West Rand District Municipality: engagement with Municipality, MEC, AGSA, SALGA & DCOG

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Cooperative Governance and Traditional Affairs

27 October 2020
Chairperson: Ms F Muthambi (ANC)
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Meeting Summary

The Portfolio Committee on Cooperative Governance and Traditional Affairs (CoGTA) met with the West Rand District Municipality (WRDM) alongside SALGA, the Provincial Treasury, Provincial Department of Cooperative Governance and Traditional Affairs and the Department of Cooperative Governance (DCoG) to interact on the state of West Rand District Municipality. This was to conclude on the preliminary oversight into the state of all those municipalities that had illegally invested municipal funds into the now defunct VBS Mutual Bank. The Municipality’s financial situation worsened after it had invested R76 million in VBS, which was written off as a financial loss. Such financial losses also included a neighbourhood development partnership conditional grant to the value of R43 million which meant that projects funded by this grant could not be completed by year-end.

The Committee noted that the Gauteng Provincial Executive had invoked a constitutional intervention in terms of Section 139(5)(a) which prescribed the imposition of a financial recovery plan to ensure the municipality’s ability to meet its financial commitments. Findings by the Auditor-General indicated that it had been almost two years since the imposition of a financial recovery plan and that the district is still under severe financial challenges. It was also reported that the district is counted with several municipalities, within the province, with deteriorating performance as it did not ensure adequate monitoring of all the controls necessary for performance reporting.

Views were raised that the district cannot be liable for the costs associated with Health and Fire Services as the grant to fund these functions goes to the local municipalities. Such issues defeat the purpose of developing a financial recovery plan when the bulk of the district’s financial problems remain.

Meeting report

The Chairperson welcomed all the delegations to the meeting and thanked them for availing themselves.

She stated that the meeting with the West Rand District Municipality was to complete the Committee’s preliminary oversight into the state of those municipalities that had illegally invested funds into the defunct VBS Mutual Bank. The district’s financial situation worsened after it invested R76 million in VBS which was written off as a financial loss. Provincial CoGTA was silent about the situation in their report while the National CoGTA report made an astonishing claim that the VBS investment had no impact on the finances of the West Rand District. She found this astonishing because the presentation by the district CFO explicitly pointed out that investments held with VBS were impaired and that the impairment loss amounting to R76 million was not budgeted for.

The financial loss to VBS included the Neighbourhood Development Partnership conditional grants to the value of R43 million which meant that projects funded by this grant could not be completed by year end. National Treasury also reduced unconditional grant funding to recover the lost grant money. This worsened the district’s financial position such that it had difficulties meeting its obligations including the payment of salaries and suppliers and saw the district using a conditional grant of R20 million for operational expenditure, thus incurring an unauthorized expenditure.

On the basis of the municipality’s poor state of financial health, the Committee noted that the Gauteng Provincial Executive invoked a Constitutional intervention in terms of Section 139(5)(a) which prescribes the imposition of a financial recovery plan to ensure the municipality's ability to meet its financial commitments. The concern is that it has been almost two years since the imposition of the financial recovery plan in November 2018 and the district is still experiencing severe financial challenges and is unable to pay its suppliers within 30 days.

The Auditor-General (AG) also identified the district as one of the municipalities in the province whose reported performance information deteriorated as it did not ensure adequate monitoring of all the controls necessary for performance reporting. The AG’s report appealed for a reconsideration of the financial model for the two districts in the province because it is unsustainable as the operational expenses (mainly salaries) of the districts are very high due to large staff structure relative to the functions they performed. This matter was covered by the Provincial CoGTA to a certain extent but there is no decisive proposal on the resolution of the financial crisis engulfing the district municipality, especially the dispute with the local municipalities on the powers and functions for health and fire services. There were only merely vague references to CoGTA “looking at various options” and for a need for unspecified provincial and national policy decisions.

It cannot be correct that the district is liable for the costs associated with Health and Fire Services and yet the grant to fund these functions goes to the local municipalities. There is no point in the development of a financial recovery plan if the bulk of the district’s financial problems remain. She added that it was concerning for the Committee that all actions on irregular, fruitless and wasteful expenditure are either awaiting the establishment of a municipal disciplinary board or awaiting Municipal Public Accounts Committee (MPAC)’s recommendation despite the fact that the municipality has a fully-fledged MPAC. This gives the impression that there is little appetite to address irregular, fruitless and wasteful expenditure. The onus is on the district to take appropriate actions to prove this impression wrong.

Provincial Treasury Presentation

Mr Owen Witbooi, DDG: Municipal Finance Governance, Gauteng Department of Finance, indicated that the presentation would be focused on the Section 71 reports that were received from the district municipality as well as the technical support provided alongside the National Treasury through the Municipal Finance Improvement Programme.

The cash flow information for receipts and payments in the first two months of the financial year of the municipality show that West Rand received about 42% of its budgeted receipts and made payments of about 33% against the budgeted payments. Provincial Treasury felt that the 35% payments to suppliers and employees is stretching the financial envelope of the municipality and that there is certainly room for improvement when it comes to the cost containment measures. The district does not have a big capital expenditure budget in comparison to some of the local municipalities and the Metropolitan municipalities as the capital budget was about R4.6 million and a total of R1.1 million had been spent.

In terms of the inter-district debt, part of the strategy of the region was an agreement that the district and the local municipalities would contribute to the overall strategic focus of the district. As it stands, local municipalities owe an amount of about R14 million.

The district is not able to pay its trade creditors on time because of the financial pressure but what is positive to note is that there is an ongoing engagement between West Rand and their creditors on a regular basis. These engagements will give information on the financial position of the municipality and look into payments arrangement between the district and creditors.

The provincial grants that the municipality received includes a HIV/AIDS grant of R5.2 million and provincial treasury is still awaiting the municipality to implement the expenditure against this particular grant that is allocated.

In terms of the rollover applications, there was a request received of about R814 000 but unfortunately, the application was rejected as provincial treasury did not receive proof of commitment or explanation of the request. Mogale City as well as the local recipient of this grant did make a direct appeal to the Provincial Treasury and the appeal is currently being considered.

Provincial Treasury also noted that all short-term turnaround strategic interventions would save the district municipality up to R80 million over the next three to four years which is a positive effort even though there are severe financial pressures. The district has put forward some measures for expanding and enhancing its own revenue envelope and some of those are related to fire services and the estimated revenue enhancement initiative could potentially yield the district about R42 million.

The district municipality has a number of pillars that are structured around the financial recovery plan and one of the requirements for the success of the recovery plan is around the finalization of the powers and functions method that would support the district as well as the Fire and Rescue services. These two components were very critical in the success of the implementation of the recovery plan and currently the policy methods are ongoing and not finalised.

Provincial Treasury did a baseline assessment of the financial operations and completed and submitted the report to the municipality and National Treasury. The support plan was compiled in conjunction with the Municipal Manager and the Chief Financial Officer (CFO) with a practical focus around the budget and Treasury office and the capacity that sits within that office. Needed support to the district municipality could not be fully given over the past few months because of COVID-19 but there has been an effort to focus specifically around assisting the municipality on the annual financial statements and doing a review of those financial statements and advising municipality on areas of correctional improvement.

There has also been a focus on training and skills transfer, particularly around the Budget and Treasury Office Officials within the district municipality.

In terms of the technical level support, the focus is more on supply chain management, the policies and understanding operating procedures. There is also a focus on asset management and reviewing of the asset management plans as well as accounting for assets and assisting the municipality with compilation of the asset register, looking at the controls around safeguarding of assets going forward. There will also be a focus on helping the municipality create a funded budget and the municipality would be required to indicate to the Provincial Treasury their payment arrangements in order to ensure that the equitable share is released.

Presentation by Gauteng CoGTA

Dr Elias Sithole, Head of Disaster Management Centre, Gauteng CoGTA, indicated that the purpose of their presentation was to present to the Committee on Gauteng CoGTA’s support provided to the West Rand District Municipality.

The implementation of the WRDM’s Financial Recovery Plan in terms of Section 139(5) (a) of the Constitution

The outcomes of the status quo assessment revealed that WRDM is facing challenges concerning organisational structure’s employee costs which are very high and far outside the norm, as well as institutional matters that include financial management challenges which also added to the financial crisis in the municipality. In order to address these challenges, the municipality developed a number of strategies for implementing a Financial Recovery Plan in the immediate, short-term, medium-term and long term. The strategies include strengthening governance, organisational restructuring, effective human resource management, infrastructure and service delivery improvements, financial sustainability, administration and control improvement, budget restructuring as well as cashflow management improvement.

The key focus areas that still need to be finalised in terms of strategy one include the institution of consequence management for non-compliance with the Supply Chain Management (SCM), litigation, the review, promulgation and rationalisation of by-laws, as well as powers and functions. On strategy two, the key focus area that needs to be finalised is the filling of critical positions in the municipality. On strategy three, it is the establishment of a disciplinary board as well as the development of a skills development programme. On strategy four, the key focus areas that need to be finalised include the fire-fighting services, municipal health services, community safety services, as well as a development of a district-wide integrated infrastructure master plan. On strategy five, revenue enhancement, collection, payroll as well as a financial management capability maturity model need to be finalised. On strategy six, a budget restructuring needs to be finalized and on strategy 7 the management of financial commitments and cash flow, as well as ensuring that unspent grants are also adequately safeguarded need to be finalised. 

Gauteng CoGTA provided assistance to WRDM in terms of municipal finance support, institutional support, governance support, infrastructure and service delivery support, as well as disaster management support. Additional support included community-based risk assessments, public awareness programs and materials, disaster relief activities and material, monitoring functionality of the Disaster Management Centre through reports and functionality assessments, and the monitoring of fire and rescue service activities and compliance through status reports. WRDM’s long-term financial viability and sustainability hinges upon the resolution of district powers and function, an appropriate funding model for the district, as well as an affordable organisational structure and service delivery model.

Presentation by SALGA

Mr Leonard Seabi, Strategic and Performance Management Coordinator, SALGA, highlighted that a large part of his presentation overlapped with what had been presented by Gauteng CoGTA.

The municipality has no matters that are not being attended to, notwithstanding the fact that there are issues that were raised regarding financial concerns in the municipality. SALGA has focused much of its attention on building the capacity and capability of municipal structures to continue to play their role on financial management and oversight processes, starting with its own working group that is comprised of other member municipalities. Member municipalities are exposed to various innovations and good practices on various places.

SALGA partnered with a private entity in the audit support programmes (PWC) to provide training on supply-chain management to WRDM and other municipalities as well as MPAC training in managing unauthorized, irregular, fruitless and wasteful (UIFW) expenditure. Training on financial misconduct and cost-containment regulations was also conducted by SALGA to the MPACs, the Municipal Finance Portfolio Committee and Internal and Audit Committees.

In Gauteng, the West Rand is the only region that does not manage transport contracts, particularly for busses, but the municipality has applied for a grant to be able to deliver the service and SALGA has supported that application by working with the municipality to provide the capacity to deliver the service.

The finances of the district are severely compromised and this needs to be addressed as a matter of urgency. There is a need to resolve powers and functions in the municipality, but it is equally critical to ensure that the resolution of the powers and functions is accompanied by the necessary flows of funding and staffing. The reallocation of fire services to the district is not accompanied by the necessary funding which means that the municipality needs to dig deep in order to fund the service.

Presentation by National CoGTA

Mr Clive Maduna, Director: Support and Interventions Management, CoGTA, indicated that his presentation would also be raising similar points to those made by the previous presenters.

He explained National CoGTA’s municipal status overview, pointing out that the points were already made in previous presentations. National COGTA has been part of the discussions between the municipality and provincial CoGTA where issues of powers and functions are dealt with. National CoGTA intervened in the municipality in helping with governance and administration and with the reconfiguration of District Government Project.

Currently, a review of Section 84 and 85 of the Municipal Structures Act, 1998, as well as Draft Regulations as per Section 84(3) of the Municipal Structures Act, 1998 are being dealt with. There is also an implementation of the Rural Asset Management System (RAMS) programme as well as the establishment of WRDM Planning Tribunal in terms of the Spatial Planning and Land Use Management Act (SPLUMA).

Presentation by West Rand District Municipality

Mr Dennis Thabe, Executive Mayor of WRDM, said that the working relationship between the district municipality, CoGTA and Provincial Treasury is crucial in terms of changing certain things in the municipality. The Mayor was elected on July 2019, the Acting Municipal Manager was appointed in November 2019 and the CFO was appointed in March 2020. In terms of the District Development Model (DDM), the WRDM decided that their slogan would be “one region, one plan, one action and one system”.  He said that the presentation would highlight key issues of concern and the CFO of WRDM would proceed with the presentation.

Mr Samuel Ramaele, CFO, West Rand District Municipality, said that the WRDM received an unqualified audit report opinion for 2019/20 financial year and there were 27 findings raised by the AG’s office. A total of 23 of the findings were resolved and the year-to-date progress is that 25 findings have been resolved and 2 findings are in progress. The findings that are yet to be resolved and are in progress are a result of the financial challenges faced by the district municipality, one being the municipality’s inability to pay suppliers within 30 days and the other being late payments to benefit funds.

Regarding the payments to suppliers, the municipality negotiated with its top ten creditors to implement the extended payment plan linked with the dates of receipt of equitable share. The top 10 creditors were paid 40% of the total debt and the small creditors were paid 100% of the total debt and as part of the Municipal Financial Recovery Plan (MFRP) process, a financial turnaround strategy was tabled to council on 29 June 2020. In terms of the late payments to benefit funds, the municipality is still facing challenges in making payments to benefit funds within the prescribed timelines however the municipality is up to date with payments made to benefit funds and only owes interest in arrears.

Considering consequence management of the UIFW funds, the R76 million investment to VBS Mutual Bank affected the municipality’s financial health. The MPAC recommendation for the municipality was that the Council should align itself with the Deloitte and Touché report including CoGTA forensic report as the matter is sub-judice. A similar approach that Merafong City Local Municipality had taken in terms of the VBS saga should also be implemented in West Rand District Municipality, such as reporting the matter to the South African Police Service (SAPS). Following the implementation of this resolution, the municipality became aware that a case was already opened with SAPS and the municipality was informed that the matter had been taken over by National Office.

In terms of the conditional grants that were not supported by cash available at the reporting date, the municipality did not have sufficient cash ring-fenced in its bank accounts to support unspent grants. MPAC suggested that the unauthorized expenditure should be written off and the municipality opened a call account available on demand with FNB bank to ring-fence conditional grants. The finding has been resolved and will not reoccur as the municipality can be able to prove that there was money available regarding the outstanding grant that was reported as well as the HIV/AIDS grant. Bank statements were requested to show that there was money available at the reporting date.

Regarding capacity building, the district municipality has three vacant senior management positions, including that of the Municipal Manager, Regional Planning and Re-industrialization Manager and the Technical Services manager, and four filled positions. In terms of the overall organisational structure, there is a 53% vacancy rate with the total posts being 683, total placed employees 344 and the number of the total vacancies is 338.

Discussion

Mr H Hoosen (DA) said that it was encouraging to see that there have been some interventions by SALGA, the province, the municipality as well as CoGTA at the provincial and National level to improve the situation in the district municipality. It is also important for the Committee, as politicians, to reflect on how the municipality reached its current state. Politicians promise people lots of things during the elections and after being elected into positions, they do not provide those services to people.

He was concerned that the municipality invoked Section 135 of the Constitution in January 2018 but when reading the report, one finds that action only happened around August 2019, which is more than a year later. He felt that if the intervention kicked-off sooner, there would have been less damage in the municipality and the situation would have been recovered much sooner.

He wanted an explanation of how the municipality aims to reduce the costs while the salaries of councilors were being increased. He asked if there was a genuine attempt from the municipality to try and reduce costs and expenditure, cut down contractors and scale down where possible and if the same measures were done in terms of security services especially when it comes to the politicians.

He asked on the progress on the VBS Bank matter and the actions taken against the people who were directly involved in order to recover the money. The money needs to be returned and the people responsible need to account.

He wanted more details about the quarterly performance assessments that were concluded for the Section 56 and 57 managers and the extent to which the province was involved in the decision to increase the salaries of the councilors in the municipality. He asked on when the Disciplinary Board situation would be solved and what the R28 million, stipulated in the UIFW amounts, was spent on.

Mr K Ceza (EFF) said that community service in general is not doing well in the municipality as poor environmental management is causing health risks for the communities of Merafong, Mogale City and Randfontein.

He inquired as to why the municipality was not enforcing health and safety laws for the protection of the communities against health hazards associated with the deposits of radium, uranium and gold. The district is struggling with waste management in municipalities such as Mogale City, Merafong and Randfontein as the recycling of waste is done by unregistered informal recyclers. He asked for the information on who was assigned to do recycling in the communities as other challenges include dumping and inappropriate disposal of waste which causes secondary health hazards. He did not understand why it is so difficult for the district to appoint comprehensive waste management in the municipality and asked for the relevant details on health services, the status of the shortage of services and poor management of ambulance services that are yielding negative response patterns.

He wanted to know the highest qualification of the district’s Chief Fire Officers, as the minimum requirement for the position is a B-Tech in Fire Technology offered by the Tshwane University of Technology. He asked why the municipality was using underqualified personnel with non-accredited diplomas that are not quality assured by anyone and the plan to resolve the problem since these people are responsible for community safety. He asked CoGTA for the timelines for the financial assistance of the fire department.

The MPAC made recommendations to the Rand West City Council to write off about R2.2 million in irregular expenditure incurred in the 2016/17 financial year and also requested that the council investigate more than R12.5 million and recover more than R427 000 from responsible officials. He asked if there is any information regarding the implicated officials.

There was also a recommendation that a case should be opened against the former Municipal Manager of Westonaria for his involvement in Sakhingomso which scored a contract of close to R500 000 and did not disclose that he was the director of Sakhingomso. He wanted to know what consequence management action was taken against this MM. He also asked about the disciplinary action that was taken against the former Randfontein supply-chain management based on misrepresentation of information on the transactions that were concluded before the time he was employed in the municipality.

He asked whether there is any political interference or interest in the municipality in terms of the positions of the fire services and what the qualifications of the politicians are if that is the case.

He also asked about the state of water and electricity in Merafong Municipality in relation to the protests that happened in the municipality since 2011. He wanted to know the number of officials that were implicated and arrested with regards to the Rand West City misallocation of funds allegations and the strategy of the district municipality to protect public funds and assets from further squander.

He inquired whether there are wellness programmes within the fire services department in the district.   

Ms D Direko (ANC) asked if the interventions done by SALGA and CoGTA in assisting the district municipality were effective and made an inquiry about those responsible for giving councilors permission to pay themselves a higher grading than the specified municipal grading. She wanted to know the current financial status of the municipality and whether salaries of employees and third parties were paid on tie and whether the Section 59 managers are permanently employed or on contract.

She asked on the progress the municipality had made in resolving the VBS matter and whether those were responsible are being held accountable.

Mr Farouk Bhayat, MMC: Finance, WRDM, said that when looking at the problems of WRDM realistically, one can realise that the problems in the municipality originate from a number of previous years. The issues within the municipality revolve around the decrease in revenue due to various circumstances that prevail. Though powers and functions were removed, the fixed costs that were incurred as a result of the provision of those powers and functions always remained.

Employee related costs are indeed exorbitant but that is because of the prevailing circumstances.

MMC Bhayat thanked CoGTA and Provincial Treasury for their endeavours to keep the municipality afloat as they made appropriations amounting to about R122 million on an Ad Hoc basis and added that a municipality cannot be run on an Ad Hoc basis because the reason for making appropriations in a municipality is because of the realisation that there was a problem in the first place.

All the conclusions that have been arrived at need to be translated into action because the circumstances that prevail are being recognised but there is no action towards a solution. When looking at the DDM, one notices that it speaks to the inputs that were made in 2016 and now going towards the end of 2020, there is a DDM that speaks to exactly what is known.

The way that WRDM is treated is different from the way in which other district municipalities are treated. He asked why other district municipalities were allowed to sell bulk water and bulk electricity and WRDM was not.

The problem that local government is facing comes from the division of local municipalities into political offices and administrative offices. Oversight has been compromised because if a Member of the Mayoral Committee (MMC) does an oversight they will be criminalised in terms of the councillor’s code of conduct for interfering within administration. What politicians are currently doing is “after sight” and not oversight.

The Chairperson said that the Portfolio Committee does do oversight and suggested that MMC Bhayat joins the Committee. She then asked the municipality to clarify what informed the disestablishment of the West Rand Development Agency and the alternatives put in place to ensure that the realisation of the objective informing the establishment of the agency are met.

She asked whether the mentioned 100 positions were removed from the municipality’s organogram or if they were filled. In the case whereby the positions were filled, she wanted to know what happened to the staff, and if that was not the case, she asked on the value that this added to the alleviation of the municipality’s financial difficulties.

Mr Hoosen said that MMC Bhayat should have been fair with the Committee because he was there when the decision to increase the salaries of the councillors was made. He added that he must explain why he thinks it was necessary. The Committee understands that there were other contributing factors to the state of the municipality but leaders who are in charge of the municipality themselves must lead responsibly first.

The Chairperson added that it is known that the district municipality is prone to disasters and wanted to know the state of the disaster management function in the district as it was not clarified in the presentations. She wanted to know what challenges are faced by the district including whether the district has a post-COVID-19 economic recovery plan.

Response by Municipality

Mayor Thabe clarified that there is confusion between the West Rand and the Rand West, and that the Rand West was a merge of the Westonaria and Randfontein municipalities. When there are positive things that are meant to go to the West Rand they go to the Rand West and when it is negative things they tend to go to the West Rand. Based on that, some of the questions that came from Members have to do with issues of maladministration that comes from Rand West which have nothing to do with West Rand District municipality. Some of the issues will not be responded to on that basis as the delegation from the WRDM did not prepare to answer questions regarding the Rand West.

The Chairperson asked if the mayor was saying that WRDM does not play a role in supporting the municipalities including Rand West when they have a constitutional responsibility to support those municipalities.

Mr Thabe said that they did not want to mislead the Committee and wanted to give actual facts. He added that they know what is happening in the local municipalities within the district but would have given a factual and better presentation on their state if they were told to prepare for that. 

The Chairperson asked where the actual Municipal Manager of WRDM is instead of the Acting MM.

Mr Thabe said that after having encountered labour related matters in terms of misconduct within the institution, the district municipality started to do the relevant processes to engage the previous MM. The matter of the WRDM and the then MM, Mr Mokwena, is in the Commission for Conciliation, Mediation and Arbitration (CCMA). The previous MM had not signed the performance contract with the municipality and legislation said the person was no longer a member of the institution because he did not sign. The previous CFO’s contract expired, and the post was advertised accordingly, which is why there is a new CFO. Council took a decision to appoint an acting MM up until the current term ends because of the financial challenges that the district is facing.

Mr Elias Koloi, Acting Municipal Manager: WRDM, said that the problems of the municipality started as far back as 1999 after the promulgation of the Municipal Structures Act in 1998. The predecessor municipality to WRDM took a decision to align all functions that are district-based which was also a process that was supported by the MEC of local government then in 2003, who then assigned the provision of fire services to the WRDM. At the time, fire services were a function provided by the constituent local municipalities which were Westonaria, Randfontein, Mogale City and Merafong. In terms of the Section 12 notice, the then MEC assigned this function of fire services to the predecessor of WRDM. The problem was also perpetuated by the abolishment of the levy that the district municipality used to receive which was replaced by another grant which was the Replacement Government Levy. The incremental rates of the two levies were not commensurate as the initial levy that was provided, the regional service levy’s incremental rate was not the same as the replacement grant. When fire services were transferred to the district municipality the related funding was not transferred which also had an impact on the financial reserves and the financial stability of the district municipality.

The district municipality in December took a resolution to establish a District Disciplinary Board but there were vivid resolutions that were placed by the municipal council to say that the council needed to have representatives from both Gauteng Provincial Treasury and the National Treasury. As part of implementing the resolution of council, WRDM wrote letters to the two sector departments requesting a delegation of one member at each of the sector departments. A response was received from the deputy indicating that they were in a tight corner to provide representatives from the department because they were also providing oversight to the district municipality. WRDM is taking a report back to the municipal council indicating that there is no other alternative but to establish this board without the two department that were identified.

Mr Ramaele said that in terms of the fleet management, WRDM had a lease of municipal vehicles and the cost for the last four years was R26 million and in terms of the cost-benefit analysis that the municipality had, the National Treasury transversal contract requested the municipality to have a budget of R4.5 million to scale down on the leasing of legation. The previous list of legations did not have an option to own the vehicles but with the current outright purchase, the vehicles will be in the ownership of the municipality at the cost of R4.5 million meaning that the municipality will save up to R12.1 million.

When looking at the fire engines and mini rescue vehicles, the previous finance lease obligation for the last three years was R39.6 million for five fire engines and five mini rescue vehicles. Currently, because of the conditions of the finance lease, the transfer of ownership must go into the name of the lessee which in this case is the WRDM. There was a settlement agreement with the leaser, Marce Projects and Simunye fleet management services, where the ownership of the fire engines will be coming from. Going forward, WRDM will be budgeting for maintenance of R1.5 million with a savings of R38.1 million because the ownership of the fire engines and the mini rescue vehicles will be under the municipality.

The third contract was for ICT network and the voice of IP which for the past few years the municipality had spent R27 million. When the contract ended the municipality decided not to continue with the contract as there was a heavy financial burden. WRDM approached the Department of eGovernment through Gauteng Provincial Treasury and requested them to assist the municipality with Gauteng broadband network, which they did. The municipality will only be maintaining the servers that they currently have as well as other related costs in terms of the voice of IP for the telephone system to continue functioning. This will amount to R1.5 million with a total saving of up to R25.5 million in ICT network.

The municipality giving the West Rand Development Agency a subsidy of R4.4 million and because of the disestablishment the municipality will save R4.4 million. The contracts that are going to be scaled down include the list of photocopy machines which amounted to a contract of R4.2 million for the past three years. The reduced number of machines is anticipated to be R2.6 million with a savings of R1.5 million. The cell phone and the 3G cards old contract was R2.8 million and the new contract is now R1.9 million, saving R960 000. The old contract with security services for the last two years was R11.7 million and the new contract will be R8.3 million with savings of R3.3 million. With regards to insurance, on the old contract per year the municipality spent R4.7 million but because the number of vehicles has been limited the new contract is R2.2 million with savings of 2.5 million. The fuel cost previously amounted to R2.4 million but due to scaling down the cost will be R1.2 million with savings of R1 million.

The R28 million conditional grant was spent on paying SARS for revenue services of R22 million for the past ten months from July 2018 to March 2019 to try and limit penalties and interest that was charged.  The remaining R6 million of the grant was used on the 3rd parties that were outstanding for June 2019. The municipality had R22 million at the end of the quarter which is September 2020. The monthly obligations of the municipality related to the salaries which amount to R18 million, these are salaries paid to employees and remuneration of counselors per month totaling R8.4 million, third parties’ payments of R7.4 million and SARS which amounts to R3 million.

Mr Samuel Konopi, MMC: Roads and Transport, WRDM, said that they were informed of the increase of councilors salaries from level four to five in January 2017 as they were newly elected to their positions in August 2016. Immediately in the following year, the salaries were moved back to level four but not everybody that was already in level five could go back to level 4 so an increment of level four was implemented which was not level five. The following three years to date, there have not been increases.

In terms of VBS Bank, the council commenced a Province Commission and investigation which came back with a dilemma that Deloitte and Touché indicated that they could not go to court to represent the municipality as witnesses which meant that the municipality could not take any action as there would have been no one to represent the municipality in court.

The infrastructure and delivery improvements are part and parcel of the powers and functions including the issues of waste management and the district municipality can only coordinate. In terms of environmental issues, WRDM have engaged with the mining industry but the problem is that the mines can only be accounted for by the Department of Minerals and Energy.

There is no political interference in the deployment of fire services positions in the district municipality.

Ms Nonkoliso Tunzi, Speaker of Council: WRDM, said that the salaries of the councilors are proclaimed through a Gazette by the Minister. There is a provision that when the Gazette is promulgated, a person who was in the upper grade may remain in that grade because it has financial implications on the lower grades but any councilor who comes later should not be remunerated on the grade that the previous councilors were receiving.

Ms Rethabiseng Mokebe, Senior Management: Corporate Services, WRDM, said that the 100 positions that were removed from the organogram context were those of the 2017 structure which was premised on the 2016 strategic plan. The positions had not been filled and when they were removed from the structure, it was just a removal of several positions that had remained vacant for a certain time and there were no employees who were affected.

The advertisement of the jobs in the municipality is based on the advertisement of job profiles as have been developed and signed off by the HOD. The design of the job profile is in terms of a framework where the qualifications of a certain level are standardized, and standard qualifications are requested.

There are four senior managers that are appointed, three are permanent and in 2019 the council took a decision to revert to fixed-term contracts and the current CFO position is on a five-year contract.

The politicians within the municipality do not interfere in any recruitment whether it is in public safety or in administration even in their own political party support offices.

The advice that was given to the Council previously was that there are several ways in which the money lost in VBS could be recovered and WRDM is one of the four municipalities that have successfully lodged a claim with the liquidators for the recovery of their amount and the claim has been approved. The district municipality is now awaiting the filing of the distribution account to determine the amount which will be receive. As much as the last report of the liquidator indicated that they might not be able to match each cent that was spent, it reflected an amount of R43 for each rand that is anticipated, meaning that the municipality could still be in a position that prevails and thereby recovering R43 million of the R76 million that was invested. There are still other steps to be taken to recover the bulk of the money after that. The WRDM was advised on how they could litigate but at this point the strategy is to go for the deep pocket principle, focusing on where the municipality is more likely to get the largest amount of money and work its way through the various parties from whom it can recover the money.

Response by Provincial CoGTA

Dr Sithole said that there is a team that is working on issues of powers and functions focusing on fire rescue services and disaster management. The plan is to come up with a process of de-centralisation but also a road map that will guide the municipality on specific time frames to ensure that its functions are self- sustainable.

Through the HOD of CoGTA, Gauteng CoGTA adopted a regional approach containing teams composed by senior members of the department led by DDGs and the teams possess various skills and expertise. The teams have been deployed to every municipality in order to pick up any problem that could come up before it can become a crisis.

Response by National CoGTA

Mr Maduna said that working together with provincial CoGTA, there is a process that needs to be   expedited to engage the districts and this will be done districts in time.

Response by SALGA

Mr Seabi said that the capacity supports that the organisation has been providing include the development of an organogram and that the structure needs revision to manage the number of employees. The other capacity building program relates to building oversight structures, particularly focusing on challenges that have been identified by the AG.

The district is one of those municipalities that have been able to play their oversight structures if one looks at as an indicator. The number of issues that have been attended to, almost 100% have been addressed.

The Chairperson said that the municipality needs to submit a written report on the impact of the VBS Bank investment on the municipality’s finances as it was indicated that it did not affect the municipality’s finances in the presentation.

Provincial CoGTA and SALGA will also need to brief the Portfolio Committee with an honest analysis of the issue of Section 139(5)(a) intervention in the municipality as it has been two years, but the district is still having difficulties. There also needs to be a post audit action plan submitted so it can be dealt with as the Portfolio Committee could not focus on the matters as raised by AG because of time.

She added that it appeared as though there is no appetite from the municipality to deal with the UIFW funds and that the Acting MM and Mayor will have to bring forward a breakdown of the UIFW for the 2018/19 financial and a progress report on what is being done to bring into account those who were implicated in wrongdoings.

The Committee will see to it that it reconvenes a meeting with the municipality and stakeholders. If this is not possible before the end of term this year, then it will be scheduled for the beginning of the term in 2021. The Mayor needs to provide the information on the district’s support to the local municipalities and whether the district’s Inter-Governmental Relations Policy and Legislation (IGR) structures are functional. There also needs to be a separate presentation from the National Disaster Management Centre because there have been issues throughout.

The Chairperson thanked the WRDM and other stakeholders for availing themselves to the meeting with the Committee and showing commitment to resolving the issues in the municipality.

The meeting was adjourned.

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