Madibeng Local Municipality: engagement with Municipality; MEC; AGSA; SALGA; COGTA

Meeting report

Introductory remarks by the Chairperson

The Chairperson opened the virtual meeting, welcoming the Members, Committee support staff, as well as the delegations from the North West province, Madibeng Local Municipality, the South African Local Government Association and Auditor-General of South Africa. Apologies were announced and the agenda of the meeting was then introduced.

 

This is not the first interaction with Madibeng; they had had a joint meeting with the Standing Committee on Public Accounts (SCOPA) to discuss issues about the municipality. Reports were sent late to Members against the 24-hour rule of Parliament that provides that reports must be submitted 24 hours before a committee meeting. The MEC of COGTA must explain why the report was submitted late.

They are encountering the same audit outcome with regard to the Madibeng Municipality. Payment to consultants exceeds the salary bill schedule and exceeds the MEC Finance section entirely. There are no improvements on the audit outcomes. The administrator’s report shows that this trend continues under the 2018/19 financial year that is under review, where municipalities are listing the assistance of four different consulting firms to prepare one set of financial statements.

The Committee learned that the municipality has a financial reporting accountant responsible for bank reconciliation, a CFO responsible for monitoring and supervising the Department and a deputy CFO responsible for financial statements. However, as Members were browsing through the presentations they noticed that there are other slides that indicate that the CFO position has been vacant since December 2018. The administrator must give clarity on this.

They are also touching on the effectiveness of the section 139(1) intervention and the case of Madibeng amplifies this question. The administrators report indicates that the municipality has been subject to four interventions in terms of s139(1)(b) of the Constitution; none of these interventions have yielded better results and this is an area of concern for the Committee. There is no reason why the provincial executive is avoiding the institution of s139(1)(c) of the Constitution in that municipality.

The other issue is the lack of consequence management for wrongdoing, which is also common in Madibeng. People can get away with anything because there is no will power to effect consequence management. They are aware that the forensic report is currently sitting with the municipality; there is no action taken on its findings and recommendations. Some officials initially suspended in connection with the illegal investments of the VBS Mutual Bank are back in the employ of the municipality. The municipality appears to have lost R35.1 million invested in the bank. However, they are making efforts to recover that money and those that invested the money have not been held accountable. Communities are dumping refuse at the doorstep of the municipality for money wasted.

The Committee is also concerned about a councillor in the service of the municipality owing rates and taxes with impunity; illegal debt orders in the municipality’s bank account have not received attention for more than two years; the list around poor consequence management seems to be endless. The report on four senior managers in June 2020 on allegations of misconduct comes as an exception rather than a rule. There is little comfort in knowledge that the municipalities financial structures are functioning when there is little evidence of their effectiveness.

The presentation still refers to a systematic breakdown in discipline of financial controls in the municipality despite the existence of internal audit committee, MPAC and municipality disciplinary board.

The Committee needs to intensify its oversight on these matters and close collaboration with the Hawks will be vital. 

Briefing by the Madibeng Local Municipality on its status

The municipality said that it was placed under section 139(1)(b) interventions five times due to political instability, weak municipal administration as the municipality had to go for four years without senior management being appointed. The section 139(1)(b) intervention included targeted intervention on water and sanitation.

Allegations of maladministration and corruption have been reported over the years, a forensic report remains not implemented by municipal council; this includes taking disciplinary processes against officials who invested in VBS. The municipality has water supply challenges in rural parts of the municipality and water quality challenges where there is piped supply of water. There is vandalism and theft of infrastructure meant for service delivery. Administration has been lifted as at 30 June 2020 with little progress or non-tangible results. However, the municipality is awaiting the closeout report from the MEC. Recently, on the 03 July 2020, the provincial executive committee (EXCO) resolved again to place the municipality under section 139(1)(b) of the Constitution.

The municipality has, during the intervention, embraced and demonstrated commitment and support towards the realisation of the objective of the intervention. As a result, the council resolved to extend the six-month term with another six months. The situation in the municipality can be described as stable and improving although there are still some serious underlying challenges which will take a long time to address. The damage inflicted to the municipal finances, coupled with the dilapidated state of municipal infrastructure will require a complete turn –around in the way in which the municipality is managed politically and administratively. Council and Mayoral Committee meetings as per council agenda, the majority of portfolio committees are meeting regularly and only a few meetings are postponed, MPAC and Audit Committee are also functional.

There is low staff morale, four positions of Municipal Manager, Chief Financial Officer and Directors of Infrastructure and Technical and Human Settlement and Planning still remain vacant, regardless that the municipality was placed under section 139(1)(b) of the Constitution. The organisational structure is bloated at the top and is not aligned to the municipal functions and high number of unresolved labour matters, blurred lines of responsibility between council and administration.

There is a need to investigate the IT contract because the IT company has five different accounts with the municipality. Maladministration of credit cards, illegal debit orders in the municipal primary bank account. There is also need to conduct life style audit starting with Councillors. Additionally, there are allegations of rented thugs/criminal activities that usually invade and disrupt operations in municipal offices.

The municipality obtained disclaimer of audit opinion for four consecutive years and AGSA identified continuous use of consultants and the municipality has the highest cost of consultants in the province and yet no value was realized due to a lack of proper record-keeping practices, which at times appeared deliberate in order to hide the extent of irregularities. There was also instability at both municipal manager and chief financial officer level during the financial year and the provincial treasury seconded staff to the municipality to assist in these roles after year-end. However, even the provincial treasury’s seconded staff could not assist the municipality due to an inability to maintain proper records to support the information presented in the financial statements.

In terms of municipal mitigating measures the municipality advocates for reconciliation of accounting records, correction of prior year issues and early implementation of annual financial statements plan to avoid late review of annual financial statements. The Department will be rolling out the following projects to assist the municipality to improve audit outcomes: data management which aimed to assist municipality with accurate and complete billing, and records management to assist the municipality to improve records management systems.

See presentation document for more information

Progress report on the implementation of section 139(1)(B) of the Constitution in Identified Municipalities in the province

This is a progress report and related expenditure on the invocation of section 139 (1)(B) and (C) of the Constitution. The progress is informed by the close-out reports submitted by the intervention teams.

Notice of invocation of section 139 (1)(B) intervention of the Constitution (RSA) in Ramotshere Moiloa, Tswaing, Madibeng and JB Marks Local Municipalities and request for concurrence.

This is a letter regarding the invoking of section 139 after reports of systematic failures by the councils to carry out their executive and legislative mandates as articulated in section 152(1)

Implementation of the integrated risk-adjusted preparedness and response plan: COVID 19

This was an update to Members of the Committee on the implementation of the Integrated Provincial Risk Adjusted Preparedness and Response Plan for COVID-19 in North West Province.

SALGA support to Madibeng Local Municipality

The North West SALGA also briefed the Committee on the support it provides to the Madibeng Local Municipality. It reported that following the support provided to the municipality, the Auditor-General (AG) stated the following in his 2016/17 general report: “We noted a number of new initiatives being implemented by the coordinating departments and the South African Local Government Association to improve financial and performance reporting as well as the compliance levels at municipalities”. SALGA also said that it will never be satisfied with the impact yield by the support initiatives it provided, until the audit outcomes of all its municipalities are both improved and sustained.

 

See presentation document for more details

 

A detailed presentation document by the Auditor-General’s findings on Madibeng can also be found on PMG website, under the meeting thread.

 

Discussion

Mr C Brink (DA) directed his first question to the Madibeng administrator, Adv. Monnapula Motlogelwa. He said that there is a contradiction in the information given to the Committee because the presentation that was given by the North West, where they indicated that proper procedure is not being followed for disciplinary action concerning the VBS saga, but the administrator says it is happening. They cannot control what the Hawks or NPA are doing but they can ask what the municipality is doing to follow the proper disciplinary processes and to act on the forensic reports that have been commissioned by the province.

In terms of the CFO position, what emerged from Public Accounts last year is that the former Chief Financial Officer (CFO) who left at the end of 2018, Mr Morris Maluleka, was also the CFO when the R50 million VBS deposits was made and only R20 millions of that was recovered. The MFMA puts fiduciary obligations on a municipal manager and CFO so it is not about blaming junior officials; the senior officials have to take overall responsibility. Is there any view on whether Mr Maluleka and/or the acting CFO are implicated in this? His concern is that they left without disciplinary charges being instituted against them despite the heavy fiduciary responsibilities that are placed on the CFO and municipal manager by the MFMA. Provincial and National Treasuries can assist with the interpretation of the Act.

Mr Maluleka went on to become a municipal manager of the Waterberg District in Limpopo before the investigation was properly concluded and before he could account for his fiduciary responsibility. He said that the law is clear, that if you suspend a senior manager or take a decision to investigate a senior manager a report has to come back to the municipal council and compile an interim report and, based on those findings, proceed with charges. He asked the administrator if disciplinary reports from the financial disciplinary board of the municipality or other special investigations body, in terms of the Systems Act, have come back to council for action or if that not happening at all.

Secondly, are they acting only against junior officials, which would be completely incognisant to the situation here? They cannot just act against subordinates; the senior official who has the fiduciary responsibility also needs to account. Unfortunately, Madibeng is one of those areas that have zero accountability in terms of VBS; R50 million gone in a municipality that is close to bankruptcy or technically insolvent from the Auditor-General’s report.

He thought that the Mayor of Madibeng, during the time of VBS deposits, had resigned because that is the precedent that was followed in most municipalities in the North West as well as Limpopo; Gauteng was an exception. The decision to remove the last remaining Mayor in VBS in Gauteng was made by that Mayor’s party. Mayor Muthibe was the mayor during the time of the VBS saga (subject to correction); the question to her is why she has not resigned and she cannot wash herself off her responsibilities. She has responsibilities in terms of law and oversight process and budget process. He added that you cannot lose R30 million and just blame the officials.

He asked Councillor Ntsabele if she has written to the Mayor to request disciplinary reports to serve before council against senior managers in terms of the Systems Act or MFMA, so that disciplinary action can be taken on the VBS Bank matter and other disciplinary issues. If they have not done so, why is that? Council has legislative responsibilities for the discipline of senior managers and councillors as well. Secondly, given the councillors who have outstanding debt to the municipality, has the speaker taken any disciplinary action as the custodian of the disciplinary process against these councillors? Has he spoken to the Chief Whip? Has anything being done in this respect because the financial reports would indicate every month or at least quarterly which councillors are not paying their bills?

Does the MEC intend to take any action because of the lag in taking disciplinary action by the council Madibeng in respect of the VBS Bank matter? Are there any plans for further intervention? Madibeng is in such a terrible state it might be a candidate for section 139 (1)(c) intervention. What is the resolution of the municipal council and its re-election? Is the MEC taking that into consideration, especially given now that there are between four and five failed interventions and no lessons are learnt?

There is a water collapse issue in Madibeng. Can SALGA give any set of lessons from failed interventions? Why do interventions of this nature fail?  That type of analysis is crucial.

Mr I Groenewald (FF+) asked whether the forensic report was tabled to council. To the Mayor and Speaker of Madibeng, he said that their MPAC is not functional due to lack of attendance of councilors.

He noted that schedule one of the systems provides that officials must attend meetings. Did they invoke or act against councilors that did not attend MPAC? Will the municipality do a report of councilors’ attendance and services rendered to council?

There was no bank reconciliation for the last three years but in the other slide there is a contradiction in that they say that the consultants used cash on cash equivalents of which R36 million was paid for five different consultants. Why is it that in those three years the bank reconciliation was not done?

For revenue, credit receivables and credit control, they are only using estimates because they are not able to read metres. Is there a reason why communities keep them away from those metres? Is the metre reading contracted? If so, what is the amount they pay for contractors to read the metres?

In terms of the systems Act, the community must allow them to read metres. Has the municipality taken any action such as asking the assistance of the police to read those metres and what have they done to get readings for those metres?

The municipality had stated that there is training needed on its supply chain management (SCM) unit. When someone is appointed in an SCM unit they must have experience and have a good understanding of how SCM works. What training is needed?

In terms of document management, slide 16 of the presentation mentioned that all the entity’s documents are kept and safe. One of the AG's findings was that the Office did not receive all the evidence. Why then was it reported to the Committee that the papers are available and safe?

Were third party payments, such as on medical aids, made? If not, how long have they not being paid? Over the last three years, has the annual report has been reported timeously in terms of the MFMA?

A Member pointed out that the part of the presentation which discusses the loss of water and electricity made it seem like the municipality gave up on governing due to challenges. Has the mayor given up in governing Madibeng?

In terms of electricity disconnection, what is the amount that is being paid to contractors to disconnect and are they paid to give 14-day notice? It looks like the municipality does not even give notice and if they do it is the same day they disconnect.

For the R1.1 billion loan from the PIC (which is a loan that overlapped before 1994), it is clear from the MFMA there must be a council resolution. Is there a resolution?

The AG’s report showed that salaries and wages accounted for almost half of the total revenue. What is the municipality going to do to address that?

The Hartebeespoort Dam falls under the municipality’s region; the entity alluded that the dam is one of the economic sectors in terms of tourism. Due to the pollution in Hartebeespoort Dam, what is the municipality doing to correct that pollution and what future plans are there to ensure it does not happen again?

In terms of riots arrest, what are the problems especially for the many riots that are happening in Madibeng within the last year? There was police presence when the administrator assumed his duties on 18 August; why was there a police presence?

To the Mayor, all the opposition parties put a motion of no confidence with his leadership; they claim that he lacks leadership and oversight and from the presentation it seems true.

To the administrator, in the last year or two, how many section 32 procurements were done and what was the total amount to that?

The municipality has a contract with Be2Bright (Pty) Ltd. In terms of that contract, the municipality is paying to rent vehicles R9 million a month for 106 vehicles. When did the contract begin? Was there permission to sign the contract because the total amount of the contract is R218 million which they could buy and maintain the vehicles? How many of those vehicles are operational? How many are licensed?

The Members noted that the municipality was renting an MP300 without a canopy for R21 000 a month. How did they accept paying that amount of rent a month for a car that is less value than that?

Mr Victor Budlela, a former employee of the municipality, was accused of murder and has been in prison for the past year while still being paid close to R40 000 a month. Can the Mayor explain what the situation is and why is he being paid?

For Capital Projects on draught relief there is a value of R22 million, but they spent R5 million. The contract is on hold and the contract was terminated due to irregular expenditure. What were those irregularities and how are they going to mitigate those monies lost?

In terms of the IG backlog on projects, it is a R25 million project. This project is also on hold and the contract was terminated due to irregularities in the appointment. What were the irregularities and on both projects? What was the consequent management taken?

For the contract with Betrobit they are paying almost R200 000 a month for two-graders, although it broke down since September 2019. Can they also explain that?  

Ms G Opperman (DA) said that the Madibeng municipality has appeared on 29 July and they revealed there that there has been no investigation, no accountability and no action for all prior years of irregular expenditure, fruitless and wasteful expenditure. Why has no disciplinary action been instituted?

The municipality fits the description of a municipality in financial crisis as per s140 of MFMA. Its liabilities exceeds its current assets and it owes its creditors R599 000 million as of June 2020 and the debtors’ balance is R2.4 billion. What is the recovery plan and how is the municipality going to retrieve the monies from debtors? How is the leadership going to turn the municipality around despite five failed interventions?

There are five officials that are facing consequence management and irregular expenditure is sitting at R443 800 million for the 2019 financial year mainly because of adjudication committees that were not properly constituted. Has this been rectified and why have they deviated from competitive processes? Do the five individuals facing consequence management include people who had illegal or unauthorised debt orders with the municipality for DSTV, AMC Cookware? Have they paid back the money? When will they implement the recommendation of the forensic reports that are said to be with the municipality? How far back do the forensic reports date?

There is an IT company with five different accounts with the municipality. She asked for more information to be provided on the allegations of rented criminals to disrupt operations in municipal offices.

Mr K Ceza (EFF) said that putting the municipality on administration multiple times has been a futile exercise. He was wondering whether it was a good idea to put it under administration and not appoint a manager and CFO. The AG reported that there are cases of corruption in the municipality and only a case of compliance has been opened for a person known as Mr Cash, who was suspended since October 2019. What timeframes can they give for the five that have been implicated on the allegations against them?

There is R31.7 million that is implicated by VBS; the perpetrators are back in the employ of the municipality and the community was on a rampage. How many are still under the employment of the municipality? In terms of provincial SCOPA, what is the status of the corruption committee? The mayor accepted that the committee is in place and is functional, but it has not led to a single case. Which case did that committee probe? What is the status of that committee currently? Despite evidence where a single case which an official has been prosecuted.

There is a lack of accountability in a case where the municipality acquired a loan of about R1.1 billion. Why was the loan not disclosed on financial statements of the municipality during the audit? Why did it take the High Court for the municipality to admit it took a loan from public investment corporation?

SCOPA indicated that MPAC is being prohibited from probing the municipality. Who are the culprits that are prohibiting MPAC from probing the municipality? What action has been taken on people who have been implicated on procurement scandals without inviting competitors? Has a detailed report been submitted on the payment of DSTV and clothing accounts from the municipal bank account and names of officials and what action has been taken against them? They cannot allow public funds to be used for private use.

The community of Madibeng went on a rampage on various issues such as dirty drinking water, potholes. What is the turnaround strategy to deal with the community’s needs?

Mr Adriaan Basson asked the administrator how he worked during his period of administration. He pointed out that R1.1 billion is owed to the PIC. The loan is not a loan the municipality took up but a loan prior 1994, and the municipality tried to deal with it, himself included, when he was a councillor in that municipality. He further added that Madibeng will never be able to pay back that loan with the current status of the municipality’s finances. How is the administrator going to deal with the PIC concerning this matter?

In the report it stipulates that electricity was R96.6 million that the municipality owed Eskom and Tshwane. Currently, Madibeng only owes Eskom R236 000 million so even under administration matters have escalated. It seems like Madibeng is the milking cows in terms of corruption when it comes to the North West. How are National Treasury and COGTA going to deal with this issue? The community of Madibeng is struggling with no service delivery. They owe R17 million on fleets, and 106 vehicles which they could have bought and are now paying R 9 million a month. Over the last two weeks the vehicles were blocked, sewage was running, electricity cables could not be fixed – there was no service delivery. They give work to 6 000 people and those people have lost income because of poor service delivery in Madibeng and the blocked vehicles on the system. The administrator needs to account what he has done to change the municipality. There was a total of 106 vehicles that Madibeng is renting at a cost of R9 million a month. The administrator needs to explain how he is going to deal with this.

For seven years people have been protesting for water. The Department of Water and Sanitation has made funds available to upgrade the water purification plant because of ANC councillor interference in those projects being delayed for three years. How is the administrator going to deal with not allowing councillors to interfere with projects so that water can be delivered in the area?

To the mayor: the right thing would have been for the mayor to step down and resign as a mayor, but it seems that the mayor will not do so. How will the province deal with this? It is bad leadership and the province is not assisting the municipality in cleaning up the leadership of the municipality.

Mr B Hadebe (ANC) said that if a municipality has conducted a forensic investigation they do not add on the outcome of those investigations; it is tantamount to fruitless and wasteful expenditure. The municipality must explain whether they are planning to act on the outcomes of the forensic investigation. These investigations cost millions and if entities do not act on the recommendations the investigations become a futile exercise.

On the use of consultants, the AG says that the consultants were ineffective. From the point of view of the municipality, have they received value for money on the outsourcing of the consultants? Have they been able to transfer skills? About R35 million was spent and the report indicates that the municipality is struggling to pay service providers after receiving goods and services it takes almost 360 days to pay for services rendered. Is this a similar instance when paying consultants or are they paid on time? To see whether there is a challenge when making payments to service providers or some are more equal than others.

Chairperson of COGTA in NW Motswane said that despite having agreed with the former MEC that they would temporarily stop with the invocation of the implementation of section 139 across municipalities until they have reviewed terms of reference and the appointment of administrators in municipalities. The reason why these investigations are not yielding results is because they are not analysing and making assessment, other than the desktop assessment presented to ensure that they go to the root of the problems. They cannot apply one solution to all municipalities. There is a lack of administrative will. The first report was not properly dealt with. There was a case dealt with and there was no follow up on forensic matters that were investigated. Unless provincial and national treasury intervene with the outcomes of the forensic investigation it does not seem like there will be any progress. It gives people impression that they will not be held accountable even though investigations have been done.

It does not seem like a good idea to reinstate s139 in that particular municipality. Since 2019, Members asked for a report and they have not received an update. Part of the problem was that the administrators were directed to report to the executive committee (EXCO). You cannot procure medicine for someone who is not ill. EXCO will not know what needs to be corrected. The municipality has failed to investigate irregularities that have occurred in the municipality, fruitless and wasteful expenditure, failing to admit their shortcomings, employing consultants but they have a staff of 156; the municipality failed to produce reports. Provincial treasury should be allowed to intervene in terms of s139 to help with a financial recovery plan for the municipality. If the municipality resists that recovery plan, then it will prove that the municipality has something to hide. They can then make a full analysis of the entire structure. The capacity of the Madibeng should be a municipality that raises its own funding given the industries surrounded in that municipality and they have big mines. Why has the municipality not been able to tap into these opportunities?

National and district municipality and water boards are not held responsible for the monies given to water boards, that municipalities that do not have. They should report to this Committee that they have finished this water demand project as a result of the water master plan established to the issue of water. There are irrigation schemes in Madibeng but there are communities that are up in arms due to lack of water, the farming communities are able to maintain their water demand. The electricity network problem is in shambles despite there being two service providers.

The Chairperson said that the municipality must answer on the land use patterns; she asked what the municipality was doing in their interventions with regard to the land ownership patterns in terms of national demographics and taking into account transformation and inclusivity.

She added that the presentation needed to be updated to give an indication of service delivery: water, sanitation, electricity, roads and solid waste. What are the backlogs in these services and how are they being addressed?

How did the municipality conduct its public participation for IDP and budget during the COVID-19 for people who do not have access to technology? What is the experience of the support they are getting from national and provincial government in terms of s154 of the Constitution?

In 2016/17, R214 million was lost; 2017/18, R316 million was lost. The loss gets higher but there has been administration throughout; now there is a R1.3 billion loss. In their proposed intervention they are mentioning s139 (1)(b) and not mentioning s139 (1)(c). Are there any success stories of these interventions? Is the necessary support available from provincial COGTA and provincial treasury for these municipalities?

There are section 71 meetings every month with provincial treasury it seems that those meetings are just for miscellaneous compliance. To the speaker and MEC of Finance when the reports are submitted to them, what do they do about them because they were never dissolved of their responsibilities even though they are under administration?  

Why is the municipality where it is today despite the support from COGTA and provincial treasury?

Mr G Mpumza (ANC) said the critical questions the presiding officers of the municipality must answer are why they have not been providing the necessary strategic plan. The municipality has spent R35 million on consultants that were supposed to provide financial reports; was there any value provided by these consultants? What action is taken from consultants who did not perform according to their expectations?

Over the four terms, what has been the assessment of the municipality in terms of the invocation of section 139 (1)(b)? From a cooperative government perspective, what has the province been doing to assist this municipality and invoking s164? The MPAC of the municipality had recommended a write off of R1.5 billion; R426 million was referred to the municipal manager for investigation. Why did the council make the decision that the municipality must investigate itself? What is the progress around these investigations that the municipality made? Could MPAC also explain how they arrived at that particular recommendation in November 2017? What measure of consequent management were they expecting with such a write-off?

The AG report indicates the non-compliance with supply chain management. There is a lack of reconciliation. There is poor record keeping which is the key of point of administration. Does the municipality have the requisite skills in terms of budget and finance? Where is the CFO of the municipality? The financial system they are using is not user friendly to the measures of the internal control; why have they continued to use the system? Does the CFO understand that they must provide adequate, reliant financial management system?

The province has indicated that section 106 investigation has still to be implemented. What has the province been doing in rescuing the situation? Why has EXCO tolerated maladministration? The municipality would be receiving a disclaimer for four consecutive years.

The Chairperson asked who plays oversight on the administrators that have been deployed to the municipality. All the administrators that have been sent to the municipality have contributed to its collapse given the trend of the money that the municipality has been losing. What administrator would allow a municipality to pay R9 million a month for rental of cars?

What is the contrary report that the province is going to give against the AG report? What is the province going to do about all these administrators that they have deployed who have failed?

The Chairperson requested from the MEC to be more specific about the delegation’s opinion on the work of the administrators and also linking it to the report of the AG. She asked the MEC to admit to their weaknesses in their lack of oversight. There were administrators who were appointed, who have failed in other work; there were administrators who do not understand municipality. How will the executive council save this municipality?

Mr Hadebe interjected and asked if the administrators have been able to do what they have been assigned to do. Are they capable of doing the job or are they contributing to the current challenges that the municipality has? Records show that they have failed.

Responses

The HOD responded that closeout reports were not presented to council for a while and it was corrected two years ago. The closeout reports of previous municipalities were sent to all the municipalities that had been under administration. Madibeng was also under administration in terms of water and sanitation; there was an administrator appointed by the province and the situation improved tremendously to the extent that intervention was terminated, and the administrator was bought to the province to assist with other municipalities. Shortly thereafter the situation deteriorated again to where it is currently.

The problem with the municipalities is that it does not have the absorption capacity to draw in all the resources it receives. Municipalities, including Madibeng, had not had senior managers for a long time. The senior managers in Madibeng resigned in December after the last intervention they had which ended in June, i.e. if there is a skill to transfer there is no one to transfer that skill to; there are no senior managers to ensure that controls are in place.

They appoint people who have a track record in local government and properly qualified and they bring reports to the province which they analyse. The MEC will then confirm with the Mayor of those municipalities and where they are not satisfied they will indicate. They have terminated the services of an administrator before because they were not living up to the mandate.

The Chairperson asked if there is consequent management for those administrators if they do not perform.

HOD responded that consequence management will follow; they had appointed a team to investigate the allegations.

The Chairperson explained that the consequence management is for their employees and administrators because they can also collapse the municipality. Anyone who is employed by the municipality needs to be held accountable. Once they are removed there is no consequent management in the province.

HOD said that the Department will be able to take action against transgressions made by administrators. That was the only instance where they had taken out an administrator. The MEC will ensure that there are consequences.

The Chairperson asked about Tswaing – the administrator that was fired. Was it based on ill-discipline or was he touching the untouchables?

The HOD explained that the administrator procured vehicles worth R3 million in one company without following any procedure in terms of SEM. One of his terms of reference was to ensure that SEM procedure is followed.

The Chairperson asked the HOD to provide a list of the transgressors. Why were they dismissed and what action was taken, particularly in Madibeng because that is the point of discussion?

Mr Hadebe pointed out that he is not satisfied with the response of the HOD and it seems that he is making excuses; the close-out report cannot be used as an excuse because they come at the end. Administrators need to be assessed and monitored on a regular basis based on the work they perform.  Have they achieved what they have been assigned to do? The Committee expects the municipality to give something more substantive; their response is not satisfactory.

The HOD concluded by adding that there are workshops from MPAC; they have been given the tools to do the work. MPAC will respond to that and one of the issues why they do not have MPAC offices and why they are not properly supported.  

The Administrator firstly addressed the matter on the VBS disciplinary action by investing funds unlawfully to VBS. The CFO was Mr Maluleka, who resigned in December 2018. The Acting Municipal Manager, Ms Mahole, was one of the directors not facing disciplinary action including this matter; two junior officials were implicated in the forensic report and absolving the liability of senior managers and oversight authorities. This amount reflected in the council report. Council knew that the R30 million has been lost due to the process.  They will await a forensic report. Even if the report clears the individuals, there is still a statutory obligation and they need to answer to that as well the MFMA and municipal investment policy. Unfortunately, Mr Maluleka had resigned, which prevented them from invoking any labour action against them. There is a great trend wherein senior managers had resigned before any disciplinary action could be done. When the interventions started in July 2020 they had already resigned and could not be brought back for disciplinary action and could only take action against the internal ones. Forensic reports have been reported to council on the 25 February 2020 including the recommendations of council and processes to institute disciplinary action.

They have obtained versions of the junior officials in the report, and they have not acted against the most junior officials but acting against senior managers implicated. What was the state of the oversight role and function? The council and any official in the municipality cannot deny responsibility in this process either by omission or by commission that they did not exercise proper oversight and did not act timeously.

Even if no individuals were implicated in the report, the fact that they had knowledge of the R30 million but there was no action in relation to that is problematic. The speaker will deal with the question on councillors and action taken against them.

Concerning the water infrastructure challenges, they volunteered to submit a comprehensive report on the challenges and interventions they have made. It is known to the Minister, Deputy Minister calling for action on the dirty water in the Madibeng. They started with the cleaning of reservoirs and treatment works and addressing the pipeline problems. He is yet to receive a complaint about water. There have been no calls since and they are providing clean water in all the areas they are responsible for. They have a detailed report on the closeout report in relation to water relations. The report indicates their progress and it reflects what needs to be done. In reality, the challenges in Madibeng could not be dealt with in one year and so they could not attend to everything because of financial reasons and capacity. What they were not able to do they are ready to put as their recommendations. They will still avail themselves to present the report to the Minister, the public and any other interested officials.

In 2016 the then MEC of Local Government told the community to not pay for services and still today they are not paying for services. They have developed a revenue and advancement plan for these communities in December; they started in the townships and approaching certain businesses. The COVID-19 has delayed their plans. He appealed to political leaders to assist to go those communities and advise them on the payment of services.

The PIC loan was a loan of the then TLC and was then transferred to the Madibeng in 1994; the matter was before the courts and the municipality has launched an appeal on the quantum and value of the claim because it has superseded the original amount. It is in the SCA in Bloemfontein. It has been reported in the inter-provincial and all entities of government, whether it is the Premiers forum, North West, ECC, COGTA or all spheres of government know this challenge. Their guidance and support are needed.

Section 32 procurements, even the fleet contract is a section 32 procurement which cost over R300 million in three years. At the end of the contract there is no claim of ownership for the vehicles; there was an offer to purchase the vehicles after the contract has ended. It was an unfair contract; the municipal council knew about this contract. They found out that this company is given R35 million every quarter in advance. MFMA requires for payment of services of already rendered. They stopped the advance payment and ensure that even if they are dissatisfied with the nature of the commitment, service delivery must continue. They need to pay for all the vehicles used by the municipality. A specific audit was conducted on these vehicles and not all the vehicles in the payment schedule of the municipality are fully functional; this has amounted to R12 million to R17 million in counter claim against the service provider. These vehicles were reported in accidents and never replaced. The contract has been there for the last two years and it is in its third year and when they came in; they could not do more. Terminating it would not be beneficial because it could affect service delivery. This matter is under the SIU investigation on how it was procured and other issues relating to this investigation. They have met three times with the SIU and emphasised the importance of dealing with the situation and they have supplied all documents they have required and all the officials they wanted to interview.

On the official who is still in prison but still getting paid, the entity explained that treasury has reported that the payments had been stopped in August and an investigation is ensuing as to why this occurred while they knew he was in custody and unable to render any service to the municipality. There are other issues that are being investigated such as employee expenditure.

On the rent of graders at R300 000, the price is extremely abnormal. It has also been handed over to the SIU. If the senior manager had any confession to make, she would be free to do so. They have started to act against this issue. For the last two weeks the service provider has locked the vehicles not being paid in June and July; part of the reason the service provider was not paid the signatories to the municipal account were changed when the municipal manager left on the 3rd July. They have been paid and the vehicles have been unlocked and are dedicated to their areas of service.

There is no action on previous irregular expenditure; part of the action on irregular expenditure relied on dependant on the processes, where part of the report is tabled to council and referred to MPAC for investigation and reveals the types of investigations done. It has not been actioned because it took time to get to council. Part of the post-audit action plan includes dealing with issues of irregular expenditure. Irregular expenditure means service cost has been incurred but the proper process was not followed. If the fleet contract was committed in 2017/18 and they are still paying the contract in 2020, its irregular expenditure of 2017/18 recurring in 2020; the context is also important.

With creditors and debtors, there is R2 billion across businesses, residence and all other treasures and the creditor treasure runs to R500 million. The municipality relies on equitable share to pay some of these creditors. Without equitable share the municipality would be in big trouble. So, they rely largely on those transfers for payment of major creditors. He has not experienced any conditional payments that they have not done which had not come to their attention. It has not come to their attention how conditional grants will be spent on their intended purpose. It has also happened in previous years and will be verified in the audit outcomes, so that the expenditure on conditional grants is used for their intended purposes.

There were illegal debits in the municipal account; these debits have been reported to the Hawks. The case has been dominating the news. He suggested the written response to the rest of his answers due to time.

Mr Hadebe suggested that the rest of the meeting be continued in the second half of the meeting in the evening and other issues will be dealt with later.

The meeting was adjourned.