Follow-up meeting with: Fetakgomo-Tubatse Local Municipality (Mphaphuli Constructing); Ephraim Mogale Local Municipality (Resignation of the Former MM)

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Cooperative Governance and Traditional Affairs

20 April 2021
Chairperson: Ms F Muthambi (ANC)
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Meeting Summary

Video: Portfolio Committee on Cooperative Governance and Traditional Affairs

The Portfolio Committee on Cooperative Governance and Traditional Affairs (CoGTA) held a follow-up meeting with the Fetakgomo-Tubatse Local Municipality and the Ephraim Mogale Local Municipality to deal with two disputes involving a settlement agreement with a municipal manager, and the non-payment of a contractor for an electrification project. 

In both cases, the complainants asserted that the municipalities had provided false information at the previous meeting, and in terms of the relevant legislation, it was a crime to provide untrue information if it was done with the intent to deceive the Committee. As the burden of proof was on the Committee to prove beyond reasonable doubt that such intent was present, the Committee had called on those involved again to interrogate them before considering criminal charges.

In the first matter, the Committee heard from the former Municipal Manager of Ephraim Mogale Local Municipality that the Mayor had not respond truthfully to the Committee’s questions about the settlement agreement between her and the municipality. She had been suspended and disciplined by the municipality for the investment of R80 million in the VBS bank, but claimed she had not been responsible for this, as it had been the former mayor who had persisted in telling the chief financial officer to invest in the VBS bank.

The Committee resolved that the current mayor had to provide a report on the matter to the Committee by 30 April, and also advise on what action would be taken against the current municipal manager, who had disappeared from the virtual platform during the meeting.

In the second matter, Mphaphuli Consulting sought an opportunity to reply on matters raised by the Fetakgomo-Tubatse Local Municipality, alleging that the submission by the municipality was incorrect and non-factual, and risked harming the company’s reputation, and those associated with it.
The company had written to the Public Protector, the Presidency, the Minister of Cooperative Governance and Traditional Affairs (CoGTA)  and the National Treasury for assistance in resolving the issue of non-payment by the municipality to the company for work rendered and invoiced, but had not received any assistance, and had therefore approached the Committee directly. Only now -- three years later -- the complaint was receiving attention.

The Chairperson said the main interest of this Portfolio Committee was to see a sound and harmonious working relationship between municipalities and the business community. Without this, it was impossible to facilitate an environment that was conducive to local economic development, as envisaged in the Constitution. When municipalities and contractors squabbled and went to court over payments, it was the communities that who suffered from the delays in getting services.

In this instance, over 14 000 households in nine villages were without electrification. The municipality had to share its plan to provide electricity to these households, as this matter had started during the term of the previous council and was still ongoing. The Chairperson said this meant the municipality was not responsive to the needs of its people.

The Committee resolved to refer the matter to the provincial Department of Cooperative Governance, Human Settlements and Traditional Affairs, and the provincial Treasury, to review and report to the Portfolio Committee in a month’s time. The national CoGTA must support the two provincial departments.

 

Meeting report

The Chairperson said the meeting was a follow-up to the meeting which had taken place on 17 March.  The Committee had subsequently received a request on 20 March from Mphaphuli Consulting for an opportunity to make its case. In its request, it stated that Fetakgomo-Tubatse Local Municipality’s response to the Committee had been incorrect and non-factual. It would have the implication of risking the company’s reputation and those of its associates. 

The Committee, after deliberation, believed it would only be fair that Mphaphuli Consulting be given a chance to speak before the Committee concluded its report. The purpose of what it sought to do was to try to mediate the relationship between stakeholders and municipalities, because the ultimate goal was to provide service delivery to communities. In the absence of a cordial working relationship between local government and relevant stakeholders, such an objective would not be accomplished. 

The Chairperson highlighted that service delivery was the key that guided this Committee, and that it was provided for by s152 of the Constitution. In addition, Mphaphuli Consulting’s presentation had also touched upon the VBS looting issue, which had also been mentioned at the meeting on 17 March. 

The second agenda on the meeting emanated from the correspondence from a former municipal manager at Ephraim Mogale Local Municipality. Subsequent to the meeting of 17 March, the committee had received correspondence from the former Municipal Manager of Ephraim Mogale Local Municipality, Ms Monica Mathebela, who wished to bring to the attention of the Committee that the Mayor, Councillor Molaudi Mothogwe, had not responded truthfully to its questions around the settlement agreement between her and the municipality. The Committee thought it was rational to provide the former municipal manager the opportunity to state her case, and for the Mayor to be given an opportunity to respond before the Committee, which would then make a determination on whether Parliament had been misled. 

The Chairperson highlighted that if necessary, the committee would explore its options in terms of legal recourse, as provided for in the Powers, Privileges and Immunities of Parliament and Provincial Legislatures Act of 2004. She emphasised that the Committee would not allow anyone to disrespect Parliament with impunity. Given the fact that Committee Members had stayed up until 2am at the meeting on 17 March, the least Members would expect from officials was responses that reflected the truth. 

The Chairperson said the Committee would ask Mphaphuli Consulting to make its presentation, and would then ask Fetakgomo-Tubatse Local Municipality to respond, after which Members could raise questions and discuss the matter. The same procedural orders applied to Ephraim Mogale Local Municipality. She reiterated the importance to be truthful when answering to questions in Parliament.

The Chairperson welcomed the Minister’s presence, and noted senior managers’ attendance on the virtual platform. She repeated the virtual platform rules, and asked participants not to be in their bedrooms while attending this meeting, as it was being broadcast on YouTube. 

As Mr Lufuno Mphaphuli had some connectivity issue, the Chairperson decided to move the second agenda up, and asked Ms Mathebela to brief the Committee on her case. 

Ephraim Mogale Local Municipality: Resignation of former Municipal Manager

Ms Monica Mathebela, former Municipal Manager (MM): Ephraim Mogale Local Municipality, said she had watched the live meeting of 17 March, and was surprised to hear that the mayor, Mr Molaudi Mothogwane, had denied any settlement and golden handshake agreement had been reached between her and the municipal management. She was particularly disturbed by the justification that had been offered by the mayor to explain her resignation. The justification was that she thought that she had not had a chance to win, which in her view was untrue. She believed that leaders needed to uphold truth and integrity, more so when responding to questions on national TV and in Parliament. 

The truth was that she did not resign in the beginning, when the VBS looting was exposed, and was prepared to take the consequences. She therefore found it shocking that a falsehood had been maliciously spread to tarnish her reputation. The truth was that she had signed a settlement agreement after a marathon session of engagements. One of the conditions in the settlement dictated that she must immediately resign. She had subsequently signed the settlement agreement on 6 October 2020, and the municipality had signed on 12 October. On 19 October, she had tendered her resignation. The matter being referred to was currently at court. She added that that settlement was the only relief that she had. 

The Chairperson asked Mayor Molaudi Mothogwane’s to respond to the former Municipal Manager’s allegation. 

Mayor's response

Mr Mothogwane responded that the municipality and Ms Mathebela had indeed reached a settlement agreement. However, the municipality had misunderstood the question which was asked by Committee Members. During the meeting on 17 March, the municipality’s delegation thought the Member’s question meant whether any monetary value had been given to Ms Mathebela as a golden handshake, so the municipality had denied it. However, he confirmed that the process of a settlement agreement had taken place. The municipality as an institution had been engaging through its legal team on Ms Mathebula’s matter. He confirmed that the process of the settlement agreement was still on. Her resignation had been noted and approved by the municipal council. 

The Chairperson asked Ms Mathebela to respond to Mayor’s response. 

Ms Mathebela noted the mayor’s response, and commented that the mayor was very truthful and loyal. The untruthfulness of the municipality which she had described was also manifested in its handling of the settlement agreement matter. However, this matter was being contested in court, and she did not have anything further to say. 

The Chairperson opened the floor to Members to discuss the matter. 

Discussion

Ms P Xaba-Ntshaba (ANC) had carefully listened to what the former MM had had to say. She was rather disturbed by the attitude which the former Municipal Manager had displayed, as she had said that she would contest the matter in court. She highlighted the fact that it was during Ms Mathebela’s time that R80 million had been invested at VBS bank and then disappeared. She thus found it shocking that Ms Mathebela had shown the Committee such a nonchalant attitude, which could only lead to one explanation -- that the former MM had done nothing wrong. She therefore wanted the former MM to provide more details on the R80 million that had disappeared. Who had invested the money into the VBS bank? What had happened? 

Mr G Mpumza (ANC) emphasised the importance of councillors sticking to the code of conduct, as well being wary of putting a municipality into disrepute, which the mayor should have also been aware of. He therefore want to know at what stage the mayor had realised that he had misunderstood the content of the question. Had he realised it at the meeting on 17 March, or did he realise it only now? He warned officials that there would be consequences for providing false information to Parliament. He needed more clarity from Mayor Mothogwane, and asked him to answer why he had not sought clarity at that time.

The Chairperson asked Ms Mathebela and the mayor to respond to those questions. 

Municipal Manager's response

Ms Mathebela explained in a chronological order a series of events that had taken place prior to her resignation. An investment of R80 million had been made at VBS bank in 2017. Prior to that investment taking place, there had been a report to which she had not been made privy, which stated that the municipality’s Chief Financial Officer (CFO) would outsource three quotations and then decide in which bank to invest the money in terms of the interest rates offered by the three banks. Amongst the three quotations, VBS bank seemed to have offered the best interest rate, at 9.15%. 

At that point, she was not aware that the VBS bank was a bank that the government was discouraging it to invest its money in, due to some grey areas in the municipality’s investment policy. After having been informed by the CFO of the decision to make the R80 million investment at VBS bank, she subsequently wrote a letter to the municipality’s primary bank, First National Bank, instructing it to release the R80 million and transfer it to VBS, mindful of FNB’s own internal control measures. What she did not anticipate was that that letter had not been sent to FNB, but had been withdrawn, and that R80 million had been released by the pressing a laptop button. There had been indications that the former mayor, Ms Bella Kupa, had persistently asked the CFO to invest in the VBS bank. Afterwards, she was suspended for three months without pay, and the disciplinary committee had ruled that she must also attend financial management courses to sharpen her skills.

The Chairperson interjected, and asked who had chaired the disciplinary committee. 

Ms Mathebela responded that Adv Hlongwane had chaired the committee. 

The Chairperson asked Ms Mathebela if the municipality had approach her, or if it had been the other way around. 

Ms Mathebela responded that she and her legal representative had always been open to the option of settlement. However, this option had not been taken to consideration during the disciplinary board’s ruling. Then, at some point, the municipality had approached her for a settlement deal, and now the matter was before the court. 

The Chairperson asked why the matter was before the court if there had been an undertaking reached between both parties that they wanted to settle.

Ms Mathebela said that the matter was currently in court because the municipality had not been negotiating in good faith, as it was now asking the court to grant an order to set aside the settlement agreement. She was opposing the municipality’s request, as well as the summons for the recovery of R87 million. 

She drew Committee’s attention to the correspondence between her and the VBS curator on 14 November 2018, in which she had stated that the municipality needed its funds. After her suspension, Mr Ngula, who had been the director of the municipality’s corporate services, continued to use Mohale Attorneys to pursue the matter in court. It had resulted in a letter issued by the Polokwane High Court which declared that the municipality’s claim to get its funds back was lawful. There had been an estimated figure for the amount of money that could be legally recouped, but as she had not been in the employ of the municipality she was not aware of the exact figure. 

Ms Xaba-Ntshaba interjected and said that she did not believe that the issue could be successfully resolved today because the mayor to whom Ms Mathebela had referred was not present on the virtual platform, so Committee Members were now listening to only one side of the story. The current mayor, Mr Mothogwane, did not even know Ms Mathebela. Furthermore, the people who had served on the disciplinary committee during the disciplinary process of Ms Mathebela were not included in this meeting either. She therefore proposed the Committee should include all these involved parties in its next follow-up meeting. She also questioned why Ms Mathebela had chosen to not tell the Committee of the salary that she had received in December, as she had just mentioned that she had been subsequently suspended for three months without pay. She found those statements problematic. 

The Chairperson stressed the objective of the meeting, which was to know circumstances under which the settlement agreement had been made. Ms Xaba-Ntshaba’s point was not the objective of the meeting. 

Mr I Groenewald (FF+) read section 55(2) of the Local Government: Municipal Systems Act which stated that as accounting officer of the municipality, the municipal manager was responsible and accountable for:

(a) all income and expenditure of the municipality; 

(b) all assets and the discharge of all liabilities of the municipality; and 

(c) proper and diligent compliance with applicable municipal finance management legislation.

However, Ms Mathebela had said in her submission that she was not aware of the about-to-be-made investment in the municipality. He therefore wanted to know if the former municipal manager had read the Municipal Finance Management Act (MFMA). Also, if she had advised the former mayor not to do something, but the mayor had still carried on doing it against her advice, should she not have written to both the mayor and councillors? He asked why she had not informed municipal councillors as soon as she found out about the irregularity. If she had written such a letter, he wanted the letter to be submitted to the Committee. 

Ms Mathebela responded that she had not written a letter to councillors because she was not aware of the incident when the investment took place, and had learnt of the capital investment only when the report had been brought to her. 

Ms Mathebela was disconnected. 

The Chairperson said they would continue with the next agenda item, and asked Members to indicate when Ms Mathebela was back on the virtual platform again. 

Mphaphuli Consulting: Fetakgomo-Tubatse Local Municipality issues

Mr Lufuno Mphaphuli, Chief Executive Officer (CEO) at Mphaphuli Consulting, stated that the purpose of his presentation was to clarify some issues and put it on record that certain information which Fetakgomo-Tubatse Local Municipality had presented to the Committee on 17 March had been incorrect and non-factual. He expressed grave concern that should he not take the chance to clarify the matter and put the record straight, it would adversely affect himself as well as Mphaphuli Consulting. 

He said the first misleading issue was that the municipality had accused Mphaphuli Consulting of having claimed for work that it had not completed. The claim was related to the professional services which Mphaphuli Consulting had provided for nine villages in 2017. It had been over 40 months and the municipality still had not paid, nor provided any reason as to why it had not been paid. 

The second issue was that the municipality had accused Mphaphuli Consulting of overstating claims in the Operation Mabone programme. It had defied the Polokwane High Court’s order, which had stated otherwise. It was unusual that the municipality did not appeal the High Court ruling, but had rather opted to rope in the Special Investigating Unit (SIU) to defy the court’s order. Furthermore, it was regrettable that the SIU was going against s165 of the Constitution, which clearly stated the binding nature of court’s decisions. 

Mr Mphaphuli provided the background of Project Mabone. The project was approved by the National Treasury in May 2013, and 99% of the project was funded by the Department of Energy. In April 2013, the leadership of Tubatse Local Municipality had gone to Treasury to make its presentation on Project Mabone with the purpose of getting Treasury on board. Prior to the presentation, Treasury had already issued a circular in 2010 called "pledging of conditional grant," which allowed future allocations to be incorporated into the project. During the process, Treasury had recommended that one committee be established and needed to be chaired by the Department of Energy which oversaw all payments. However, due to the instability of the municipality’s political structure, the fifth Municipal Manager had disbanded the committee and caused a lot of confusion over the payment for the project. 

Mr Mphaphuli highlighted the various obstacles and difficulties that he had faced on the path to the completion of this project. In September 2014, he had received a submission informing him of the municipal council’s decision to cancel the contract. In response, he had made a rebuttal to the decision, and fortunately the municipal council did not go ahead with the cancellation. The SIU’s proclamation came in August 2014, after which the Minister of Finance advised the mayor on the background SIU proclamation in October of the same year, and instructed that Operation Mabone be supported after the municipal manager had been appointed. 

After the Minister’s instruction, there were again issues surrounding the legality of the contract raised by municipal officials, which were directed at Mphaphuli Consulting. He had thwarted that attempt to delegitimise his contract. He commented that bringing in the SIU was just an attempt to dislodge him from the project. 

The narrative that his company had over-claimed was without basis. In December 2015, he had challenged that narrative by appointing an assessor, whose investigation had shown that his company had under-claimed to the value of R30 million. In August 2016, the municipality had delayed payments. In response, he had proposed to the municipality that it should allow the National and Provincial Treasuries, as well as Eskom, to be a single mediator. In September 2016, when a new municipal council was formed, the then mayor, Mr Johannes Phokane, had mentioned to the media that Project Mabone was too big for Mphaphuli to take on, which was untrue. As the mediation request did not come to fruition, Mphaphuli Consulting had had no option but to go to court. The High Court had ruled in favour of Mphaphuli ordering the municipality to pay the company R41 million. It was on the same day that the High Court had made the ruling that the municipal council had adopted a resolution to conduct a forensic investigation into the company. 

Mr Mphaphuli said that such back and forth incidents happened numerous times, and he had to skip some of them to save time for Committee Members. In January, the municipality had notified Mphaphuli Consulting that it had to cancel part of the contract because it did not have sufficient funds to pay the company. When the President came to Tubatse, Mr Mphaphuli had met with him and expressed his frustrating experience working on the project, given the huge impact that it would make on rural households. 

He had requested a meeting with the municipality in February, and the municipality had later set a date for 8 March. His company had made a business proposal on the way forward, but on 9 March the Supreme Court judgment had been handed down, and the municipality had turned to the SIU this time. In addition, the municipality had put out defamatory statements to local communities saying that the company had deliberately disrupted a council meeting in April 2017. He believed that it was an attempt to poison the community, but fortunately the community and his company had forged a good relationship. 

After this case, he had reached out to the then Municipal Manager to find a solution to the predicament. The then MM had requested a formal presentation be made through his attorney, which he did on 9 June 2017. The municipality never responded to the request. In the business presentation, Mphaphuli Consulting had detailed its plan to complete the electrification of all villages before December 2017, and had indicated that it was willing to accept late payments. Unfortunately, by this time the municipality had roped in the SIU. When Mr Mphaphuli was served notice for the SIU, he did not even know any details of the allegation which had caused the SIU’s investigation. All the SIU did was ask him for his company information, and it even met with his company’s auditor. 

Mr Mphaphuli remarked that it was regrettable that while the SIU was busy investigating his company in 2017, most of the money had been invested in the VBS bank, which was later looted. It was a lost opportunity which otherwise would have had the job done. He said that some projects would have taken only one or two weeks to complete, but with the lost funds, some in that community still had no electricity three years later. He struggled to understand why the leadership at the municipality would allow that to happen. He reminded Members that when projects were not finished, sites were more likely to be vandalised, which would only cause more resources to be wasted. 

He detailed the obstacles that he had to go through as a service provider and the lack of support that he had received from government officials. In June 2017, he had reported the issue to the Public Protector, to which she had responded five day later that she could not be involved in the matter. On 1 August 2017, the SIU had begun its investigation into Mphaphuli Consulting at the request of the municipality. 

Mr Mphaphuli had made a submission to the Minister of Justice and Correctional Services in September. In this submission, he had stated that the municipality seemed to be setting a precedent for service providers, that they should not go to court if there was a disagreement with the municipality. However, he had not received a response from the Minister. He had also made a submission to the Chairperson of the Portfolio Committee on Justice and Correctional Services. 

In April 2018, he had made a submission to President, requesting an audience. In the submission, he had expressed his concern at the prolonged period of time which the local community had to wait without electricity. It was a month later that the President had responded, referring him to the Minister of Cooperative Governance and Traditional Affairs (COGTA). Minister Dlamini-Zuma had responded to the matter in March and April, but nothing constructive came out of those responses. 

In July 2019, he wrote to the Speaker of Parliament and there was no response from that. Later, in September that year, he also made submissions to the Head of the SIU and to the Select Committee on Public Accounts (SCOPA), explaining that it was a waste of public resources for the SIU to recommend that the municipality should appoint other parties to complete Project Mabone while the contract with Mphaphuli Consulting was still valid and in court.

Mr Mphaphuli expressed his disappointment at the unstable local government. Since 2011, there had been five mayors, 12 accounting officers, nine CFOs, as well as eight directors of the technical department that had served in those roles. He commented that the institutional memory of Project Mabone had been lost with the constant changing of local government heads. He reminded everyone that Operation Mabone was a turnaround strategy that had been adopted by the municipality. It was a project approved by the National Treasury, and was 99% funded by the Department of Energy. 

Mphaphuli Consulting’s claim made in 2017 was for professional services rendered, and had been certified by Eskom. It was a justifiable claim and been approved by the National Treasury, but the local municipality seemed to be continuously playing this game with Mphaphuli Consulting. The municipality had on one occasion even misled the local community that Project Mabone was an accepted, but not an approved, project. In response to that, Mphaphuli Consulting had had to quote the Oxford English dictionary to provide the authentic definition of the word ‘approve,’ which meant accepted. 

Mr Mphaphuli said that his company had not received payment for over 40 months. Despite the government’s policy which required 30-day payment, it was actively not adhering to its own policy. He was flabbergasted at how the SIU had been manipulated by the municipality to play politics. In the absence of the SIU’s investigation, the project would have been completed already and all remaining 14 000 households would have been electrified. 

The Chairperson opened the floor for the mayor and his team to respond to Mr Mphaphuli’s case. 

Fetakgomo-Tubatse Local Municipality's response 

Mr Ralepane Mamekoa, Mayor of Fetakgomo-Tubatse Local Municipality, responded to the allegation raised by Mr Mphaphuli that the municipality’s presentation to the Portfolio Committee on 17 March, item 5.2, was incorrect and non-factual. The municipality also noted the concern indicated by the Committee Secretary in its correspondence on 19 April. 

He said the municipality had been constrained to deal with Members’ questions over specifics, as the correspondence from the complainant had not been furnished to the municipality. It reserved its right to address the issues that had been raised in court. Furthermore, the construed notion by the complainant that the municipality’s submission was ‘non-factual and incorrect’ should not be an admission of the allegations levelled at the municipality, but rather a consequence of dealing with adjudicate matters. Therefore, he wished to submit to the Committee that the allegation was in bad faith, and was frowned upon by the municipality. The municipality could only substantiate its presentation with the correct factual updates, as of the ruling on 24 March 2021. 

The Chairperson interrupted that the Committee would not be making a determination on the merits of the case. It merely believed that there could be a possibility that the municipality had provided it with false information. The reason that the municipality had been summoned to the Committee had been because of Mr Mphaphuli’s request. She reminded everyone to bear in mind s72(d) of the Powers, Privileges, Immunities of Parliament and Provincial Legislature Act, which stated that it was a crime to produce false or untrue information if it was done to deceive the House or Committee. The Committee needed to hear his side of the case, as well as Mr Mphaphuli’s side of the story. 

Mr Mamekoa said that he fully understood the consequence of lying to Parliament, and would never lie to the Committee. The municipality had come to the Committee to tell what they knew, which was the truth. With the Chairperson’s permission, he requested that Mr Tlakale Phala, Municipal Manager, to go into details. 

Mr Phala said that municipal officials were not criminals, and that they were responsible officials acting in the best interests of the institution which they served. The municipality may not be able to respond to every issue raised by Mr Mphaphuli adequately, because some of them were being contested in court. 

Mr K Ceza (EFF) commented that no Member of the Committee had accused any municipal official of any wrongdoing so far. That notion had been misconstrued and misinterpreted by Mr Phala. He sought clarity on Mr Phala’s statement that ‘there was no criminal in the municipality.’ He questioned why there was a need for him to be so defensive while the Committee was only doing its work to learn the truth. He wanted to put on record that this Committee appreciated the municipality’s efforts to deliver service, but it also recognised its problems at the leadership level. Such inappropriate remarks had never been brought up by any government official in this Committee in the past. 

The Chairperson concurred with the view that Mr Phala’s statement was very problematic. 

Mr Phala explained that he had only meant that lying to the Committee would be a criminal offence -- nothing more than that. The municipality had provided true information, to the best of the officials’ knowledge. 

The Chairperson said that Mr Phala had to bear in mind that it was up to the Committee to determine who was a criminal, not Mr Phala. 

Mr Mpumza asked the MM to withdraw that statement, as no Member of the Committee had accused anyone of any wrongdoing. 

Mr Ceza concurred with his colleague’s point.

Mr Phala withdrew his statement, and apologised. 

Mr Phala said that the court had ruled in favour of the municipality on the condonation application. It had ordered the municipality to find an exception to support its defence with regard to the R9 million claim submitted by Mphaphuli Consulting. 

On defamation lawsuit brought against the municipality by Mphaphuli Consulting, he said that the complainant had filed an application for an approximate amount of R500 million from the municipality. The matter had been defended and no reaction had been noted from the complainant. He could not provide further input, because the matter was being adjudicated in court.

Regarding the SIU’s investigation, there was a dispute over the R76 million raised by the complainant on Project Mabone. The claim had been submitted for Project Mabone, in which the same complainant had tried to claim the amount of R9 million from the municipality. It was inconceivable to entertain such an allegation and the complainant’s claims. As the matter was being heard in court, he was not in a position to provide further input. 

He further put it on record that Mr Mphaphuli could not quantify the R9 million on Project Mabone. The municipality had also hired an assessor, who had produced a report to prove that the complainant had not completed the work, so there was no quantification for such a claim. The report could not be divulged at this stage, as the matter was being heard in court. 

Mr Ceza asked Mr Phala if he had been a preferred candidate at the time of his appointment. 

Mr Phala said that he would not know, as he had not been part of the panel that had interviewed him. He suggested the question be directed at his seniors, such as the mayor. 

Mr Ceza asked when Mr Phala had received his appointment letter.

Mr Phala said his term had begun in August 2020. 

Mr Ceza asked at which municipality he had previously worked. 

Mr Phala said that prior to working at Tubatse Local Municipality, he was in the employ of the Elias Motsaledi Local Municipality.

Mr Ceza asked Mayor Mamekoa about the appointment of Mr Phala, and if there had been a preferred candidate who had later withdrawn the application in that process.

Mr Mamekoa said no. 

Mr Ceza asked why Mr Mamekoa sounded so hesitant in his response.

Mr Mamekoa said that he had substantiated his no with the fact that there was no candidate who had withdrawn to give Mr Phala the opportunity. He affirmed that the interview process had been very fair. 

The Chairperson asked Mr Mphaphuli to respond to the responses given by the municipality.

Mphaphuli Consulting's response

Mr Mphaphuli responded that at the meeting of 17 March, to which Mr Phala had referred, Mr Phala had said that Mphaphuli had claimed for work that had not been done. Mr Mphaphuli said that this was not factual. The municipality had said that Eskom had accepted, but this did not mean that Eskom had approved. This "word fight" had resulted in him having to quote from the Oxford dictionary to explain that the two words were synonymous. 

He said the court had granted condonation to the municipality because it had failed to respond to the letters of demand which he had sent in January and in September of 2019. Treasury had engaged with the municipality, and the municipality had insisted on taking Mphaphuli Consulting to court. Mr Mphaphuli said that Mr Phala’s justification was feeble, as the justification had emerged only three years later, which was very unfair to Mphaphuli Consulting, as a lot of things could happen in three years. Even the municipality’s attorneys were not disputing the fact that work had been done and completed. 

Mr Mphaphuli rejected Mr Phala’s statement that Mphaphuli Consulting’s claims were overstated. The court had made a decision, and the municipality’s attorneys had written to his own attorney informing him that the municipality did not intend to apply for a recession on the judgment of 7 April 2017. As the judgment had not been appealed, the judgement still was valid. 

There was also an affidavit that had been deposed by the then Acting Municipal Manager, Lefty Gabaganenwe. 

The Chairperson confirmed with both Mr Phala and Mr Mamekoa that Mr Gabaganenwe was no longer in the employment of the municipality. She questioned his motive for resignation after having deposed an affidavit. 

Mr Mphaphuli confirmed that the affidavit had stated that the SIU had advised the municipality to appoint other service providers, and had assured the municipality that it would pursue litigation against Mphaphuli Consulting. 

The Chairperson sought clarity on the exact types of service that Mphaphuli Consulting rendered.

Mr Mphaphuli responded that he was more on the construction side of the service, providing engineering, procurement, project management and managing construction services. 

The Chairperson asked whether. in terms of the general conditions of contracts, there had been an agreement on the fees for the services rendered. 

Mr Mphaphuli said yes.

The Chairperson was satisfied with the response that a lawful contract existed and had been agreed upon and signed by both parties. She had also been notified that Mphaphuli Consulting had been paid for the 26 villages that it had rendered services for. The remaining issue was the remaining nine villages for which it still had not received payment. 

Ms H Mkhaliphi (EFF) remarked that the municipality seemed to be hiding things. It seemed to her that the municipality was using the court case to conceal information from the Committee. She again made the point that the Committee merely wished to understand what had transpired without getting into the merits of the case. 

She had the impression that the municipality had been difficult, as the service provider had even offered to sit down and talk. She reminded the municipality of its responsibility to provide service delivery to the people, and asked what was happening to the people in the 14 000 households without electricity, while the fight between them carried on. She emphasised the importance of prioritising the poor people.

She asked Mr Phala whether he would personally take responsibility for the litigation expenses as a result of his arrogance, and the arrogance of the entire leadership at the municipality. She disagreed with him that the court’s condonation was an indication of favouring the municipality -- it was merely an indication that the municipality had made its submissions late. She believed that the management leadership at the municipality needed to solve problems instead of creating them by engaging in expensive court processes, because this did not help anyone. 

Ms S Buthelezi (IFP) asked about the adverse effect on the poorest of the poor, since the matter had been dragging on for more than three years without resolution. She asked Mr Phala if it was true that the municipality had failed twice to discover documents in court. She wanted to understand what had led to municipality’s delay in submitting the required documents to the court in time. It made one to agree with the view that the municipality was problematic. She reminded officials that the municipality’s core mandate was to deliver services. 

Mr Ceza assured the mayor and municipal manager that they must not take Members’ questions personally, as they asked those questions only because they were crucial to understand the actual situation. 

He asked the municipal officials to indicate whether Mr Phala had achieved the basic, intermediary or advanced level of competency at the time of his appointment. He also commented that the law also discouraged the appointment or promotion of an individual who achieved only a basic score in the competency test for the senior management level.

Mr Ceza sought confirmation from the mayor that there had been no preferred candidate at the time of appointment of Mr Phala. He knew of someone who had met the competence level, but had later withdrawn the application. 

Mr Mpumza asked Mayor Mamekoa to help Members to understand why the municipality was reluctant to share more information with the Committee, and used the court case as a shield. While the matter was being heard in court, what measures had the municipality put in place to assist the community to access electricity? Why should communities be the victims of the squabble between the government and its service provider? He asked if the mayor resided in those areas with no electricity. He wondered if he would feel the urgency more deeply if he stayed in those areas.  

Mr Phala said that he did not dispute the fact that Lefty Gabaganenwe had once acted as the Acting Municipal Manager. The issue was about the affidavit which he had signed. He assured Members that the issue was currently being determined in court. 

He said that despite the fact that the Operation Mabone contract had been terminated, the municipality was still providing service delivery to some communities. The project continued. He acknowledged that the municipality had some backlog issues which had resulted in some households still not being connected. However, the municipality had councillors to make sure that communities received services despite its financial constraints. 

Mr Phala remarked that his competency was a personal issue, as it was related to whether it was compatible with the level of a senior manager. He said it was not the first time he had served as a senior manager.

The Chairperson said that this question was not a question that Mr Phala could respond to. The mayor had to respond to the question. 

Mr Phala rejected that claim, and said his credentials should not be judged based on his handling of Operation Mabone. The disputes came not only from the municipality’s side. The SIU was also disputing the matter. 

The Chairperson reminded officials to respond to the question on condonation. Since there would now be an extra expense for the lawsuit because of the condonation, would the municipal manager pay the expense out of his own pocket?

Mr Phala said that as it was a municipal lawsuit, he could not pay out of his own pocket. The reason for condonation was because the complainant had filed a default judgment against the municipality, so it had to fight the case in court. 

The Chairperson disagreed, and said that the municipality had filed for condonation because it had not submitted the required documents on time. She therefore wanted to know who had been in charge of that responsibility in the municipality at that time. 

Mr Phala said that the accounting officers had been indicated in Mphaphuli Consulting’s submission.

Mr Ceza interjected and instructed to Mr Phala to respond directly to the question without making reference to others. 

Mr Phala said he did not know who the accounting officers were when the condonation was filed. 

The Chairperson suggested Mr Phala should familiarise himself with the contents of the case. It was unfortunate that he knew so little about it. 

Ms Mkhaliphi commented that the municipality did not care about anything but themselves. Taxpayers money was now being used to pay for litigation expenses. She also observed that when she had raised the subject on 17 March, Mr Phala had been confident that the municipality would win the case, but that attitude had been changed in today’s meeting. 

Mr Groenewald expressed his worry that Mr Phala knew so little about the previous court cases. As he was the current accounting officer, he needed to take action and give instructions, and needed to be up to date on the case by now. 

Ms Xaba-Ntshaba expressed her disappointment that this municipality did not care about people in South Africa, but only about themselves. The delay in delivering Project Mabone had destroyed 14 000 households and lives. She found the municipality’s attitude unacceptable, as it had ignored Mr Mphaphuli’s olive branch for settlement. She reminded the municipality that people working at Mphaphuli Consulting were also facing the risk of losing their jobs. 

Ms Xaba-Ntshaba said that SIU seemed to be conniving in this issue, and had sided with the municipality. 

The Chairperson summarised Members’ questions and directed the Mayor to respond to them. 

Mayor's response

Mr Mamekoa responded that the launching of the project had been done by previous mayor. After the launching of the programme, the mayor had been removed and Mr Mamekoa had come in to complete the five-year period of the project, which had only two years left. It was only after a number of consultative meetings that the project got started.

He confirmed that payments had been made through Mphaphuli Consulting according to the work it had completed. Although there were disagreements on the invoices issued by the company, oversight visits by executive committee had been made to ensure that such problems would be overcome. He acknowledged the massive scale of the project to electrify villages, but in many instances the only problem during the running of project was payment. The municipality often found itself not convinced by invoices produced by Mphaphuli Consulting, as their invoices were not a true reflection of the work that they had completed on the ground. As time passed, the relationship between Mphaphuli Consulting and the municipality became soured. Then before all the villages could be electrified, the contract was terminated. The status was that the electrification of some of the villages was still incomplete. 

Mayor Mamekoa added that the SIU had also done its own investigations, and its report had stated that the municipality and Mphaphuli Consulting were both at fault for spending more money on the work than had been completed by the company.

He responded to the question about the appointment of the Municipal Manager. The appointment of a municipal manager was a section 56 position. Thus, a position of this nature must be advertised for no fewer than 14 or 21 days in local and national newspapers. Thereafter, applications would be received, and the council had to appoint a committee to oversee the process of the appointment. According to law, the mayor must be the chairperson of the selection committee, together with COGTA in the province and the South African Local Government Association (SALGA), who formed part of the panel. During the selection process, the committee first looked at candidates who qualified in terms of the regulations for the appointment of senior managers. Then the Committee begins to shortlist, in line with the regulations regarding the candidate’s experience and qualification. To the best of his knowledge, Mr Phala had done the best during the interview. He confirmed that the competency level assessment took place after screening the candidates' criminal records. That was the last stage in the process. There might have been candidates that had scored higher in the competency test, but overall Mr Phala had been the top candidate. 

Mayor Mamekoa said that the intention behind the programme was very good. He remarked that it was unfortunate that the relationship between the municipality and the service provider became sour as the consequence of disputes over payments. The contractor and the municipality had disagreed on invoiced items and amounts. One of the reasons that the court case had been a prolonged process was because of the incompetent legal representatives at the municipality. They were not attorneys. At some stage, they did not go to court when the hearing was scheduled. In some instances they would leave the court when case was being heard. All of this had contributed to the ups and downs of the court case. 

He confirmed that there was a huge electrification backlog problem, and ascribed the cause to the rapid growth in the municipal population. The backlog affected not only electrification, but also other services which the municipality provided. Many people were relocating to the municipality because of the mining companies there. On behalf of the municipality, he said that objectively the municipality was not a capable one and was financially constrained, with backlogs in service delivery as well as having limited resources. 

Further discussion

Ms Buthelezi questioned whether it could be the uncaring attitude in the leadership that had resulted in the municipal legal representative's performance. 

Ms Mkhaliphi pointed out that as Mayor Mamekoa had rightly pointed out, that the municipality’s legal advisors were not advising correctly, and agreed with the view that taking all matters to court did not save anyone and wasted a lot of time. She encouraged improved leadership skills among municipal officials. She did not believe that the Municipal Manager could not even withdraw the case. Whenever there was a problem, whether it was a challenge or a war, the way to solve it was always to negotiate and to find a solution. She wanted an assurance from the municipality that it would take the Committee’s advice, and sit down and talk to Mphaphuli Consulting. 

Mr Mpumza said that the mayor and the Municipal Manager should both be aware that the Intergovernmental Relations Act made provision for seeking resolution on disputes through concessionary agreements. So far, the municipality had not opted for this option. It should have been aware that the infrastructure grant should have been spent within its specific budget period. Therefore, in taking the dispute to court, the court would not determine that the matter was urgent and it could be dragged out for a period of four years. 

He also found it quite concerning that the municipality was still keeping the same lawyers who were not competent. The Municipal Manager, as an accounting officer, should have apprised himself about this situation and should have sought to take the matter away from the court and resolved it outside of the court in order to provide service delivery. As the matter was not progressing, the community was suffering. He found it unacceptable that the municipality seemed to be stuck on the notion that the court must resolve issues and the community must suffer. He questioned municipal officials as to where the responsiveness was. He highlighted that public servants should be developmental oriented and responsive to the needs of the community. Those words were written in the Constitution. He also questioned why the mayor should not resign to resolve the situation. 

The Chairperson requested response from the municipality. 

Mayor's response

Mr Mamekoa said the lawyers which he mentioned had been replaced by a new team of lawyers. The municipality understood that the problem was a complex one. Some of the state institutions, including the Auditor General (AG) and the SIU, were seeing the municipality as having entered into an agreement that was unlawful and had overpaid the contractor, and so on. The municipality understood that as leaders, they had a responsibility to serve communities, so the Municipal Manager had indicated that the electrification programme was going on, despite the disagreement with Mphaphuli Consulting. 

He confirmed that the municipality had not ignored or undermined the advice and inputs from the Committee. However, he also wanted to put it to Committee that it was not only about the legal route, but also about accountability, which involved the municipality having to account to the Auditor-General and the SIU. 

The Chairperson said that the matter would not be resolved in this meeting. The tenure of the council would end in the next five to six months. Five years later, there were 14 000 households in those villages with no electricity. The decision on the contract, which was to provide electricity for those households, was still pending. The mayor had acknowledged that there were times that the municipality took the responsibility for delaying the matter because of the quality of its legal representation. Both Ms Mkhaliphi and Mr Mpumza had emphasised the importance of the concessionary measures in the Intergovernmental relation framework, as well as negotiating with Mphaphuli Consulting to figure out a way forward. Currently, the municipality was wasting its resources to defend this matter, which had huge financial implications. As the election time was getting near, the community was supposed to get electricity. 

She instructed the municipal officials that the matter must be referred to the provincial Cooperative Governance, Human Settlements and Traditional Affairs (COGHSTA) and Treasury, which was the owner of the project. Furthermore, after review, the matter must be reported back to the Committee. She was giving the municipality a month to do that. She also instructed COGTA at the national level to provide more support to the province in dealing with this matter. 

Ms Ngaka Dumalisile, Head of Department (HOD), Limpopo COGHSTA, and Mr Mpho Mogale, Executive Manager, National COGTA, agreed that both spheres of government would support the municipality in dealing with this matter. 

The Chairperson remarked that the Committee had the interests of the people at heart. The expectation had been that 14 000 households should have electricity by now. This matter had been dragging on from the previous council to the current council for five years, and it was unacceptable that the matter still had not been resolved. 

Resumption of Ephraim Mogale Local Municipality: Resignation of former MM; discussion

Ms Mathebela, former Ephraim Mogale Municipal Manager, continued her response. 

She said that the mayor had been informed by her, both formally and informally, with a letter indicating the issue with VBS bank. A letter had also been sent to the municipal council. She therefore had not failed in her duty to report the matter. 

She was aware of the Municipal Finance Management Act and its regulations regarding the municipality’s primary bank account. What she was not aware of was the grey area in the policy, which she had highlighted in her response earlier. 

Mayor Mothogwane responded to Mr Mpumza on the question about the golden handshake. He explained that the way he had understood the question was whether he had offered anything of monetary value to the former Municipal Manager. Hence, when he responded to municipal officials, he had mentioned that he had misunderstood the content of the question. 

He respected every sphere of the government wholeheartedly, and would never intentionally mislead Parliament. The only thing was that he had misunderstood the content of the question. He also offered his apology.

The Chairperson instructed Mayor Mothogwane to ask clarifying questions in future if he did not understand Members’ questions or thought their questions were unclear. She accepted the mayor’s apology. She pointed out that the municipality had a responsibility to divulge to the Committee about the litigation with the former Municipal Manager, but he had opted not to do so. 

She wanted to know what had made the municipality not honour its agreement, which had been agreed to by both parties. 

Mayor Mothogwane said that the municipality had looked at the option of settling the matter out of court after the labour court hearing in April 2020. In December 2020, the municipal council had opted not to go ahead with the settlement after the provincial Treasury in Limpopo had instructed the municipality to recover the lost money from the former Municipal Manager and Chief Financial Officer, since it did not make sense to pay someone who they were supposed to be recovering lost money from. The municipality therefore had not implemented the settlement agreement after the Municipal Manager tendered her resignation on 19 December 2020. 

The Chairperson enquired about the terms and conditions which the settlement agreement entailed.

Mr Douglas Molefe, legal advisor for the municipality, elaborated on the details of the terms of the settlement agreement. These were:

  • Without any admission of liability, the applicant shall pay to the second respondent, former MM, in settlement, an amount of R1 292 449, being the second respondent’s full year salary. 

  • Ms Mathebela shall tender her resignation immediately after agreement.

  • The settlement amount was to be paid directly into Ms Mathebela’s account within 30 days.

  • The settlement amount would not bear any interest.

  • In the event of failure by the municipality to pay the amount within the prescribed period, the settlement amount shall start to accumulate interest after 30 days.

  • Should municipality fail to pay the settlement agreement within the stipulated period, Ms Mathebela may proceed with execution of the compliance of the agreement;

  • The municipality would issue a certificate of service to Ms Mathebela after the agreement had been signed. 

The Chairperson asked the municipality what had made the municipality withdraw from its own agreement. She asked if legal advice had been sought, because it seemed that the municipality was now wasting more money on matters that had been concluded. 

She said that on 28 October 2020, in the council meeting, there should also have been the appointment of an acting Municipal Manager. The municipality had responded that the current Municipal Manager had served as the acting Municipal Manger during this matter. When Committee Members had sought the municipal manager, the municipal manager was not on the platform. She said that this type of behaviour was unacceptable and asked for Members’ opinions on the matter.

Mr Ceza suggested sending this municipality back to resolve its issues. It was clear that the municipality had not met the 30-day payment period requirement. 

Mr Mpumza seconded this view, and said that the municipality must report back to the Committee and account again. The fact that the mayor had to look for an official was unacceptable. On the municipality’s return, he also wanted a report on what steps had been taken against the municipal manager who had disappeared from the virtual platform. 

The Chairperson agreed and said that something was not right, as there had been a lack of truth. She had doubts as to whether the provincial treasury had been informed about the signing of the settlement agreement. She suspected that the municipal manager had run away from the meeting to conceal certain truths. 

Chairperson's concluding remarks

The Chairperson recalled that the Committee had met with the municipality on 15 October, and according to the timeline that had been provided by Ms Mathebela and the municipality, the settlement agreement had already been signed. She needed the Committee Secretary to provide Members with meeting minutes to confirm that oversight visit. She seemed to recall that the then acting Municipal Manager had not been in that meeting either. She commented that this municipality had provided a typical case of misrepresentation to the Committee. She ordered the report to be submitted to the Committee by 30 April. She also requested an annexure for the provincial treasury.  

Mayor Mothogwane said that he could not find the Municipal Manager. 

After checking with his team, he indicated that by the end of 2019, subject to correction, the municipality never had any resolution regarding the settlement, because the matter was in labour court. 

The Chairperson said that the municipality had never paid much attention to the Committee’s recommendations. 

The meeting was adjourned.

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