Financing of govt. legal matters must be urgently addressed to avert looming crisis

29 November 2017

The DA is calling on the MEC of Provincial Treasury, Mac Jack, to put measures in place to improve the financial management of legal claims and settlements by government departments.  This comes after the Adjustment Appropriation Budget highlighted the random approach towards the financing of legal matters, which has the potential to bring departments to their knees.

Legal claims against provincial departments are mounting.

While the DA fully understands that these “contingent liabilities” are subject to the courts, and the timing of judgments is somewhat unpredictable, the harsh reality is that a large percentage of these cases will eventually be lost by government.

The Northern Cape Health Department alone faces R1.5 billion worth of legal claims. And should the court find in favour of any given applicant, or should the department opt to settle, it will have to cough up large sums of money.

The problem is that government’s management of legal matters is flimsy at best and it currently makes no attempt to include claims and settlements, that are likely to be finalized and payable during any financial year, in its budgetary planning.

A lack of dedicated funding to pay claims and settlements in turn places departments in a precarious situation.

The recent adjustment budget served to highlight a case in point:

An additional amount of R3.450 million had to be allocated to the Premier’s Office for a contractual settlement to be paid to the former HOD for Transport, Safety and Liaison, Steven Jonkers, following a labour dispute that arose after his contract was not renewed in 2015. This is in spite of the court having ordered payment back in 2016. According to Premier Sylvia Lucas, her office failed to file opposing papers and hence they were left with no choice but to settle. If Provincial Treasury had not bailed them out, they may well have had the Sheriff of the court knocking on their door to attach assets.

It is exactly this type of lax approach to legal matters and this lack of foresight in respect of financial planning that necessitates funding for legal matters to be ring-fenced.

Failure to adhere to court orders instructing departments to pay-up is not only an affront to the rule of law but it is also downright irresponsible and could result in dire service delivery failures at departments, especially given last ditch attempts by the courts to enforce payment by attaching assets.

In fact the provincial Health Department has been on the verge of losing life-saving equipment, including oxygen machines and even ambulances, on a number of occasions already due to its inability to pay.

The DA will request Jack to consider our proposal to implement a system that ring-fences funds for legal matters, in order to prevent ad hoc bail outs of departments by Provincial Treasury, or worse.

The DA will further query an amount of R217 000, committed to the Law Society, that was rolled over from 2016/2017 to 2017/2018 financial year. We not only need an explanation as to why it was necessary to request a rollover for this line item, but also why the Office of the Premier is paying the Law Society in the first place.

For the sake of sustained service delivery, the potential of legal matters to debilitate the state must not be underestimated.

Issued by Boitumelo Babuseng, DA Northern Cape Provincial Spokesperson of Finance, 29 November 2017