OR Tambo District Municipality: engagement with Municipality; MEC; AGSA; SALGA & DCOG

Meeting report

The Chairperson opened the virtual meeting, welcoming the Members and the delegations in attendance. The Committee was to be briefed by the OR Tambo District Municipalities, supplemented by the South African Local Government Association; Auditor-General of South Africa and the Department of Cooperate Governance

Briefing by the OR Tambo Municipality

Ms Thokozile Sokanyile, the Executive Mayor of O.R Tambo, took the Committee through the presentation. She focused on the municipal strategies, goals and locality.  The collection rate for the fourth quarter of 2019/20 financial year was very low, with 17% for April and 29% for May and June 2020. The sum of bills for the fourth quarter amounted to R78 million, whilst the sum of the collection amounted to R19 million; this resulted in a collection rate of 24% for the fourth quarter in total. The main contributor for the low collection was the Covid-19 lockdown regulations which halted some activity during levels five to three.

On expenditure, she said that it was worthy to note that the Office of the Executive Mayor had been asking for the COVID-19 expenditure report since April. The said report was never received until the Executive Mayor came across the report that was shared by the CFO in a meeting that was called by the AGSA on 07 August 2020. The District Municipality received a Disaster Relief Grant in order to assist in the procurement of COVID-related expenditure. The amount received was R4.2 million and expenditure incurred was about R3.1 million on goods such as masks and hand sanitisers. Terms contracts and Regulation 36 were used for the expenditure.

The district had a total of 54 water tankers carting water to needy areas and intervening to COVID-19. The tankers were as follows: 12 tankers were received from the Department of Water and Sanitation; 10 water tankers were hired by the District as a means to address water supply where there were no services and drought areas; 26 water tankers were specifically hired for the intervention during COVID-19.

The O.R Tambo had been getting a qualified audit opinion for a while now. For the 2018/19 year it was due to Property, Plant and Equipment as well as irregular expenditure. The municipality did not adequately recognise property, plant and equipment items in accordance with GRAP 17: property, plant and equipment. Infrastructure Work In Progress (WIP) were incorrectly disclosed as completed infrastructure assets and some infrastructure assets that were completed in the prior year were incorrectly disclosed as transfers in the current year. Some of these infrastructure assets were further recorded at incorrect amounts. Consequently, infrastructure assets disclosed in note nine were overstated and infrastructure the WIP was understated.

On consequence management, the council established a section 32 committee of the MFMA to investigate irregular expenditure that occurred from 2012 to 2016. A certain amount was identified and a recommendation was made to council to condone on the following basis:

• Contract between Amatola Water which was not in line with SCM regulations
• Use of SCM regulation 32 misunderstanding of the regulation
• Historic irregular expenditure that was caused by vacuum in management.

However, the Committee and the MPAC made referral to Municipal Disciplinary Board to investigate a certain amount that had no supporting documents and lack of reasoning for causes of irregular expenditure. The MDB, as established by council, was busy with the investigation of financial irregularity in order to ensure that where necessary, there was recovery of those costs.

The Mayor added that the main aim was to reduce irregular expenditure and that CoGTA and SALGA had been asked to help.

Briefing by the Auditor-General of South Africa

Ms Shereen Noble, the Business Executive for the Eastern Cape, took the Committee through the presentation. Most of this presentation had already been covered by the municipality. It had been receiving a qualified opinion over the last few years. The area of struggle was irregular expenditure. The areas of qualification were property, plant, and equipment and this related to infrastructure assets. Some projects were accounted for as complete when they were not necessarily so, or the wrong amount would be put in.  Secondly, the municipality did not have systems to account correctly.

The municipality did not make use of consultants for the year under review and prepared the financial statements and performance reports in-house. Previously, a large amount of money was spent of consultants.

The supply chain management (SCM) regulations dictated how an Adjudication Committee should be setup and prescribed four senior managers. The municipality did not comply with that; as a result, the contractual commitments made became irregular. Deviations from SCM also contributed to the adverse findings. The municipality would flag an item as an emergency but upon evaluation, it was discovered that poor planning was the issue. There was no consequence management around the culprits who incurred irregular expenditure. The municipality wrote off irregular expenditure amounting to R2.8 billion after investigations were conducted by MPAC. There were no officials that were held liable for this and no money was recovered. Some staff employed by the state also contracted with the government. However, this was not allowed. In the current year, such cases were not investigated and a disciplinary board had not been established as required.

There was insufficient infrastructure to meet the needs of the municipality. The infrastructure was aging and dilapidated; maintenance was not prioritised or budgeted for. There were insufficiently qualified engineers to conduct the condition assessments and oversee the work performed due to vacancies in the Department.  The actions taken by management did not result in the improvement of the water quality and they did not minimise further water shortages in water supply.

Briefing by South African Local Government Association (SALGA)

Mr Sonwabo Gqegqe, Provincial Director, SALGA, took the Committee through the presentation. A big part of the presentation was already alluded to by the Executive Mayor. The municipality was situated in an area that did not have a municipality prior 1994 and was substantively rural. It continued to grapple with lack of bulk infrastructure, and this contributed to lack of economic development.

In previous interactions members of the Committee were taken through SALGA’s Municipal Audit Support Programme. It sought to provide hands on support and capacity building to municipalities as part of the audit turnaround process.

It was time for the government to adopt a shared municipal support and intervention framework. Progress was being made here and this framework was being finalised in the Eastern Cape. It was noteworthy that creating a monitoring system remained a key issue and hopefully the process of reviewing indicators would be concluded soon and a monitoring system would be implemented.

Quarterly reports that were presented to Parliament should be considered part of the system so that whatever intervention was evoked in the municipality was framed by the matters that were raised by either the MEC at provincial level or Minister at national level. This was to highlight the framework that had been developed. The Constitution required the implementation of reciprocal inter-governmental relations system. Whatever support was provided to the municipality must be agreed upon and address the real challenges faced by that municipality. That was why the reports were highlighted in the beginning. It would be useful to bring on board National Treasury because it was directly involved.

All councillors were inducted on support. There was capacitation of the political leadership in that district on local government in general and the legislative and constitutional obligations for public office bearers. SALGA supported the municipality on the Audit Committee (AC) meetings and coordinated AC training for the members of the AC in order for them to discharge their responsibility properly; it also supported the municipality during the mid-year performance reviews to ensure that they planned better and improved their performance for the remaining semester. It also assisted O.R Tambo District with the process of recruiting the Chief Financial Officer (CFO), Director of Internal Audit and members of AC, by ensuring compliance with legislation. OR Tambo Speakers’ Forums were workshopped with the regulations dealing with cost containment in the municipalities in order to comply with the Regulation and financial management.

Briefing by the Department of Cooperative Governance and Traditional Affairs (CoGTA)

Ms Sylvia Gelderbloom, the Head of Local Government Support Programme in the Eastern Cape, took the Committee through the presentation.

CoGTA support, in terms of the DDM and O.R Tambo, was a pilot for the implementation of the programme. There had been workshops with the province and district to discuss the gap analysis between the challenges outlined in the district profile and provincial investment. On the DDM implementation, a skills gap analysis was conducted to assist with shared services and district hub manager was appointed for O.R Tambo. The district profile had been updated in terms of COVID-19 response issues. Unemployed youth was being recruited to participate in the programme of the Department of Rural Development in January 2020.   

CoGTA and the Municipal Infrastructure Support Agency (MISA) working together had identified O.R Tambo for implementation of Private Sector Participation Model. Discussions had started with the district on identifying certain projects that could provide technical and financial support in fast tracking key service delivery projects in the district.

Through the MSIG, O.R Tambo had been identified as a municipality to receive support with the provision of training for councillors on staffing regulations and competency framework.

On support provided by MISA, it assisted with the development and implementation of operations and maintenance plans. There was a Regional Management Support Contract project that was currently developing standard operation and maintenance for the WSA’s and WWTW plants that were operating. It reviewed the current Integrated Waste Management Plans in order to comply with legislation and to assess the conditions of the water disposal sites in the district.

Discussion

Ms P Xaba (ANC) said that the whole country was listening to the Executive Mayor as she was presenting. Upon seeing the presentation, she had more questions with no answers. What are you doing to make O.R Tambo a better place? With reference to the recent leak of the audit report for 2018/19 that reflected that the municipality had R1.4 billion in irregular expenditure, what measures do you have to avoid this disgrace in future? What about the R4.8 million? Can you provide clarity as to why there were pre-payments of money for the provision of water when no work has been done?

The AG’s report on consequence management showed irregular expenditure of R2.8 billion after investigations were conducted; this indicated that the Mayor probably did not read the report. The municipality established no consequence management or disciplinary board. The matters at hand affected the Eastern Cape and this Committee was doing oversight. What is the rationale behind hiring underqualified engineers? It was obvious that the intention was to spend money.

Mr K Ceza (EFF) said that many of the issues raised by the Committee related to the fact that municipalities were at the forefront of service delivery where people resided. Should any mismanagement or corruption be detected the Committee rose above politics and acted as a unit. Robust oversight might be confused for rudeness. There were questions raised by the residents of O.R Tambo district and they had not been answered by the municipality. An elected leader must lend an ear no matter how small the issue. Some of the questions asked by the public were:

• Which water projects has the municipality engaged in? Which companies were asked to participate?
• How much was the budget allocated to the COVID-19 response?
• Who authorises payments to companies?
• What is the role of Mnandi Civils, Tikitiki Civils and MAGNACO?
• Which areas were visited by the companies? Which ones were not visited? For the latter, why not?
• What is the municipality doing to ensure that criminal offences and racketeering are punished?

Mr Ceza then said that the people of iNgquza, which had 32 wards, complained that there was no water. What is the municipality doing to ensure that people have water? On water infrastructure, how many tanks have been installed? Where is the money to upgrade pipes in Enyandeni and when will this happen?

The matter on food parcels was not political so people should not take it personally. There should be an inclusion of opposition parties in the distribution of food parcels as the food did not belong to any party. During oversight, councillors in the district did not know anything about food parcels.

On reopening of schools, St John’s College in particular, where there was no disclosure of a Covid-19 status, what plans do you have to curb the spread when the school eventually opens? Do you have measures to put up temporary structures in Cecilia Makiwane hospital as it is dilapidated? What measures do you have to deter corruption so that the guilty do not act with impunity? Do you have information on who is threatening the life of the CEO? Can you explain on what basis Mr Hlazo’s suspension was lifted?

Mr C Brink (DA) reckoned that the presentation implied that the municipality had failed at water and sanitation provision. Only 21% had access to proper sanitation and yet the municipality was a water and sanitation provider in the rural areas. There was no denying that they were failing at service provision. It could not collect 82% of its debt. The question was a historic issue with tenders being offered to state employees. What is the progress on actions against this?

About R4.8 million was spent on door-to-door campaign. Who is investigating this inside the municipality to limit the expense having the Hawks investigate it as a criminal matter? The Mayor asked for an expenditure report from the CFO but was not given because there seemed to be a breakdown in their relationship. Will action be taken regarding this? Is the model adopted by the municipality sending it in any direction? On the lack of capacity, the organogram showed that more people work in the Mayor’s office than anywhere else. Her office was a political one and an operational one. What do they do?

Mr G Mpumza (ANC) said that SALGA indicated that the municipality was a pilot of separation of powers and a pilot of the District Development Model (DDM). The architecture of the government model of separation of powers needed to be reviewed and assessed to ascertain the extent of its contribution. The AG said that there was a shortage of engineering and that the infrastructure was dilapidated. The core business of the municipality was the provision of water, so the district should structure itself around this objective. Therefore, capacity must reflect and relate the objects of local government as set out in the Constitution. Does the municipality not have adequate legal function to provide capacity support to the municipality? About R5.7m was spent on procurement of PPE. Was the process fair and just?

Ms G Opperman (DA) asked how many service providers the municipality had. Has the municipality blacklisted any employees who conduct business with the state? With the current SIU investigation going on, do you have a summary of cases? On water provision, what preventative measures have been put in place to mitigate water losses?

Ms M Tlou (ANC) asked where the district hired the 54 water tankers and how much the company received. Water infrastructure was clearly not a priority and the engineers were underqualified. What is the current state of water in municipalities? What will happen to replace the R981 million? The mayor seemed to not be part of what was happening in her municipality.

Ms P Xaba-Ntshaba (ANC) asked when the municipality anticipated furnishing the Committee with a list of suppliers in the service of state. Will you blacklist and terminate the contracts of those who contract with the state? What action has been taken in relation to Mantwakazi, the sub-contractor to Cycle Civils in the construction of VIP toilet? What is the name of the independent investigative entity that O.R Tambo has commissioned to investigate the COVID -19 programme and what are the terms of reference for investigation? When do you expect the report for tabling in council as this municipality is continuously failing in submitting reports? Empindweni did not have water and the presentation was silent on the conditions of that area.

The Chairperson said that this municipality was a water and sanitation provider so this report should have given an indication of water and sanitation status in the entire district. What are the backlogs in the services and how are they being addressed? Apart from the invoices, members of the public said that they were never consulted so how did you conduct public participation and how did you reach out to the poor who do not have technology? The municipality is one of the pilots of the model, what is your experience of support from national and provincial government in terms of s154 of the Constitution? Are you able to support local municipalities in your jurisdiction?

MISA had given a good report on how it planned to assist the municipality to turn itself around, but it was not taking this support seriously. On slide 18, the procurement team and CFO should know the flow of money without the AG knowing. Such could not be demanded from the AG when there were people with authority.

On the AG’s report, the audit outcomes showed that irregular expenditure was a matter of concern. The trends showed that the municipality was the largest contributor of irregular expenditure in the province but there was no consequence management at all. So, a breakdown of that R1.4 billion should be given, since the leadership had received the AG’s report. There was complete disregard of supply chain management policies.

Responses

The Executive Mayor responded that the door-to-door campaign was being investigated by the Hawks, SIU, and the provincial CoGTA Department was investigating. A criminal case was opened by the municipality on it. The irregular expenditure was to be investigated by MPAC and to curb it, when the municipality got quarterly compliance reports, irregular expenditure would be reported, and the reports would be audited.

The memorandum by the people was not received. The municipality would provide a report regarding this.  

The Covid-19 expenditure report had not gone to Council. The CFO and Acting Municipal Manager were made aware of this. The Mayor asked for it because she wanted it to be tabled. The expenditure for COVID-19 was done on the R4.2 million grant as well as the equitable share. On food parcels, the municipality had not distributed them, and she had raised that with the CFO and Municipal Manager. Water tanks had been installed by municipality. The municipality received 888 tanks and 843 were installed. For Covid-19, 26 water tanks were hired and that was reflected in the report with R5.8 million used on them. On the distribution of trucks, Ingquza received nine, KSD received 14, Umhlontlo got 11, Nyandeni got 12 and Port St John’s received seven. The Ingquza municipality said that there was no water cutting. The issue in Inqguza that caused scarcity of water was illegal connection and by-laws were enacted to have such people arrested. Inqguza had boreholes which had high water levels. At Empindweni, the municipality requested assistance from MISA and took a contractor to do a project there on 23 July 2020. SANRAL was also requested for the LSDF of Empindweni, where it would assist the district with road construction. For door-to-door invoices, the official was on leave and an independent investigator had been commissioned to investigate. The Committee was invited to see these projects that were being investigated.

There was one legal advisor in the legislative services and not the whole institution. The institution had many lawyers that represented it. The 2 000 vacant posts on page 54 were posts for the whole municipality and not the Mayor’s office. The posts that were filled were 1 249, leaving 1 103 vacant ones. The Mayor’s office still had unfilled vacancies. Mr Owen Hlazo was still suspended pending the investigation.

The DDM was being assisted by national and provincial spheres. Having two pilots in one municipality caused it to stop on its tracks. The assistance that the district was giving extended to Inqguza being given a person to assist it. The district did not have wards as those were in local municipalities. The matter on insufficient personnel was true. Water and sanitation should be reprioritised together with BTO and this had been raised in the report as those were the two departments that caused irregular expenditure.

The Chairperson asked who was frustrating the Executive Mayor. Who are the pilots wasting time? What are they?

The Mayor said that she wrote to the acting municipal manager to take action and if she did not get a report on the issues that were being raised, because the municipal manager was, it was frustrating. Another issue was not getting a report on Covid-19. This had been raised with the CFO and acting municipal manager. Amongst the two pilots, one was an oversight model on the separation of powers as well as the DDM. It said that the district municipal manger should come up with one plan. The oversight model did not have a law; the district used legislation that governed council. In some areas, there was no law. It took some time for the municipality to accept the DDM. The council was the responsibility of the Speaker; so this caused contradictions and widened up the gap between the Speaker’s office and the Mayoral Committee.  

The acting municipal manager said that as a preamble to his submission, he assumed the ranks as an acting municipal manager last month. The Mayor was correct that she wrote to him, raising an issue about support and the information that was not forthcoming. Having received it, he would now implement the disciplinary regulations for senior managers, and this would result in the report that would be brought to council for decision to continue. Water losses that were unaccounted for contribute to the adverse audit opinions. The problem had been solved by purchasing bulk water meters to account for the losses.

On the employees in non-core departments, the organisational structure was being reviewed and the draft was finished and waiting to be workshopped to employees and councillors. This process would be finished very soon. Employees needed to be in core departments like sanitation provision.

On door-to-door invoices, they had not yet been paid although the project itself was under investigation. On irregular expenditure, to curb it, the municipality was incurring it in adjudication committees. These committees had been reconfigured in line with the recommendations of the AG. Four senior managers must sit on the Bill Adjudication Committee.

On the bidder awards that did not meet the minimum score, this was because there was no capacity in the Committee and now they were being capacitated so they stick to regulations. On deviations, a strict adherence was being implemented. Term contracts were being utilised to avoid s36 and looking to service providers with term contracts. Bidders who did not disclose that they were related to municipal employees, the AG noted that some awards were given to people who were in the employ of the state. The municipality was soliciting the help of the AG for a system that identified whether people were in the state’s employ or not. The AG was asked to be interactive regularly and not only when the audit was to take place. The issues that contained the reports that were not forthcoming, the mayor had been struggling to get information from as early as April.

Mr Moabi Moleko, CFO of OR Tambo, said, on issues that arise from slide 18, that he did not defy the Executive Mayor as that would be insubordination. He had detected that when the entity was paying Amatola Water and obtained financial statements for 2018 and realised that note nine of the statements there was an amount of R210 million received in advance excluding VAT. The opening balance was R60 million. He enquired about the R60 million, asking whether there were any projects tied to it; the answer was no. It turned that money was being hidden in Amatola Water. In 2019 the balances of advances were requested, and they amounted to R178 million. At the time the Executive Mayor was the Chief Whip of the Council. Advances were prohibited and there was no value for money for advances. The denial of some staff institutions saying there was a general condition of contracts allowed this but as CFO, he advised, in terms of the MFMA.

In April 2018 he went to Johannesburg and there was no expenditure but when he returned, he discovered that the municipality had paid R52 million and that R42 million was paid to newly appointed contractors. When the Executive Mayor was sworn in, he briefed her on some of these challenges. This trend continued because this institution had poor planning and commenced things late. There had been many hostile meetings even one that was chaired in January and Amatola was there. In the meeting, he denied that he had made the municipality lose R36 million, and he provided evidence in that regard. At that time, his life was in danger. Before the lockdown R12 million was paid, and he went to the site and found that there was no material on site. On April 16, there was another meeting where he was accused by Amatola and other senior officials, and the executive mayor was chairing. He was chastised for not paying advances. The mayor said nothing about the reports at that time and he told them that his life was under threat. The root cause of the animosity was these advances. There was no value for money in paying before the work was done.

On subcontracting, the recent regulations said that if the tender was over R30 million there must be subcontracting. He investigated and found that this was an issue of irregular expenditure. He had been bringing this up in the meetings.

When financial statements were prepared to determine whether a project was complete, completion certificates were used. If the certificate was not received, it meant that the project was not complete. The AG found that there were statements and yet projects were not complete. The Project Management Office (PMO) was a source of conflict because it was there and had auditors paid monthly, but he had seen inflated invoices from the office. This office insulted him on social media and he brought this up with the municipal manager. He opened a civil case on the matter. The PMO stealing the institution and it is the source of conflict.

He said that he had advised the Executive Mayor to not allow Chief of Staff to not sign documents on procurement as that would result in irregular expenditure and this had not been adhered to. When the qualified audit was received, the municipality was moving from the disclaimer and creativity such as installing cameras had to come to play because documents were not being found. The committees were the responsibility of the Accounts Officer and he was not consulted when BAC members were appointed. The chain was only as strong as its weakest link. It was supply chain and everyone was involved. These advances would increase irregular expenditure. This R1.4bn that must be broken down, now that there had been no investigation currently, that figure might increase. The financial statements of Amatola reflected the amount correctly, it was indeed R218 million, excluding VAT.

The Chairperson asked again to hear on irregular expenditure and steps being taken against it.

The CFO responded that when payments were made there was due diligence to ensure that user departments certified that the work was done. Payments were made in conjunction with supporting documentation. There was suspicion that consultants were not honest because they would say work was done when it actually was not. The information in one’s possession was what allowed one to make a decision. On the breakdown of the R1.4 billion, the quorum contributed and contracts from previous years that were not terminated.

The Chairperson said that the AG had said that there was no consequence management. There still needed to be a further breakdown. Are you not involved in any of this? What has been your role in this?

The CFO responded that he contributed to the issue of the quorum. He said that he would provide a report to the Committee including what consequence management steps had been taken.

The Speaker said previously, the municipality was called to the Committee and questioned on irregular expenditure. The suspended municipal manager issue was raised, and the labour court agreed that the procedure followed to suspend him was correct, and he was asked to pay the costs.

On the question of the legal team, there was a team and one member was suspended and won the arbitration case. The reason he was suspended was that he had represented a colleague in an internal case and was taken to DC and won the matter. The issue on advances, the Executive Mayor and he were frustrated at the Committee reports on OR Tambo projects. The Council was eager to deal with non-completion of projects when money was being used. When the pilot of Separation of Powers was introduced, he was in local municipality. The challenge was that people were used to local municipality systems. National and provincial COGTA should assist the local sphere for good governance for the better of the poor.

On COVID-19 expenditure, the Council wanted a report on this.  The Mayor went to Council to present on reprioritisation because the Council needed a detailed report. The report showed that there were contractors already on site when the reprioritisation was not approved by the Council. This should not be about party politics but have the people being represented in mind.

On consequence management, he indicated that on 26 August the Council resolved that the municipal manager must institute consequences for all employees found liable for irregular expenditure for 2017/18 financial year. When one tried to fight corruption, one started to get enemies. The MPAC Committee was doing a good job.

On the MPAC matter, the sitting Executive Mayor and Council took a decision that MPAC must be given maximum staff as required in the organogram. The legislature was not responsible for this and showed deference to separation of powers. The committee was not loved because it was doing the work and the people who worked there had expertise and experience in local government. The responsibilities and role of MMC was blurred in these issues. The council took a decision to convene with Amatola, but the meeting did not materialise. The issue of advancements with Amatola had been frustrating for a long time. Nqgongwe in Pt St John’s, Thuso construction got advancement of R40 million and indicated in its letter that the advancement was prepared as per instruction from O.R Tambo. So, this problem was really rooted in the municipality.

On terms of reference, the council adopted them on the day when a resolution was taken. Investigation for COVID-19 payments was added on the terms of reference. The council had reports from MPAC presented last year and it demanded the contract between O.R Tambo and Amatola but that was never given to the council. Local government, which was highly legislated, must respect the statutes and work in unity to deal with issues that affect the poor. The Deputy Executive Mayor (DDM) took a decision that he must take the responsibility of the suspended Municipal Manager because the Executive Mayor distanced herself in dealing with it. The Mayor chose to connive with the suspended Municipal Manager (MM).

The Municipal Manager said that the Companies Act was used to pay advances. The Council questioned this as to how the Companies Act could affect the government to such an extent. It sought advice of National Treasury but was told that local government could not use the Act in that way, not in any sphere of government for that matter. It requested the Act up to date and the municipal manager was not forthcoming. The MM was adamant that the Companies Act allowed for advances to be paid.

On the AG report, that matter was frustrating. The Council would write letters and attach to report to show that it had done its best in dealing with irregularities that were taking place in the institution.

The Chairperson asked if the council had done its best. Why is the municipality still in the status quo?

The Speaker responded that this was a Committee of Parliament and it gave recommendations to various entities. However, the implementation of such decisions was not in the Committee’s competence. The Committee should probably visit the site during alert level one. Both national and provincial CoGTA must come through s154 and provide assistance. SALGA had also been requested to come and assist with deciphering the separation of powers model.

On the DDM, there were minutes of the meeting when this had taken place. Council meetings were always recorded, and it could provide evidence at any time.

The Chairperson asked whether the DDM was of any assistance.

The Speaker responded that it was but he was not yet in a position to know how much money had been injected to advance the DDM because the municipality would not only master it in the boardrooms. Money was supposed to be injected in the municipality and monitored in order for it to advance. The plan could not be implemented without plans. The theory was good but it would not be of assistance.

The Deputy responded to the question of lifting the suspension. Immediate suspension was only meant to be a temporary measure for opening the case because there were criminal aspects. When the case was opened, it allowed the Hawks to come in and investigate and then the suspension was lifted.

The Mayor said that the MM was still suspended and the investigation was taking place. When he said that he would not be part of what was done, he was following the procedure of the Council. The MM had to be given a seven-day notice but that was not done.

The Chairperson recounted that the Labour Court had ruled that procedural fairness was followed.

The Mayor responded that the DEM in the Council said that it was the urgency of the matter. If there was a ruling that said that then that was acceptable.

The Chairperson asked whether the Mayor had not seen the ruling of the Labour Court.

She responded that she only saw the portion on urgency that the speaker had given her.

Mr B Hadebe (ANC) said that for the sake of clarity, the Speaker was adamant and confident that the ruling was that the suspension was procedurally in order. What the Mayor was saying was contrary to what the Speaker was saying. Was the ruling on urgency or was it on procedural fairness?

The DEM said that when urgency was applied for, reasons were given and forwarded an affidavit opposing the urgency. The judge considered the content and dismissed the case and said procedure was not followed. The delegation given to me did not come from the Mayor. In opposition to that, legislation was quoted, which gave power and authority to the Mayor. The court ultimately ruled that there was no urgency and the case could be heard in October 2021.

The Chairperson asked for the judgment.

The speaker responded that the matter was struck off the roll.

A speaker from the Department said that the DDM was geared to capacitate and ensure that there was a functional municipality that developed economic growth in the area. The O.R Tambo was one of the pilots and the pilots were establishing hubs. Institutional relationships between local and district municipalities was a discussion that had been taking place at policy level and within SALGA. District municipalities had powers that local municipalities may not necessarily have – such as zoning. The DDM had identified those areas of policy and discussing whether the current structures could function in the DDM as they were or is there a need for change in policy to give, remove or share powers? The IGR was used to ensure that stakeholders worked together. The challenges that may arise and impede the IGR from fulfilling its purpose would be looked at. The aim was to have one plan and one budget.

Secondly, the O.R Tambo was heavily populated and in the next 20 years there would be six million people living in the district. It had to grow in terms of the economy as the population grew. It had the lowest skills and lowest education levels. The Minister was liaising with Walter Sisulu University to figure out why there was no faculty of agriculture, yet the district had the most potential when it came to agriculture. It was a job absorber and creator, and skills were needed. To deal with this, the university must establish an agriculture faculty.

On unemployment, he said that agriculture, tourism and ocean economy were low. These three sectors would change the district, which had the highest in poverty in the country. The profiles had been updated and the gap analysis had been discussed. The quantum in the district, in terms of provincial investment, was R11.5 billion. Therefore, the hub which had been established would ensure that projects were concluded. The district hub was getting a person who would taking over as hub manager and would work with the college, and TVETS would be established. Mr Mzwandile Sokupa had been introduced as the hub manager and had CEO experience and quantity surveying background.

Ministers and deputies would be deployed to districts and hopefully this would resolve the challenges. The hub would also establish DDM technical capacity in terms of water supply and infrastructure and dam construction in certain areas. MISA did very well and completed seven boreholes during the lockdown.

Mr Kevin Naidoo, Executive Manager: Municipal Governance, COGTA, said that the principal, at the budget forum, gave an apology for his absence. What was to be discussed were ways in which SALGA, the Department and Treasury would be engaging with the sector in future. It was suggested that this collaboration should be formalised with some form of a memorandum of understanding. Treasury had pledged that the district would be engaged. This would be a step to see how to deal with financial management issues as they present themselves.

On the COVID-19 expenditure the organisation, Ms Noble said that the AGSA, together with the President, agreed that they would start looking at expenditure in real time. O.R Tambo had not given all the information before the expenditure could be looked at.

The Chairperson said that things at O.R Tambo were done manually. So how will this be done in real time?

Ms Noble responded that AG would look at transactions that had taken place and look at the processes that were in place and do a risk assessment to see if they were vulnerable. If so, they will be escalated to management. The district would provide information whether manually or electronically. The sooner it got the findings the earlier it could rectify them.

Follow-up questions

Mr Hadebe said that the AG was correct that there was instability in senior management and office bearers. The Mayor was saying one thing and the speaker contradicted her. So what should the Committee rely on? The Mayor said that an independent investigator was appointed without terms of reference but the speaker said something else. How was an investigator appointed without terms of reference? What would they be even investigating?

On written invoices, why are officials being put on special leave? The invoice had yet been paid but the official concerned had signed it and sent to manager to effect payment. This meant that the official had satisfied herself that the service provider deserved to be paid. Certain community members that were put on the list denied that any correspondence with them had taken place. That on its own provided reasonable grounds to believe that misconduct and negligence was done by that official and millions were lost. Such an official ought to be suspended and not be rewarded with a payment holiday. Why do you not suspend him without payment if you are serious about consequence management? Who approved the advanced payments and why?

In terms of contractual agreements, does the CFO understand them as contained in GCC? Has he given himself time to understand regulation as contained in the CIDB? As an accounting officer, he had the responsibility to prevent wasteful expenditure. If he had not done that, it was a call for concern.

He said that the speaker was responsible to ensure oversight and compliance with legislation; it was confusing that he spoke about getting frustrated by Members. As the chairperson of the council, how is he enforcing compliance? Being frustrated was not enough. Have you instituted disciplinary action for those who will not toe the line?

Mr Ceza said that there was what the municipalities plan with providing water in Kuhombe Community. In ward 18, 19, 20 there were boreholes; what plans are in place to ensure that water is provided? In Katiluma and Polar Park, is there a de-densification, decontamination programme for COVID-19? If so, what did it cost the district municipality? Have you installed electric infrastructure and do you have a housing plan there? If so, when will that resume?

On the CFO’s return from Johannesburg there was money spent; did he find the origins of the money and the money he was accused to have squandered? Mr Hadebe was worried because if the elephants were fighting, it was the grass that was suffering. On the instability in senior management, surely the DDM would be irrelevant if it did not find a good working relationship. Is there a remedy for this?

Ms Tlou asked the CFO on irregular expenditure and who was involved. She noted that the speaker stated that the Amatola project was never discussed in Council. Why was there R60 million just sitting there? What has he done to correct the situation? Before lockdown R12 million was paid; who was it paid to since there was no material on the site?

Ms Xaba-Ntshaba asked the CFO why there was an invoice all over social media that showed that there was a Qongweni-Tsomnini project in Enyandeni Municipality whereby Thuso consultants were paid a large amount of money. Were these amounts paid in advance or when the job was done?

On the threats on his life, there were many things going wrong here because people were scared for their lives. There was a controversial unit in the MM’s office that threatened the CFO.  After paying tender money, he would not get documents and he would have to fight to get them. A person’s life was at stake here; this was a serious matter.

The speaker said that Amatola was never brought into Council to approve for a contract but for some reason it was there. He said he was eager to fight corruption without success because there was someone in the background counteracting his efforts. This municipality was corrupt to the core. The instability was caused by corrupt leaders. They were defiling the municipality, which was for the people and not the leaders. The NPA and Hawks needed to come and arrest people in that municipality.

Mr Mpumza said that the Speaker had said that the Chairperson of MPAC indicated that the R2 million must be written because he did not want to lose his life. The CFO had indicated as well that even in supply chain there were underground forces. Why do the presiding officers of the district allow the development of such a toxic environment that threatens the normal functioning of the institution? What action has been taken to ensure the safety of lives in the institution?

He noted that the speaker indicated that Amatola did not have a long running contract. But looking back at other years within five-year period, irregular expenditure had been implicating Amatola Water. The AG queried the use of only Amatola water. The FFMA had been abused here. Can the acting MM send this contract between OR Tambo and Amatola water?

The CFO discovered invoices from 2018/19 of R210 million and R178 million paid to Amatola as an advance. Since FFMA prohibits loans, who authorised these payments because the authority is with the CFO? In the report that the executive would submit, the terms of reference for the employment of PMO should be included. Fully aware of your fiduciary duties, did you ring the alarm and what action did you take to recover the money which has been paid unlawfully? On irregular expenditure, what action has been taken regarding it over the five-year period? How many officials has disciplinary action been taken against?

To AGSA, he noted out that the AG Act had been amended. Given this report, what is the action to be taken by AG in relation to recovering the money? On noncompliance with supply chain management, goods and services to the value of R200 000 had been procured with gross violation of MFMA. What action has been taken against this? The quotation system had also been abused without complying with its full requirements.

Ms Tlou recounted that the CFO said there was irregularity expenditure where everyone was involved; who exactly is ‘everyone’? For the R2.8 billion on irregular expenditure, what effective action was taken to recover the money? The municipality did not recognise infrastructure assets and they were thus not recorded. This meant that there was no effective data capturing in your municipalities. This was a disgrace and people should be arrested.

On EPWP, how many people have been employed to date? Mayor, how many companies were awarded projects and how much did each company receive? Does the municipality have 29 water tankers or 54? On the engineers and technical stuff, what was the rationale used to contract people? How can you hire unqualified people and expect them to do a good job?

Mr Groenewald asked whether Covid-19 tenders were tabled in council.

Responses

The Executive Mayor responded that in Kuhombe ward 20 there were boreholes, mainly in Ingquza. Water was typically low during winter that was why water tanks were issued. The boreholes would be reprioritised. The covid-19 service provider report was done through term contracts and some through regulation 36. Polar Park was a water-scarce settlement and the municipality wanted to relocate them because that area was prone to disaster. The R36m of Amatola was taken from the Regional Bulk Infrastructure Grant (RBIG). There was a meeting where the grant was to be reduced but he refused. Amatola senior management and OR senior management discussed this as Amatola was the implementing agent for RBIG. She did not inform the CFO because Amatola had not made any submissions. With the advancement, she was told about them when she was the chief whip as well as when she became Executive Mayor. She told the CFO to write it down so he could take action but this never happened.

She had recently told the CFO that there was a donation from Red Cross – 12.5 kilograms mealie meal – and informed him that other things were needed to accompany it. The CFO had asked whether that was COVID money or not. She told the CFO that when she went to Mayoral Imbizos, she identified destitute families but with the pandemic, families needed to be assisted urgently. That request was never processed. The CFO never communicated with her yet he sat in Mayoral Committees; he would rather communicate with other parties. Even with irregular expenditure, he was informed to not bring reports in a summarised manner as he was in the position of authority to advise.

On water carting, there were 10 trucks and they were not being used. The BTO was responsible for looking after the assets. In light of the pandemic, the municipality had set out to increase the availability of water trucks and hired 26 trucks. Shortly after, it received 12 water trucks from the Department of Water Affairs. The money used to date regarding this was R5.8 million. The names of the service providers would be provided to the Committee. The CFO had not sent forth the expenditure report since March 2020; he could not advise the municipality, hence assistance was solicited from BTO. The Mayor told the MM to take action because the CFO was answerable to her; this should also be tabled in council. The decision taken by the council superseded any other decision. The CFO was told to write instructions to any person who wanted an advancement. Some of the reports spoken of here were new to her.

Irregular expenditure was mostly caused by the adjudication Committee which was chaired by the CFO. The Mayor said that she always held mayoral imbizos, but the CFO never attended them. Failures in this municipality were done deliberately although she had made it clear that she despised corruption and wanted to turn the municipality around.

The Chairperson said that legislation was clear on financial management, the Mayor’s duties and on what to do in cases of insubordination. The delegation was bringing complaints and no solutions; incumbents should demonstrate leadership. S71 reports were signed off by the Mayor; something was amiss if there were reports that were not provided to the Mayor.

The speaker said that the director was placed on special leave because she specifically requested to be placed on leave to allow for the investigations to proceed. The Council agreed unanimously and the responsibility of the Speaker was to sum up the decisions of the Council. On the safety of people’s lives, the municipality was doing its best to ensure that this matter was being resolved.  The Mayor was correct in saying that she despised corruption.

The CFO said that he had never disobeyed the Executive Mayor and did not intend to do so. On the matter regarding the R36 million that was lost, he explained that it was lost due to understanding of the RBIG. The accusation was that he had kept invoices by 31 December 2019, but it could be proved beyond a reasonable doubt that the first batch of invoices arrived on the 31 of January 2020.

On the meeting held, where he was accused of keeping invoices, he clarified that invoices actually arrived the day after that meeting. He said that he could produce a Proof of Execution (POE). It seemed that between himself and the Executive Mayor. The staff had sent the Mayor all invoices she had requested.

On who approved the advances, he explained that the requests were sent in the form of ‘work done’. The user department and the MM approved these payments and consultants signed certificates; so it was all misrepresentation. The invoice with R40.6 million was paid before the work was done but the user department said that it was for work done.

The Chairperson said that documents must be sent and law enforcement would also be invited.

The meeting was adjourned.