Acting city manager challenged

The reason for this statement is to correct some of the inaccuracies stated in the media article, titled “Plan to call in experts to help sort out metro’s financial woes”, which was published in The Herald on Friday 13 September 2019.

The article may create an inaccurate perception in the minds of the residents of the NMBM if some of the inaccuracies are not addressed.

It is not the intention of this response to create a “trial by media”, but merely to adequately inform the public.

The municipal public accounts committee (Mpac) welcomes the stance which the acting city manager has taken on matters of supply chain management, consequence management and irregular expenditure, as stated in the article.

The Mpac shares these views and in particular, has the vision to assist this municipality to take the necessary steps to achieve a clean audit status.

One of the key issues to address to get there, is how we deal with what is called the “Historic Limitation of Scope / Irregular Expenditure”.

However, in the interest of transparency and honesty, the Mpac takes particular exception to the comments made by the acting city manager, Anele Qaba.

The acting city manager appears to be taking credit for work he has had no input in.

In work which was conceptualised, researched and initiated prior to his appointment as acting city manager.

Qaba goes further to question the work Mpac have performed as well as infer that the Mpac requires “technical” assistance.

Legislation:

The article mentions section 32 of the Municipal Finance Management Act (MFMA) and reports which are to be written in terms of this section.

But perhaps reading the section in full would provide the clarity that the extracts do not.

Section 32 (2) reads as follows:

(2) A municipality must recover unauthorised, irregular or fruitless and wasteful expenditure from the person liable for that expenditure unless the expenditure –

(a) in the case of unauthorised expenditure, is –

(i) authorised in an adjustments budget; or

(ii) certified by the municipal council, after investigation by a council committee, as irrecoverable and written off by the council; and

(b) in the case of irregular or fruitless and wasteful expenditure, is, after investigation by a council committee, certified by the council as irrecoverable and written off by the council.

In the NMBM, the council committee referred to in 2 (a)(i) and in 2 (b) above is Mpac.

The institution will write section 32 reports explaining what has led to the unauthorised, irregular, fruitless and wasteful expenditure and submit this report to Mpac for Mpac to perform its investigation into the merits of the case and whether the amount should be written off or if action (disciplinary or recover) should be taken.

Inaccuracies to be addressed:

The following four inaccuracies from this article need to be addressed:

● “The money that is spent there irregularly is money that should be going towards service delivery.”

Irregular expenditure, by its definition and nature is expenditure incurred in contravention of an act or policy.

It is not necessarily that money has been “wasted” or money has been stolen which should have gone towards service delivery.

These comments merely add fuel to the fire of public outcry over the use of municipal resources.

We are by no means condoning the breach of policy or act, but, to say that money was taken away from service delivery merely incites more anger;

● With acting chief financial officer Jackson Ngcelwane, they have devised the plan for the independent team.

The plan to deal with the historic limitation of scope/ irregular expenditure by making use of an independent team of experts is a joint plan undertaken by the budget and treasury directorate led by the MMC (Cllr Mtsila) and the acting CFO (Mr Ngelwane) and the Mpac.

This plan was started before Qaba was appointed as acting city manager.

It is completely incorrect for Qaba (or The Herald) to insinuate that these plans were the brainchild of the current acting city manager.

It does a disservice to the many hours Mpac, budget and treasury and former acting city managers have put into ensuring that this approach is compliant with legislation and able to provide the intended benefits;

● “Most of the irregular expenditure is historical, dating back to the late 1990s and early 2000s.”

The MFMA came into law in 2003, and the historical limitation of scope/irregular expenditure goes back to this year, not the late 1990s; and

● “Mpac is made up of politicians so you need a technical team that is independent that will assist Mpac.”

The inference here is that Mpac lacks or needs technical assistance.

This is incorrect. The technical team will look into the historical limitation of scope/ irregular expenditure on behalf of the institution and will provide Mpac with their results.

The full extent of the historic limitation of scope / irregular expenditure is over 1,000 files which need to be looked into on a case-by-case basis, and a report written to Mpac about each file, explaining what went wrong, whether value was received (does the bridge that was supposed to be built exist, for example?) and the value of the expenditure.

Mpac will then perform its legislated function in determining whether the amounts in question should be written off or if action (disciplinary or recover) should be taken.

The comments made by the acting city manager raise very serious concerns. Could these have been made from an uninformed point of view?

Or was the acting city manager trying to garner cheap points with the residents and politicians of the NMBM?

Each option is as bad as the other.

The city manager, as the head of the institution, sets the tone at the top.

With these utterances, what kind of tone is Qaba setting for his officials to follow?

Progress with historic limitation of scope / irregular expenditure

Mpac, with the assistance of budget and treasury and previous acting city managers, have engaged National Treasury, the department of cooperative governance and traditional affairs and the South African Local Government Association on the process to follow for this write-off.

Through Mpac’s interrogation of the very first application for this write-off, processes were put in place to successfully amend the NMBM’s unauthorised, irregular, fruitless and wasteful expenditure policy to speak to the unique situation of historic limitation of scope that the NMBM finds itself in.

To date, the Mpac has processed, applied its mind to and successfully written off R7.9bn worth of historic limitation of scope amounts.

Just this week, Mpac has started discussions with the Accounting Standards Board, which develop accounting standards for the public sector, for their input on how to deal with the write-off in our financial statements from a financial accounting point of view.

While a lot of this spade work does not make it into the eye of the media, it is not to say that Mpac and budget and treasury have not been proactive in dealing with this matter.

In dealing with this, Mpac also hopes to assist this institution to put the controls in place to ensure that we are never in this position again.

The events which led to the current historical predicament are wholly unacceptable and an entire culture change is required.

It is the hope that with the buy-in of the MMC: budget and treasury, the acting city manager, we can rid the NMBM of this dark cloud which hangs over our heads, and lead it to a brighter, clean audit-led future.