Engagement on petitions by: Masingita Group of Companies & Greater Giyani Local Municipality

Meeting report

The Chairperson mentioned that the Committee was meeting to hear the petition by the Masingita Group of Companies on its allegations of unjustified treatment by the Greater Giyani Local Municipality (GGLM).

Ms H Mkhaliphi (EFF) informed the Chairperson that she would have to excuse herself from the meeting.

She asked whether the petition had been facilitated a Member of Parliament.

The Chairperson mentioned that there are two types of petitions that the Committee deals with. As this is a general petition, it was referred to Parliament directly from the Speaker of the GGLM.

Briefing on the Masingita petition to the National Assembly

Mr Timothy Phiri , CEO, Masingita Group of Companies, briefed the Committee on Masingita’s petition to the National Assembly regarding the unjustified treatment of the company by the Municipal Manager (MM) of the GGLM. He explained that in 2007, Masingita had conceptualised a development plan with the Mompani District Municipality and the GGLM that would address the bulk infrastructure challenges faced by the municipality.

The company has felt aggrieved by what it terms the unfair treatment towards it by the MM. The MM has not been responsive to Masingita and has refused to cooperate with the company on the development. He has levelled several accusations towards the company, which Masingita felt was aimed at tarnishing its enemy.

Masingita has informed the Executive Mayor of the Mompani District Municipality, its Political Management Team (PMT) and the Department of Cooperative Governance, Human Settlements and Traditional Affairs. Despite their intervention, the MM has failed to honour commitments to meet the company.

Masingita requested that the Portfolio Committee assist in resolving the dispute between the two parties.

The Mayor of GGLM, Ms Shibambu Agnes, confirmed that the Speaker had informed the Council that he had received a petition from the Masingita Group of Companies on 25 October 2020.

The Mayor outlined what was raised by Masingita in the petition. The petition referred to: the money that the municipality alleges Masingita owes, the dispute on the road district and the routes shares between GGLM and Masingita, Masingita’s proposal to the GGLM to design and construction an alternative street for public use in the Giyani CBD, the exchange of land between Masingita and land owned by municipality, the improper evaluation of subsidiary property entities of Masingita, the improper billing of property rates, the release of the rates clearance certificate of farm land Greater Giyani 891 and finally, the proposed development by the company.

Briefing on the GGLM petition

The Committee was presented with the GGLM petition by the MM of the GGLM, Mr Maxwell Chauke. He said that Masingita owed the municipality R8 897 million, but despite this debt, Masingita has requested the municipality to issue it with a rates clearance certificate – which is contrary to the relevant legislation. He also alleged that the company had illegally occupied land owned by the municipality. To end the dispute between the municipality and Masingita, a meeting was called by the Executive Mayor of Mopani (the meeting also included the PMT). It was agreed in the meeting that the issues would be solved amicably. One of the terms of the agreement was that Masingita would withdraw its pending case against the municipality.

Mr K Ceza (EFF) asked if the Committee would hear the presentation of Masingita.

The Chairperson mentioned that it would. She asked what the district’s role in facilitating a dispute resolution between the two aggrieved parties has been.

Input by Mompani District

The Executive Mayor of Mompani District, Mr Pule Shayi, said that the district is obliged by the Constitution – and the inter-governmental relations (IGR) framework - to foster friendly relations, to provide coordination and in the main, provide support to the municipality. Through the District Development Model (DDM), the district must work with the private sector to provide development.

The district municipality received a petition from Masingita on the alleged unjustified treatment by the MM in Greater Giyani towards the company. Masingita also reported that there had been a breakdown in relations between the two. Given the urgency, the district municipality convened a meeting that included the Political Management Team (PMT), the MM and Masingita to discuss the issues. There was an inclination from both parties to deal with all of the substantive matters. A consensus was reached that they had an obligation to attend to all outstanding issues. When the district followed up with the Mayor of Giyani, he informed them the municipality and Masingita had met on 27 October 2020, where they addressed their problems – this provided assurance to the district.

Input by provincial department

Dr Modjadji Malahlela, Deputy Director-General, Limpopo Department of Cooperative Governance, Human Settlements and Traditional Affairs (COGSHTA), mentioned that the Department was aware of the disputes between the municipality and Masingita, as the company had written to the provincial department in February 2019.

A letter of complaint was laid in February 2019 by Masingita, and the department offered to play a role of mediator between the two parties, as requested. On 13 May 2019, the department met with Masingita. It subsequently met with the Council on 3 September 2019.  The department required that the two parties should attempt to sort out the dispute themselves, but, if they required further assistance from the department, it would be willing to engage.

The Chairperson said section 152 of the Constitution speaks of local government promoting local and economic social development. She said the Committee was called to hold the municipality to account in this regard.

She requested both parties highlight their areas of disputes. She asked why the municipality had not attended the meeting scheduled to take place in December.

Mr Phiri (Masingita CEO) mentioned that Masingita had been impeded in its efforts to promote and develop the economy of Greater Giyani. The company had not experienced such challenges with other municipalities, and in fact it has been working well and efficiently with them. Currently, the company is working with the City of Johannesburg on the Masingita City project. An agreement is in place for the company to begin construction of a R1.4 billion precinct in the Collins Chabane Local Municipality from March 2021. The municipality’s Council has resolved to enter into a development partnership with the company. Another project is set to be complete this year in the Makhado Local Municipality.

All of the issues have been as a result of the current MM’s conduct. Masingita accused the current MM of treating it in an unjustified manner.

He disputed the existence of a company named Masingita Investment Group, thus it could not have formed part of Masingita’s group of companies, as claimed by the municipality in its presentation.

It was true that after receiving their letter, the District Mayor convened a meeting between all the parties in July 2020. Having been presented facts, he ordered the PMT to respond to the issues raised by Masingita in three days. The PMT did not carry out it his instructions and as a result, the company then wrote to the MEC.

Masingita had expected that the DCoGHSTA would have informed the Committee that the meeting that took place on 15 December was not the only one convened. The company had records which showed that another meeting was convened on 2 December 2020 in Polokwane – which Masingita attended. However, the MM did not attend the meeting. Thus, the meeting was reconvened for the 15 December 2020 and once again the MM did not attend the meeting. Most of the information submitted by municipality was factually inaccurate and not factual.

Referring to the rates clearance certificate, he said that in April 2020, Masingita applied for the certificate in respect of a portion of farmland Greater Giyani 891. They did so because the initial certificate the municipality had issued in June 2019 had expired. The company had to get permission from the Department of Agriculture, Forestry and Fisheries to be granted consent for subdivision (in terms of the Agricultural Land Act of 1970). After it filed its application, the municipality issued an account with R8 820 in April 2020. This account was settled in full and proof of payment was forwarded to the municipality. The municipality confirmed receipt of the proof of payment and further stated that it would communicate when the clearance certificate would be issued. This information was not stated in the presentation.

The municipality then informed the company that it had to pay a clearance fee of R1 110, which it duly did, and proof of payment was sent in June 2020. However, the MM had still not signed off on the clearance certificate. The company then issued a letter of demand through its lawyers. It was surprised when it was informed by the municipality’s legal team that it owed R5.5 million to Greater Giyani and with the added interest, this amount grew to R7.5 million. The company had not received the consolidated account yet.

The MM had referenced the debt collection and credit control policy in the presentation, yet he did not mention that this policy was approved by Council on 29 June 2020 – which was after the municipality communicated that it was readying the clearance certificate.

The meeting between the municipality and Masingita did not occur on 27 October, it took place on the 27 November 2020. After the meeting, the MM undertook to release the clearance certificate on 1 December. Another clearance fee was required (R1 546) and was paid. It was unusual that the company had an outstanding bill, yet it was required to pay them for a clearance.

In the same meeting, the MM requested that the company continue servicing the account (in the previous year both parties reached an agreement that Masingita would service the account and pay R200 000 each month) whilst the municipality resolve the billing system which was not accurate. Masingita raised the improper evaluation of properties with the MM in 2019 and how this had led to an issuing of inaccurate statement of accounts. On 27 November, the Chief Financial Officer of the municipality forwarded the company the reconciliation document, which it then analysed. The company has requested that the municipality withdraw all of the incurred interest on the inaccurate amount. The improper evaluation has since been resolved.

The company went to court reluctantly, but it had to do so as it had the best interests of the people of Greater Giyani. It filed an application on an urgent basis, but this was struck off the roll, due to its lack of urgency, not substance. He accused the MM of lying to the Committee for stating that it was struck off the roll due to substantive issues. The company has now gone back to court to address the substantive matters. It decided to halt the court action, until it had received guidance from the Committee. It is committed to withdrawing the matter if its concerns were addressed.

Masingita was granted the use of the land by the municipality on July 25 2018, yet the municipality has submitted that it had occupied the land illegally. There are minutes available that show that the MM presided over a meeting where details of the construction of a road had been discussed. There is a Memorandum of Agreement (MOA) for the company to purchase the land.

Masingita has worked well with the technical director on the construction of roads. The MM alleged that the company had designed a poor-quality road, yet the municipality had been working hand-in-hand with the company to construct the road. Masingita received a completion certificate that said the road had been completed satisfactorily. The municipality has stated that it has no budget currently, therefore the company must source funding for the development of an alternative road, which the company has done. It then entered into a service level agreement, to source funding on behalf of the municipality. Masingita would be compensated 50% of the funds that had been sourced. There was also an agreement that there would be a swap of land owned by the company and land owned by municipality.

The Chairperson mentioned that it seemed as if the provincial department had showed initiative to assist in the matter, but it was disrupted by Covid-19.

On receipt of the petition, the Committee agreed that this dispute would be used use as an indicator to note whether local development was occurring in the local municipalities. It is the duty of the municipality to ensure that local development occurs in the community. 

The Chairperson opened the floor for discussion.

Discussion

Mr Ceza said that it was concerning that Masingita had encountered these issues, as its project would provide rural development and economic activity to the residents of Greater Giyani. The project would also provide revenue much-needed revenue to the municipality.

He asked why the municipality had not signed off on the rates clearance certificate if the municipality had acknowledged a payment made for the clearance certificate application. Further, why had the municipality communicated to Masingita that it would inform it when it would release the clearance certificate. Masingita communicated that once the clearance certificate is released, it would withdraw its legal application to the court.

It seemed that the MM was often not present in meetings scheduled between the municipality and Masingita.

He asked why the municipality had created the false impression that the company had occupied the land illegally, when it had formally informed them that it could occupy the land.

In line with Section 51 of the Constitution (which speaks to development in the country, particularly in rural areas), the municipality should create a conducive environment for the private sector to assist with development in the area.

Relations between the developers and the municipality going forward had to improve.

Ms E Spies (DA) mentioned that the petition showed that work still needed to be done to ensure that there are better ways in dealing with such issues. This affords the Committee with an opportunity to be proactive and drive an initiative that will promote healthy and constructive work between the private sector and the local municipalities – that can promote development in rural municipalities.

She expressed hope that the relevant role players in this matter find each other and not allow for this to be a prolonged issue. As the matter is sub judice she would not like to comment further on the substantive matters.

The Chairperson appreciated her proposal and said the Committee would consider it.

Ms D Direko (ANC) said that the country faced a significant issue of unemployment and poverty, thus it is important for local municipalities to prioritise programmes of local economic development. Most of these programmes are underfunded, so it’s important for municipalities to form partnerships with private investors.

In its presentation, Masingita mentioned that it approached the municipality to source funds for the infrastructure plans it had made in 2015 and 2016. She asked whether there was a MOA signed between the two in those years and whether the MOA was in line with the relevant legislation that guides the municipality.

As the collection rate of the municipality has dropped (mainly due to Covid-19) it was important that all relevant stakeholders are encouraged to pay their property rates. She asked the municipality whether Masingita’s allegations that the property rates were improper, was true. In addition, were the rates improper from the beginning or only since the disputes began.  

It is alleged that the Development Bank of South Africa (DBSA) was not made aware of the project, despite Masingita’s submission that it had in fact informed the department of the project. She asked why the MM had disowned the project and why the DBSA had mentioned that it was not aware of the project.

Had the two parties signed a MOA when the municipality provided Masingita with the land? In addition, was the municipal land sold to Masingita through an advertisement, a council resolution or through a solicited bid?

She asked whether both parties could solve the issue outside of the courts, to prevent a long-drawn-out process from occurring.

Mr G Mpumpza (ANC) said that there was a clause read out by the MM which said that in terms of the Petitions Act of the province, the municipality was not meant to welcome the petition or be a part of this meeting – so as to avoid engaging with it.  He requested that the municipality look at Section/s 56 and 58 of the Constitution, in relation to the powers of the Committee.

The current government administration has implemented a programme of integrated industrialisation of townships and rural settings in the country. He asked what the local economic development policy of the municipality is; and whether the municipality had created a conducive environment for local economic development.

Why had the standoff between Masingita and the municipality not been dealt with in Council? He asked for clarity on whether Council had already taken a resolution on the matter. All of this gave him the impression that the municipality was not serious in providing development for its residents.

He also asked whether the municipality and Masingita had entered into an MOA. If they did, why had the MM dispute that the municipality and Masingita had not signed a service level agreement?

The Chairperson mentioned that she would provide the closing remarks after the Committee had heard the responses.

Responses

Mr Chauke (MM) said that all the questions raised by Members had been covered in the presentation. Officials of the municipality are willing to amicably conclude the matter with Masingita. However, Masingita would first have to settle the monies it owed the municipality, or it could enter into a payment agreement, so that it did not have adverse audit findings when it is audited. During the verification period, the municipality found that there were some companies that had been transferred to a subsidiary under Masingita group, and the municipality was not made aware of this. As a result, the Masingita had a consolidated account.

The MOU that was agreed to during the meeting chaired by the Speaker addressed all of the outstanding issues. This MOU stated that once signed, Masingita would agree to withdraw all the court cases and also withdraw the petitions it lodged in the various departments. He requested that the municipality and the company sign the MOU as agreed in the meeting.

In the interest of developing the area, the municipality agreed that the company should build on the land provided, but at the cost of the property being provided to the municipality by the property valuator. He requested both the municipality and Masingita agree on this matter, through the correct legislative channels.

Mr Mike Nkuna, Executive Chairman and founder, Masingita Group, said that the municipality had displayed arrogance in its response, and this had left him worried. If the municipality had the best interests of the residents of Greater Giyani at heart, the matter would have been resolved earlier. He alleged that the municipality had an agenda to tarnish the name of Masingita, despite the fact that the company was well recognised around the nation and internationally. The company has sought to provide development in the municipality. He recommended that an investigation should be instituted into the municipality, which would focus primarily on the conduct of the MM.

Closing remarks by the Chairperson

The Chairperson said that the Committee await the outcome of the DCoGTA’s and DCoGHSTA’s attempt to facilitate the dispute resolution process. All relevant stakeholders would be invited to another scheduled meeting in the next month. She pleaded with all stakeholders to restrain from fighting with one another as this affects the residents of the municipality. It is the duty of the Committee to expedite the matter as soon as possible.

The meeting was adjourned.