Outcome of investigation of wrong doing and governance challenges at MDB; with Deputy Minister

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Cooperative Governance and Traditional Affairs

07 December 2021
Chairperson: Mr F Xasa (ANC)
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Meeting Summary

The Portfolio Committee on Cooperative Governance and Traditional Affairs met with both the Municipal Demarcation Board and the Department of Cooperative Governance and Traditional Affairs to consider the outcomes of the investigation into allegations of wrongdoing at the MDB.

During their briefing, officials from the MDB indicated that on 12 August 2021, the Board decided to institute an investigation into allegations of wrongdoing against its Chief Executive Officer allegedly by a former employee. The service provider appointed to investigate the allegations, ENSAfrica, made no finding against the CEO, as the alleged whistleblower denied making the allegations against the CEO.

Members questioned why the Board had instituted an investigation into the CEO, particularly as the Board chairperson, prior to the appointment of the service provider, had engaged the former employee regarding the letter of complaint, who informed him that she was unaware of this letter and its contents. Considering this, Members classified the more than R550 000 spent on the investigation as fruitless expenditure.

Members were informed that following the conclusion of the process, the relationship between the CEO and the Board had deteriorated. The Committee was concerned by these claims and indicated that the behaviour of the Board was contrary to what Chapter 10 of the Constitution required from an entity.

Members pleaded with the Board chairperson to take charge of the situation and guide the Board to a resolution.

The Committee was pleased to hear that the Minister had made a request to the Office of the Presidency to establish a tribunal to investigate the challenges at the MDB. However, Members were concerned that the Department could not provide a timeframe for the establishment of the tribunal and the subsequent investigation, as well as the cost.

The Deputy Minister pleaded with the Committee to work alongside the Board and the Department in dealing with the MDBs various challenges.

Meeting report

The Portfolio Committee on Cooperative Governance and Traditional Affairs met with both the Municipal Demarcation Board and the Department of Cooperative Governance and Traditional Affairs to consider the outcomes of the investigation into allegations of wrongdoing at the MDB.

During their briefing, officials from the MDB indicated that on 12 August 2021, the Board decided to institute an investigation into allegations of wrongdoing against its Chief Executive Officer allegedly by a former employee. The service provider appointed to investigate the allegations, ENSAfrica, made no finding against the CEO, as the alleged whistleblower denied making the allegations against the CEO.

Members questioned why the Board had instituted an investigation into the CEO, particularly as the Board chairperson, prior to the appointment of the service provider, had engaged the former employee regarding the letter of complaint, who informed him that she was unaware of this letter and its contents. Considering this, Members classified the more than R550 000 spent on the investigation as fruitless expenditure.

Members were informed that following the conclusion of the process, the relationship between the CEO and the Board had deteriorated. The Committee was concerned by these claims and indicated that the behaviour of the Board was contrary to what Chapter 10 of the Constitution required from an entity.

Members pleaded with the Board chairperson to take charge of the situation and guide the Board to a resolution.

The Committee was pleased to hear that the Minister had made a request to the Office of the Presidency to establish a tribunal to investigate the challenges at the MDB. However, Members were concerned that the Department could not provide a timeframe for the establishment of the tribunal and the subsequent investigation, as well as the cost.

The Deputy Minister pleaded with the Committee to work alongside the Board and the Department in dealing with the MDBs various challenges.

Meeting Report
The Chairperson indicated that the Committee met to engage with both the Municipal Demarcation Board (MDB) and the Department of Cooperative Governance and Traditional Affairs on the outcome of the investigation into the alleged wrongdoing on the Board and the challenges it currently faces.

He requested a mover for the adoption of the agenda.

Ms E Spies (DA) moved for the adoption of the agenda.

Ms H Mkhaliphi (EFF) seconded the adoption of the agenda.

The Deputy Minister, Ms Thembi Nkadimeng, said that in a prior sitting, the Committee requested that both the Department and the MDB brief it on the status of the investigation into the entity. 

Briefing on the outcomes of the investigation into allegations of wrongdoing at the MDB
Adv Nkateko Mpangane, Director: Interventions and Entity Oversight, COGTA, said that on 12 August 2021, the Board received a written complaint against the CEO of the MDB by a former employee. Following this, the Board resolved to request the CEO respond to the complaint by 16 August 2021. During a Special Board Meeting on 17 August 2021, the Chairperson of the Board indicated that he had engaged the former employee regarding the letter of complaint, who informed him that she was unaware of this letter and its contents.

Another special Board meeting was held on 23 August 2021, where the CEOs response was considered. Having not been satisfied with his response, the Board resolved to appoint ENSAfrica to conduct an investigation on the matter.

The investigators had planned a three-phase process for the investigation, however, since no finding was made, the investigation concluded in phase one. The total cost of this phase amounted to R552 864.25. One of the recommendations of the investigative report was that an organisational culture survey be conducted by the Board.

She indicated that the whole process had played a significant role in the deterioration of relations between the Board and the CEO.

The Board chairperson, Mr Thabo Manyoni, voiced his support of the proposal of establishing an investigative tribunal into governance-related issues at the MDB. Alongside this process, the Board would look into the critical co-functions of the outer boundaries of municipalities in the country. Once the tribunal had concluded its investigation, the final report will be provided to the Committee.

He indicated that whilst the Board was facing certain challenges, it had performed well. However, to further improve its performance, the Board would require intervention.

The Chairperson opened the floor for discussion.

Discussion
Mr B Hadebe (ANC) proposed that the Committee allow for the tribunal to conclude its work before it further engaged with the Department and the MDB on the various challenges.

He added that the Committee had taken note of the entitys achievement of three consecutive clean audits, which does indicate that the Board is functional; however, there were challenges that could not be ignored.

Ms Mkhaliphi asked why the Committee and not the Department, had to raise the fact that the Board was facing several challenges. She added that the actions of both the MDB and the Department had made it seem as if they were hiding the information.

She also asked for the Department to indicate whether the President had responded to its request to establish an investigative tribunal into the Board. Further, she asked for the Department to provide a timeframe for the establishment of the tribunal.

Referring to slides 5-8, she asked what the purpose of the organisational culture survey was.

Regarding the current CEO, she asked if the Board had renewed his contract and if not, what the reasons were. Furthermore, she questioned why the Board had instituted an investigation into the CEO. No finding had been made against him and, as such, she said this investigation amounted to fruitless expenditure. This was, she said, a clear sign that there is mistrust between the CEO and the Board.

She indicated that the reports of there being three groups within the Board, was a clear sign that there is no leadership on the MDB.

Mr K Ceza (EFF) asked how much money had been set aside for the investigation by the tribunal and what the anticipated duration of the investigation would be.

He agreed with Mr Hadebes proposal.

Additionally, he proposed that the Committee should inquire with both the Municipal Infrastructure Support Agency (MISA) and the South African Local Government Association (SALGA), to ascertain whether the MDBs challenges had affected them.

Mr G Mpumza (ANC) said that there are personality differences between members of the Board, which he felt spoke to the MDBs intra-communication policy. He recommended that the entitys internal and external communication be vetted by the State Information Technology Agency (SITA), so that matters of this nature do not manifest going forward.

On divisions on the Board, he said that there was a lack of coherence in providing policy direction in the institution. As a solution to end the divisions on the Board, he recommended that the organisational cultural survey was followed by a people-management orientation, which would, to a certain extent, address the challenges of differing personalities. He added that the behaviour of the Board was contrary to what Chapter 10 of the Constitution required of an administration.

He also agreed with Mr Hadebes proposal.

Deputy Minister Nkadimeng indicated that the Department could not state when the tribunal would be finalised and what the cost of the investigation would be. She assured Members that the ministry was sensitive to the MDBs current task, which was the review of the outer boundaries of municipalities. She expressed hope that the Office of the Presidency would ensure that the tribunal concluded its investigation as soon as possible, because the Department wanted this matter to be finalised.

She disputed the claim that the Department had hidden the issues faced by the Board from the Committee and highlighted that in the previous meeting, the Board chairperson had responded to the Committees queries on the matter. Additionally, she explained that at the time, the ministry was looking into the issues and, as such, it deemed it correct for the Board to interact with the ministry first, to allow for the Minister to intervene. 

Referring to the tensions between the Board and the CEO, she mentioned that the tribunal will have to look into the allegations made by the CEO, as well as the letter from the complainant (a former employee). Once the investigation was complete, the reasons for the MDBs decision to opt to investigate the CEO would be clarified.

On the CEOs contract, she said that this was a procedural matter that was currently being dealt with. With the divisions within the Board, she did not believe that they would be able to reach an amicable decision on his extension. To her knowledge, the position had already been advertised by the Board.

Mr Manyoni indicated that immediately after the Board started experiencing challenges he wrote a letter to the Minister, requesting a hearing on the matter. He explained that usually when such issues arise, the Board has to first look into how to deal with the issue internally and, if it cannot, then it would appeal to the Minister for assistance.

He mentioned that many of the issues raised by the Committee would be looked into by the tribunal. The sooner the investigation occurs, the better, as the Board would be better able to provide clarification to the Committee.

Ms Mkhaliphi disputed the Departments claim that the MDB had raised the issues in the previous meeting. She maintained that the issues had been hidden by both the Board and the Department. To further corroborate her claim, she said that in the previous meeting the Chairperson of the Committee ruled that the issue should be discussed during a follow-up meeting (the current sitting).

She said that it was concerning that the Department did not know what the timeframe of the establishment of the tribunal was, and the investigation thereof. Both the Committee and the citizens want finality to the matter, particularly as this board holds an important mandate.

She suggested that the Committee organise a follow-up meeting with both the MDB and the department.

Referring to the CEOs contract, she said that the most viable action was for the Board to renew his contract until the matter was finalised. If it did not, she asked what other plan it had to resolve the issue.

She pleaded that the Board chairperson take charge of the situation and guide it to a resolution. She also asked the Department why the current Board should remain in place.

Mr Ceza said that every public representative must be accountable to the people they represent. He also voiced his disappointment regarding the Departments inability to provide an answer on the timeframe of the investigation. He added that for it to not know this detail spoke of the incapacity of the state to implement the required measures.

Mr Hadebe indicated that the issues raised by Members were relevant and deserved urgent intervention because if they were not addressed, they would have an impact on the lives of citizens. Nonetheless, he acknowledged that the Committee must admit that it did not know the true extent of the challenges faced by the MDB. He appealed to the Board, the ministry, the Department and the tribunal to expedite the investigation process, so that they can get to the bottom of the challenges facing the Board. Having said that, he clarified that fast-tracking the process did not mean that the process should be rushed nor should it produce poor results. 

The Chairperson requested that, in due course, the Committee be provided by either the Department or the MDB, a timeframe for the establishment of the tribunal and the conclusion of its investigation. In addition, that the Committee be provided a response on whether the Board intended to extend the CEO's contract or not.

Deputy Minister, Mr Obed Bapela, said that indeed, the role of the Committee was to conduct oversight, thus ensuring accountability. While Chapter 9 and 10 Institutions do account and report to Parliament, it is important to note that they are established through the Ministerial Executive Authority, under whose authority they fall.

Adding to this point, he said that when the matter between the CEO and Board was addressed in the letter sent by the MDB chairperson, the Minister promptly attended to the issue and evaluated the Board, which showed that there were challenges in the organisation.

He appreciated the Committees efforts to probe the matter further, as it had played a role in getting all the stakeholders to this current point. He pleaded with the Committee to work alongside the Board and the Department in dealing with the MDBs various challenges. 

Regarding the extension of the CEOs contract, he mentioned that the ministry had taken note of the urgency of the matter, and it would look into the prescripts of the law on whether the Minister may engage in the matter, but he reminded Members that the decision ultimately lies with the Board.

On the timeframe of the tribunal, he explained that during the process of establishing a tribunal, the President engages with the ministry on the terms of reference. Once they are in agreement, the President will then sign-off on the establishment of the tribunal and appoint the tribunal members. The terms of reference will include the scope of the investigation and the timeframe. He added that it will be supported by the evaluation reports, which have been submitted by the ministry.

He assured the Committee that the Department would follow up with the Office of the Presidency and the ministry, to ensure that the matter was fast-tracked.

He informed Members that the Department wants to ensure that the Board was stable.

Mr Manyoni said the Board appreciated the support and guidance provided by the Committee, the ministry and the department. He assured Members that he would raise the Committees proposals and concerns at the Board meeting scheduled for Thursday next, so that it could consider how best to move forward on the issues. 

The Chairperson thanked the officials and the Members for the engagement, which he believed had shown a way forward on the challenges faced by the MDB. He added that the interest of the Committee was to ensure that the people are served well.

The meeting was adjourned.
 

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