Two statements from the Democratic Alliance Eastern Cape:

1. IS MAKANA FINANCIALLY AND MORALLY BANKRUPT?

A reply to a parliamentary question by DA MP Kevin Mileham, has revealed shocking information about the state of Makana's finances under the ANC administration. In his response to Mileham's question, the Minister for Co-operative Governance and Traditional Affairs, Lechesa Tsenoli, has advised that:

• Makana's cash on hand has decreased from R71.1 million at the end of 2010/11 to just R23.5 million at the end of 2012/13;
• Makana's debtors book has increased from R128 million in 2010/11 to R226 million in 2012/13, and 65% of this figure is over 90 days (and therefore considered unlikely to be recovered);
• Makana's collection rate has declined from a high of 123.4% in 2010/11 to just 73.5% in 2012/13;
• The municipality has been operating at a deficit for the past three years, and this deficit has now grown to R133 million for the 2012/13 financial year; and
• Creditors are not being paid timeously.

The DA's own investigations have revealed that the collection rate has dropped still further to approximately 62%, and that the anticipated deficit for the current financial year based on this figure is R155 million. Supply chain infractions are commonplace, and it appears that the municipal manager is well aware of the fact that he is authorising irregular, fruitless or wasteful expenditure. This amounts to criminal misconduct in terms of s171 and s173 of the Municipal Finance Management Act.

During the past year, the ANC-led administration has purchased a new mayoral vehicle at a cost of R400 000, spent an estimated R500 000 (exact figures not available) on an exhibition of portraits of struggle heroes (including Robert Mugabe), sent the staff soccer team on a tour to Namibia at a cost of R300 000, and held numerous off-site imbizos and workshops at out-of-town resorts such as Mpekweni and Fish River at a cost of many thousands of rands. Given the dire financial situation in which the municipality finds itself, one has to question whether these "nice to haves" are in the best interests of the citizens of Makana. The situation is exacerbated by a failing municipal infrastructure, and the municipality's inability to pay its creditors timeously, which means that basic services such as water are cut off for extended periods (weeks at a time) due to a lack of maintenance.

In the minister's own words: "The municipality's cash on hand has been depleted, the outstanding debtors are on the increase, the payment levels are decreasing, operating expenditure is higher than the operating revenue and the creditors are on the rise. It is a classic example of a municipality that is in distress and that is not sustainable."

"The fact that Makana is, for all intents and purposes, bankrupt, should fill its citizens with outrage," said Mileham. "The Democratic Alliance has already exposed the rot at the heart of Makana Municipality and brought it to Parliament's attention. The minister failed to answer whether capital grant funding had been utilised to pay operational expenditure. We will therefore be writing to the Auditor-General requesting a forensic audit into the municipality's finances, and to the MEC for Co-operative Governance and Traditional Affairs in the Eastern Cape demanding a provincial intervention in terms of s136 of the Municipal Finance Management Act and s139 of the Constitution."

Statement issued by Kevin Mileham MP, DA Constituency Leader - Makana Municipality, December 4 2013

2.   DA WELCOMES LOCAL GOVERNMENT MEC'S INTERVENTION IN MAKANA MUNICIPAL MANAGER'S R3 MILLION PAYOUT BONANZA

The DA welcomes the investigation by the MEC of Local Government into the R3 million legal payout bonanza by the Makana Municipality to its Municipal Manager, Dr. Pravine Naidoo, and the deployment of a multi-disciplinary team to the municipality to intervene in various issues.

The payout to Dr. Naidoo was apparently authorised by the Mayor and the Speaker without the knowledge of council.  It is in stark contrast to the findings of the Labour Court, which found against Dr. Naidoo and awarded costs to the municipality.  

In a further twist, the municipality's strategic manager, Mncedisi Boma authorised the payment of Dr. Naidoo's legal costs of R800 000.

Neither payment was approved by the Makana Council.

In reply to a legislature question I asked the MEC for Local Government, Mlibo Qoboshiyane, he said the department had noted "alarming issues" and that it was "extra-ordinarily odd that the municipality would be required to pay Mr. Pravine Naidoo's legal costs in a matter where his claim was dismissed with costs, suggesting that he is the one who was actually supposed to be paying the municipality for its wasted costs". 

Qoboshiyane said his department noted the council's intention to suspend Dr. Naidoo and that the department would assist in taking disciplinary action against him. 

The department's intervention plan in addressing Grahamstown's ongoing water shortages, non-payment of employee salaries and general financial mismanagement and governance of the Makana Municipality is a positive step. For the reply, click here.

The Democratic Alliance has proven its capacity to govern in a clean, responsible manner. MEC Qoboshiyane has finally paid some attention to the desperate calls of the public he serves.  It is hoped that he will initiate similar interventions to bring some hope to other towns suffering from poor service delivery, such as Sterkspruit, Cookhouse and Gariep.

Statement issued by Dacre Haddon MPL, DA Eastern Cape Shadow MEC for Local Government, December 4 2013

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