REPORT ON CONSTITUTIONAL INTERVENTIONS IN
REPORT ONCONSTITUTIONAL INTERVENTIONS IN KWAZULU NATAL ANDSUPPORT PROVIDED BY KZN COGTANCOP LOCAL GOVERNMENT WEEK08 – 11 SEPTEMBER 20201
TABLE OF CONTENTS1.INTRODUCTION AND BACKGROUNDPAGE 32.CONSTITUTIONAL INTERVENTIONS IN KZN MUNICIPALITIESPAGES 4 – 53.SUMMARY INDICATORS PER MUNICIPALITYPAGES 6 – 74.DETAILED INDICATORS PER MUNICIPALITYPAGES 8 – 185.VACANT SENIOR MANAGER POSITIONS AS AT SEPTEMBER 2020PAGE 196.CHALLENGES / ROOT CAUSES FOR THE NON-FILLING OFVACANCIES REPORTED BY MUNICIPALITIESPAGE 207.CONSEQUENCE MANAGEMENT: SENIOR MANAGERSPAGE 218.FUNCTIONALITY OF GOVERNANCE STRUCTURESPAGES 22 – 259.ESKOM DEBTPAGE 2610.MANAGEMENT OF UIFWPAGE 27 – 3011.CONSEQUENCE MANAGEMENT: SECTION 106 REPORTSPAGE 3112.ESTABLISHMENT OF SERVICE DELIVERY WARROOMS ANDAUDIT WARROOMSPAGE 3213.COVID-19 POST LOCKDOWN RECOVERY PLANSPAGE 3314.CONCLUSIONPAGE 342
INTRODUCTION AND BACKGROUND There are currently 9 municipalities under intervention in terms of Section 139 of the Constitution in KwaZulu/Natalnamely UMzinyathi DM, UThukela DM, Msunduzi LM Mpofana LM, Richmond LM, Inkosi Langalibalele LM,Mtubatuba LM, Abaqulusi LM and Emadlangeni LM. In April 2020 the Provincial Executive Council resolved to assume further powers across 8 interventions as follows: The Disciplinary Regulations for Senior Managers, 2010 The Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings, 2014 The Disciplinary Procedures contemplated in Sec 67 of the Systems Act, and The implementation of findings from any investigations into fraud or maladministration or corruption,including the implementation of findings and recommendations in respect of Unauthorised, Irregular,Fruitless and Wasteful (UIFW) expenditure as contemplated in section 32 of the Municipal FinanceManagement Act, 2003. In Abaqulusi it was necessary for the Executive Council to also add the following item: The assumption of sections 54a and 56 of the Systems Amendment Act, 2011.On 26 August 2020, the Provincial Executive Council resolved to place Emadlangeni Municipality under section139(1) (b) constitutional interventtion. The Ministerial Representatives (MRs) have signed performance agreements which are aligned to their terms ofreference as approved by the PEC. The MR’s provide monthly progress reports based on the performanceindicators and performance agreements, which are monitored by the relevant business units.3
CONSTITUTIONAL INTERVENTIONS IN KZNMUNICIPALITIESSUMMARY REASONS FOR INTERVENTION BY PILLARMUNICIPALITY ANDINTERVENTIONTYPE1. UMzinyathi DM- 139(1)(b)2. Mpofana 139(1)(b)3. InkosiLangalibalele 139(1)(b)4. UThukela DM139(1)(b)5. Abaqulusi139(1)(b)Pillar 1PuttingPeopleFirstPillar 2Delivering BasicServicesN/AFailure to SpendInfrastructure Grantsincluding Stopping offunds by NTDec 2017N/AFailure to SpendInfrastructure Grantsincluding Stopping offunds by NTDec 2017N/ADATEJuly 2017Failure to SpendInfrastructure GrantsAug 2018Feb 2019PublicProtests dueFailure to Spendto poorInfrastructure GrantsServiceincluding Stopping ofDeliveryfunds by NTPillar 3GoodGovernancePillar 4Sound FinancialManagementN/APoor Cash FlowSCM ChallengesPoor Audit OutcomesMaladministrationPillar 5BuildingInstitutionalCapabilitiesFailure to appointsenior managementPoor Cash FlowSCM ChallengesFailure to tructuresMaladministrationPoorly functionalBallooning Eskom DebtLack ofConsequenceManagementPoor Cash FlowN/ASCM ChallengesPoor Audit OutcomesFailure to tructuresPoorly functionalPoor Cash FlowLack ofSCM ChallengesFailure to appointConsequenceMaladministrationsenior managementManagementBallooning Eskom Debt4
CONSTITUTIONAL INTERVENTIONS INMUNICIPALITIESSUMMARY REASONS FOR INTERVENTION BY PILLARMUNICIPALITYANDINTERVENTIONTYPEDATE6. RichmondLM 139(1)(b)March20197. MtubatubaLM 139(1)(b)March20198. MsunduziLM 139(1)(b)April20199.EmadlangeniLM 139(1)(b)August2020Pillar 3Good GovernancePillar 4Sound FinancialManagementPillar 5BuildingInstitutionalCapabilitiesSec 106InvestigationMaladministrationSCM ChallengesPoor AuditOutcomesCFO SuspensionMM DismissalAllegations ofMaladministrationIncompleteN/AFraud andProjectsCorruptionAllegations ofMaladministrationWardIncompleteFraud andCommittees lessProjects. O&MCorruption.Challenges (Electricitythan 50%Oversight& Refuse)functionalStructures poorlyfunctionalAllegations ofMaladministrationFraud andCorruption.N/AN/AOversightStructures totallyPoor Cash FlowSCM ChallengesPoor ContractManagementHigh turnover ofsenior managersPoor Cash FlowSCM ChallengesPoor ContractManagementSuspension ofsenior managersincluding MMPillar 1PuttingPeople FirstPillar 2DeliveringBasic ServicesN/ASec 106 Investigationre Electricity ProjectsSCM challengesSuspension ofsenior managersincluding MM5
SUMMARY INDICATORS PER MUNICIPALITYKEY INDICATORSMUNICIPALITY ANDINTERVENTION TYPE1. Umzinyathi 139(1)(b)2. Richmond 139(1)(b)3. Mtubatuba 139(1)(b)4. Mpofana 139(1)(b)STARTDATEJuly 2017AuditOutcome(2018/19)DisclaimerMarch 2019 QualifiedMarch2019Dec s &Year of VacancyFundedMM(March 2020)Director CommunityServicesFundedMM & DTC(Jan2020)FundedDisclaimer UnfundedN/ADCS (Dec 2018)DTS (Jan 2018)CFO (June 2016)MIG Exp( 30 June2020)Sec 106InvestigationConsequenceManagement100%The findings of the report havenot been implemented byDCS onCouncil, except for I criminalsuspensioncase opened with SAPS.93%Investigation completed,awaiting MEC’s approval100%Officials and councilorsreceived letters requiring100%Investigation completed andMatter of implicated officialsreferred to Hawks by themunicipalityPMU Managerunder suspension.Disciplinaryprocess underwayDCS onsuspensionMatter referredto SAPS6
SUMMARY INDICATORS PER MUNICIPALITYKEY INDICATORSMUNICIPALITY ANDINTERVENTION TYPESTARTDATE5. Inkosi Langalibalele139(1)(b)Dec 20176. Uthukela DM139(1)(b)Aug 2018Audit Outcome(2018/19)AdverseQualified7. Abaqulusi139(1)(b)Feb 2019Unqualified8. Msunduzi139(1)(b)April 2019Qualified9. Emadlangeni139(1)(b)Aug UnfundedFundedSeniorManagementVacancies & Year ofVacancyDirector Planning(2017)MM (2019)DTS (2019)DComS (2018)DTS (2019)DComS (2019)All posts arefilledMIG Exp(30 June2020)Sec %Draft reportbeing reviewedfor tabling withthe MEC.None100%InvestigationStage. Report tobe finalized by 2September 2020Judgementconfirmedpowers to MR todisciplineManagers, on30/7/202059%Awaiting MECapproval13 officials onsuspension100%Approved byMEC andinvestigationcurrently inAugust 20202 seniormanagerssuspended:MM andDirector:Technical7
DETAILED INDICATORS PER MUNICIPALITY RICHMONDGovernance & PoliticalStabilitySound FinancialManagementBasic ServiceDeliveryPerformanceManagement MM post remains vacant but all recruitmentprocesses have been finalized . Head of Technical Services : appointmentfinalized and has assumed duty on 1September 2020 PMU Manager suspended. Municipality iscurrently evaluating the responses receivedbefore completing the disciplinary process. Section 106 Report finalized and will be tabledonce considered by the MEC Council and its Committees are functional andpolitical stability has returned to Council Due to the passing of the Mayor, the processof appointing a new councilor and election of aMayor has commenced MPAC functional and will be considering theUIFW report before end of August 2020 A new Administrator has been appointed andassumed duty on 5 August 2020. Regressed to a Qualifiedaudit opinion from the AG forthe 2018/2019 FY Audit Action Plan in placeand implemented. 5/12matters resolved. Outstanding Creditors –R2.9m Current Collection rate – 48% UIFW – R56.4m(Cumulative) NT have deployed a financeexpert for 2 years from June2020 Cash coverage stands at 2.2months Income severely impacted byCovid 19 Council adopted a fundedbudget on 30 June 2020. MIG expenditure – 93%,but all funds committedand will apply for rollover Small Town Rehab grant ofR10m – 19% spent. EPWP – 100% The municipality receiveda grant of R10m from theDepartment in respect ofits roads infrastructuredevelopment (MagodaRoad). Implementationwas negatively impactedby the lockdown. R1.8mhas been spent, thebalance is R9.6.m- PMS Frameworkand Policyapproved byCouncil- Skills audit needsto be completed8
DETAILED INDICATORS PER MUNICIPALITY MSUNDUZIGovernance & PoliticalStabilitySound FinancialManagementBasic ServiceDeliveryPerformanceManagement MM commenced duty on 1 April 2020 GM Community and GM TechnicalServices. The new incumbents assumedduty on 1 August 2020 Unqualified audit opinion fromthe AG for the 2018/2019 FY Audit Action Plan in place andimplemented budget and IDP adopted byCouncil on 29 June 2020 Creditors R66m (excluding Eskom& UMngeni) Eskom debt is R131m. UMngeni Water debt R127m.-Collection rate increased from 73%to 87 by June 2020 Cash Coverage 0.02 (norm 13months) Covid 19 has affected incomeseverely, R100m less received inApril Contracted services and salariesremain most cost drivers 59%of the R197.5m MIGallocation spent by 30 June 2020. WSIG expenditure at 85% andprojected expenditure as at 30June 2020 is R46m The weighbridge which has notworked at the landfill site foryears has reopened. Service Delivery War Room is fullyfunctional and meets twice amonth and is chaired by MEC forFinance. There was another major fire atthe landfill site which was dousedwithin 7 days with the help fromeThekwini Fire, UMgungundlovuDM and Working on Fire 3 service delivery protests wererecorded in July 2020 and dealtwith by Municipal Leadership andCogta OPMS Reviewcompleted includingthe IPMS Policy ReviewedFramework andPolicy applicable 1July 2020 Quarterly reportsare submitted toCOGTA for reviewand monitoring ofperformance. Council and its Committees arefunctional MPAC Functional and reports to Council 33 of the 65 disciplinary cases since 1July 2019 have been finalised. 13 employees on suspension as at 26June 2020, and at different stages ofdisciplinary process Only 1 of 4 criminal matters referred toHawks are ready for prosecution9
DETAILED INDICATORS PER MUNICIPALITY MPOFANAGovernance & PoliticalStabilitySound FinancialManagementBasic ServiceDeliveryPerformanceManagement MM post filled Municipality completed theprocess of filling CFO post, but thecandidate declined due to ademand for higher salary packagewhich was not acceded to.Currently the municipality has noCFO and post was re-advertisedon 19 July 2020. process if fillingpost us ongoing. Head of Technical Servicesinterviews scheduled for 20August. Council envisages to combine thedepartments of Community andCorporate Services COGTA appointed ActingTechnical Director whocommenced duty on 15 April 2020 Council and its Committees arefunctional and commencedmeeting virtually after 6 May 2020 Continues in next slide . Disclaimer audit opinion from the AG for2018/2019 FY An Audit Action Plan has been approved, and40% of AG matters have been resolved. Eskom debt R172m, last paid in April 2020.The municipality will probably have its assetsattached by Eskom shortly. The municipality remains in severe financialdistress. The MSCOA implementation where themigration from Venus to Sage Evolution waspoorly done resulting in no credible monthlyand annual financial statements are possiblefrom Sage. No credible section 71 reports are provided. The municipality has lost an amount of R8 742380 revenue for the period March- May 2020due to Covid 19 impact. No investigations have been done with regardto cumulative UIFW expenditure amounting toapproximately R115 452 791m and COGTA issupporting the municipality to deal with theUIFW 12m of MIGallocation is 100 %spentA Service DeliveryWar Room has beenestablished to dealwith all servicedelivery issuesimpacting thismunicipality.– R 745 000.00 wasspent in terms of theStability grant (Covid19 grant) Reviewed PMSFramework andPolicy not yet tabledfor adoption. Quarterlyperformance reportsnot submitted butCOGTA iscapacitating therelevant officials onmunicipalperformancereporting . The skills audit forstaff has only beenpartially completedby Cogta. No skillsaudit has beenundertaken forcouncilors. Cogta issupporting to finalizethe exercise.10
DETAILED INDICATORS PER MUNICIPALITY MPOFANAGovernance & PoliticalSound FinancialStabilityManagement Implementation of Sec 106 findings & Other Creditors R189m.recommendations remainsCreditor days – 603 daysoutstanding, but some elements of the Debtors – R143mreport that are criminal have been Serious cash flowreported to the Hawks. Cogtachallenges exist withinForensic Unit is assisting thethe municipality.municipality in this matter as well asother outstanding matters.Basic ServiceDelivery See previous slidePerformanceManagement Seepreviousslide11
DETAILED INDICATORS PER MUNICIPALITY UTHUKELAGovernance & PoliticalStabilitySound FinancialManagementBasic ServiceDeliveryPerformanceManagement The MM has been appointed. The General Manager: TechnicalServices has been appointed. Council and its Committees arefunctional and commencedmeeting virtually after 6 May 2020 There is political stability withinCouncil MPAC not fully functional, doesnot provide reports in terms ofsection 32 of MFMA Section 106 is currently underway. Qualified audit opinion from theAG for the 2018/2019 FY Audit Action Plan in place andCOGTA has deployed FinanceExperts to support the municipalityduring the audit process toimprove audit outcome and will bewith the municipality for 6 months. Major creditors are ILM R4 500000, water tankers R 6 906 240and PK valves R3 980 000.Umgeni Water Board R152 146293 which is in dispute. Collection rate is 35% The MR is in the process ofreviewing the findings of UIFWreport, and will be tabled atCouncil to deal with UIFW Cash Coverage 1 month (norm 1-3months) Salary bill remains high at 36% The budget approved by Councilwas funded, there is someimprovement on cash flow. MIG expenditure is 78% as at30 June 2020.- Reprioritised R35m from MIGallocation to fix water andsanitation challenges- WSIG Expenditure is poor onlyR36m of R108m spent by yearend.- The project of installing a bulkline from Spioenkop Dam hasbeen resuscitated.- The expansion of the EkuvukeniOlifants water works will ensurethat residents of Ekuvukenihave access to potable water.- The Service Delivery War Roomhas been established.– R 738 000.00 was spent in termsof the Stability grant (Covid 19grant)- Framework andPolicy are reviewedand approvedannually in line withother policies.- 43% of councilorsparticipated in theskills audit while359 officialsparticipated. Cogtais assisting themunicipality withfinalizing theremainder ofcouncilors andstaff.12
DETAILED INDICATORS PER MUNICIPALITY –INKOSI LANGALIBALELEGovernance & PoliticalStabilitySound FinancialManagementBasic ServiceDeliveryPerformanceManagement Deputy Mayor post remainsvacant following the resignationof the previous Deputy Mayor.The council resolved that avacant position will not be filledas part of cost cutting measures All office bearers remain parttime to save costs Position of Planning &Development was advertised,appointment going to AugustCouncil meeting Council and its Committees arefunctional and commencedmeeting virtually after 6 May2020 MPAC Functional IGR structures are functional 15 employees on suspension,facing disciplinary steps. There are no sec 106 reportsundertaken Adverse audit opinion from the AGfor the 2018/2019 FY. Audit ActionPlan in place and implemented.Audit Action Plan war room wasestablished and COGTA hasdeployed Financial Experts tosupport he municipality to improveaudit outcome. Eskom debt has been reduced fromover R100m to R25m Collection rate is 75% as at 30 May2020 UIFW for 2017/18 amounts to R56531 044 and for 2018/19 amounts toR197 553 45 m Cash Coverage 1.4 months (norm 13 months) The municipality has applied forexemption to pay a 6.5% salary hiketo curb spiralling employment costs. This is one municipality that hascommitted to cost containmentmeasures which has worked. 100% of the R37m MIGallocation spent by 30June 2020. INEP expenditure is 75%of the R7m allocation . EPWP is 100%expenditure Service delivery WarRoom established and isfunctional No service deliveryprotests have beenexperienced during 2020– R 1 221 884 was spent interms of the Stability grant(Covid 19 grant) Framework andPolicy arereviewed andapprovedannually in linewith relevantlegislation. 80% of councilorshave completedskills audit, while85% of staff havebeen audited. Alloutstandingpersons willundergo the auditshortly.13
DETAILED INDICATORS PER MUNICIPALITY UMZINYATHIGovernance & PoliticalStabilitySound FinancialManagementBasic ServiceDeliveryPerformanceManagement Council appointed MM on 25JUNE 2020 Recruitment process to fill positionof Director Community Services isat an advanced stage. Director Cooperate Servicesremains suspended. Council and its Committees arefunctional and commencedmeeting virtually after 6 May 2020 MPAC Functional Implementation of Sec 106findings & recommendations waspoor/slow. however, Investigationreport was submitted to SAPS forfurther investigation. Adverse audit opinion fromthe AG for the 2018/2019 FY.Audit Action Plan in placeand implemented Outstanding CreditorsR30.1m UIFW is being investigated. Cash Coverage 0.2 months(below the norm of 1-3months) Debt collection averages30% ESKOM debt is up to date,however, There is a disputeon ESKOM invoices, theDepartment is assisting themunicipalities to resolve thematter. No water board debt A funded budget wasapproved by Council Cash flow is monitoredthrough the IFC and reportedregularly at EXCO. R188m MIG allocation is 100%spent. The Water Services InfrastructureGrant (WSIG) of R68m is 100%spent. All other grants are fully spent. Municipality received 470 staticwater tanks from Cogta inresponse to Covid 19. 293 of these tanks have beendistributed across the four localmunicipalities Service Delivery War Room wasestablished by the MEC championbefore lock down– R 536 000.00 was spent in termsof the Stability grant (Covid 19 grant)- Performance ManagementFramework and Policy arereviewed and approvedannually in line withrelevant legislation.- 27% of councilorsparticipated in the skillsaudit, and 293 employees.The balance of theemployees and officials willbe attended to byCOgta.14
DETAILED INDICATORS PER MUNICIPALITY ABAQULUSIGovernance & PoliticalStabilitySound FinancialManagementBasic ServiceDeliveryPerformanceManagement Council and its Committees commenced meetingvirtually after 6 May 2020 and are all functional. MPAC is Functional Section 106 investigation has commenced and willbe finalised by September 2020 The municipality remains without a Mayor as theprevious Mayor resigned in July 2019. While the Ministerial Representative was in theprocess of recharging the MM, the municipalitystarted a process of challenging the new powersin court. Judgement was delivered on 30 July2020, the application was dismissed with costs.The MR has re-started the disciplinary processand letter of suspension was served on 5 August2020. MM and Mayor are challenging thesuspension. An interdict will be served in court on17 September 2020 to interdict MM from enteringoffices. Unqualified audit opinion from theAG for the 2018/2019 FY. All AGfindings have been resolved. Outstanding Creditors of R43.4mwill be settled by 30 October 2020. Eskom debt is R19.2 and isenvisaged to be settled by end ofthird quarter of 2020/21 FY Collection rate is within the norm UIFW:R499.6m. Council resolvedto write-off, condone and refermatters for further investigation on30 June 2020. MR is in process ofreviewing matters. Cash Coverage – 1:0.071(norm 1-3months) Financial experts have beenassigned to the municipality byCogta to support on financial
2. constitutional interventions in kzn municipalities pages 4 t 5 3. summary indicators per municipality pages 6 t 7 4. detailed indicators per municipality pages 8 t 18 5. vacant senior manager positions as at september 2020 p
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