ATC121203: Report of the Select Committee on Co-Operative Governance and Traditional Affairs on Consideration of Extension of Intervention in Indaka Local Municipality – dated 20 November 2012
Cooperative Governance and Traditional Affairs
THE FOLLOWING REPORT REPLACES THE REPORT OF THE SELECT
COMMITTEE ON CO-OPERATIVE COVERNANCE AND TRADITIONAL AFFAIRS PUBLISHED IN ATC
NO. 156, DATED 20 NOVEMBER 2012, PAGE 4771
REPORT OF THE SELECT COMMITTEE ON CO-OPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS
ON CONSIDERATION OF EXTENSION OF INTERVENTION IN
The Select Committee on Co-operative Governance and
Traditional Affairs, having considered the directives of the National Council
of Provinces (NCOP), to consider and report on the notice of extension of intervention
in
1.
Introduction and Background
1.1
On 24
November 2009, the Provincial Executive Council of KwaZulu-Natal Province
resolved to intervene at
Indaka
Local Municipalities in
terms of section 139(1
)(
b) of the Constitution as a
result of failures to fulfill various executive obligations. The MEC for Co-operative
Governance and Traditional Affairs (
Cogta
) was
authorized by the Provincial Executive to appoint Administrators at the
aforementioned municipalities. The Administrators were appointed to undertake
the functions in terms of section 51 of the Local Government: Municipal Systems
Act (Act 32 of 2000), to establish and organize the administration in a manner
that would enable the municipalities to achieve the objects of local government,
as set out in section 152 of the Constitution.
1.2
On
18 July 2012, the Executive Council resolved to terminate the intervention at
2.
Reasons for Intervention
at
2.1
In the year ended in June 2011, the
Municipality incurred unauthorised expenditure of R4.644 millions and irregular
expenditure of R22.500 millions; totalling R27.2 million.
Furthermore, in January 2012, the
Mid-Year Review established a number of irregular, unauthorised and fruitless
and wasteful expenditure which were reported to the Council, as part of the
Mid-Year Review report. The copy of the report was forwarded to the Department
as part of the monthly reporting. The Administrator advised the then Acting
Municipal Manager (Mr.
Maphanga
) to report the said
expenditures in terms of section 62 of MFMA and section 32(4) of the MFMA, to
the MEC responsible for Local Government in the Province and the Office of the
Auditor-General. The Administrator reported that such irregular expenditures were
not reported to the MEC and the Auditor-General.
2.2
There
have been various irregular financial activities resulting in an increase in
unauthorized, irregular, fruitless and wasteful expenditure, which continued
under the stewardship of the Administrator, without his knowledge. This
reflected defiance by the administrative and political leadership of the Municipality
and undermined good governance. In addition, the administrative leadership of
the Municipality is still unstable with key senior positions of the CFO and
Director for Technical Services remaining vacant. The Mayor and Council are
still unable to exercise effective political oversight and strong leadership to
promote financial prudence and good governance. Consequently, the intervention
was extended at the
3.
Progress of Intervention
in
3.1
The status
on financial management was fair
.
The
secondment
of the Financial Expert from the
Department of
Cogta
has had a major positive effect
on the implementation of the Recovery Plan on financial management. The Expert
together with the Administrator was in the process of reconstructing the
financial records of
Indaka
, going as far back as
2009/10 on certain transactions to date. In addition, various financial
irregularities had been reported and the intention of the Administrator was to
issue civil summons to recover all the irregular and fruitless expenditure from
the former Municipal Manager and affected Councillors.
3.2
The
majority of priorities in respect of governance as identified in the recovery
plan have been met. The Internal Auditor was effective, but was stifled by the
managements failure to either respond to the audit findings or failure to
implement the recommendations. It appears that there is poor leadership in this
Municipality, although all the necessary policy frameworks were in place. The
problem, however, was a lack of implementation.
3.3.
According
to the Administrators assessment, the Councils oversight and performance
management and reporting, remain a concern and much work is yet to be done,
despite efforts being made by the Administrator in this regard.
4.
Committee Observations
4.1
The
secondment
of the Financial Expert from the Department of
Cogta
has had a major positive effect on the implementation
of the Recovery Plan on financial management at
4.2
Various
financial irregularities had been reported in
Indaka
,
and the Committee welcomes the intention of the Administrator to issue civil
summons to recover all the irregular and fruitless expenditure from the former
Municipal Manager and affected Councillors.
4.3
In
addition to the consideration of the extension of intervention in
5.
Committee
Recommendations
5.1
The Select Committee on Co-operative Governance and
Traditional Affairs recommends as follows
:
5.1.1 The National Council of
Provinces approves the extension of intervention in terms of section 139(1
)(
b) of the Constitution at
Report to be considered.
Documents
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