investigation was concluded in July 2012, and a report with recommendations was presented to the MEC and subsequently presented to the Council for adoption. The report confirmed that the Municipal Council was dysfunctional, and therefore negatively impacted on administration and service delivery.

9. Structure of the Report

9.1 This report is structured based on the on the basis of the Key Strategic Performance Areas of the Local Government Strategic Agenda which are: Municipal Transformation and Organisational 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 all section 56 positions were vacant, as a result, acting managers were appointed for a period of three months. Equally, the recruitment process of filling the positions has already commenced.

9.3 Previously there was no review done on the policies adopted by the Council, since 2006. Nevertheless, draft policies have since been prepared and work shopped with management. Those policies dealing with human resources matters will be taken to the Local Labour Forum for further consultation, and then tabled for adoption by the Council.

9.4 There was excessive expenditure on legal costs, in excess of R4 million in 2012/13 financial year. The Administrator has since issued letters to all Council attorneys to consult him, prior to proceeding in any pending matters or new matters. This was to ensure that pending matters are reviewed first to determine prospects for settlement.

9.5 Of paramount importance, there was non-implementation of recommendations of past investigations in the Municipality. A separate implementation plan has now been developed, and regular engagements with the Hawks and SIU are taking place to avoid duplication.

9.6 SAMWU: The South African Municipal Workers Union submitted that the appointment of the Municipal Manager was never legal, as he was appointed by a Council that did not formed a quorum. Further, the Municipal Manager was currently suspended from his duties by the Administrator, and has not accepted his suspension.

9.7 It was reported that staff were threatened not to communicate with Administrator, and this was weakening the performance of the Intervention Team. It was alleged that the Municipal Manager informed the staff not to communicate with the Administrator.

(B). Basic Service Delivery

9.8 Administrator: There were huge water losses in the Municipality estimated at 40%, but a Water Conservation Water Demand Management Business Plan (WCWDMBP) was being prepared to access funding from the Department of Water Affairs.

9.9 The Municipality refuse removal was not operating at an optimum level, at times, refuse was not removed for over two weeks in certain areas. Conversely an Acting Director for Community Services has since been appointed, and service providers were paid to release waste removal trucks which were sent for repairs.

9.10 Rate Payers Association: Service delivery in Maquassi Hills was irregular and poor, when taking into account what the rate payers were charged for services. As a result of frivolous expenditures and lawsuits for personal gain, there was hardly ever money available at month-end for salaries, and grant allocations were subsequently used to cover this expense.

(C). Municipal Financial Viability and Management

9.11 Administrator: Before the intervention, there was no by-law authorizing Council to implement credit control measures, resulting in an interdict obtained by the Rate Payers Association. The Administrator has since drafted the by-law and tabled it to Council, and it will promulgate after the public participation process.

9.12 The Municipality had a cash flow management problem, which resulted in critical creditors not being paid. Since then, the equitable share allocation of the Municipality has been prioritized to ensure that there was no breakdown in the rendering of essential basic services. Equally, the audit action plan of the Municipality was never implemented. However, a revised plan to prioritize matters which attracted a disclaimer, has since been developed.

9.13 Rate Payers Association: During the previous financial year, legal expenses amounted to more than R7 million. Only R1 ,2 million has been budgeted for these expenses. The rest has been accumulated by political infighting between municipal employees. It was confirmed by three judges and proven by the fact that the alleged Municipal Manager and Mayor have been ordered by three different judges to pay legal fees out their own pocket.

9.14 The forensic audit report of the Municipality indicated that investigations should be made into allegations of illegal payments by various municipal employees for services that were not rendered. This included the appointment of contractors through incorrect procedures, which were not suitable qualified for the job. These investigations were never done.

9.15 IMATU: The Independent Municipal and Allied Trade Union submitted that, due to serious financial restraints of the Municipality, service delivery has been severely hampered. The current undesirable situation in the Municipality was making it more difficult.

(D). Good Governance and Public Participation

9.16 Rate Payers Association: It was submitted that municipal meetings are never advertised, in order for the public to attend. When requested, it was not advertised in the prescribed manner and the dates and times are always changed on short notice. Equally, written communication was infrequently answered.

10. Committee Observations and Opinion

10.1 The Committee has observed that there is political factionalism and polarization of interests in the Municipality. Political/administrative interface has resulted in factionalism on a scale that, in some areas, it was akin to a battle over access to state resources rather than any ideological or policy differences. The lack of values, principles or ethics in these cases indicates that there are officials and councillors for whom public service was not a concern, but accruing wealth at the expense of poor communities which was their priority. As a result, the Committee registered its disappointment on the conduct of councillors in Maquassi Hill, especially that of the Mayor.

10.2 There was a deep rooted historical problem between the Municipality and the Provincial Department of Local Government and Traditional Affairs, especially with the previous two former MECs. As a result, there was evidently no healthy intergovernmental relations model operating between the two spheres. Without co- operation among these spheres of government and creating the right balance, the tensions that arise in these relationships will continue to create systemic blockages and weaken government’s delivery capacity further.

10.3. The Committee further observed a problem of party political internal strife which impacts badly on internal municipal business processes

11. Recommendations

11.1 Having conducted the oversight visit to Maquassi Hills 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 Maquassi Hills Local Municipality for a period of six months, after the adoption of this report.

11.1.2 The Administrator should recover the amount of R1 ,4 million, which was irregularly paid to section 57 managers for performance bonuses. 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 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 Maquassi Hills Local Municipality, as a matter of urgency.

11.1.4 The South African Local Government Association in co-operation with Local Government Sector Education and Training Authority, should facilitate the training and capacity building for Municipal Councillors; to further deepen their understanding of the oversight role; legal framework and policies that govern the activities of the Municipality.

11.1.5 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.

11.1.6 The North West 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.