Sakeliga starts court case to reverse municipal decline countrywide

31 May 2021

A new form of municipal administration, with independent control over electricity and other service charges, may soon be on the cards for corrupt and failed municipalities. That is, if Sakeliga is successful with a new litigation strategy to save local economies from municipal implosion.

In papers currently being served on two municipalities in the North West, as well as the Minister of Finance and others, business organisation Sakeliga is asking the court for far-reaching, novel interventions that have never been applied at municipal level.

The interventions revolve around the establishment of a so-called “special master”, who takes control of electricity and water fees, in addition to compulsory administration, and compulsory interventions by the national treasury’s “Municipal Finance Recovery Service.”  The special master must also compile evidence of corruption and related matters and report to Sakeliga, the respondents, and the court.

“What is new about this case, is that it moves beyond temporary solutions. It seeks to prevent access by incompetent or corrupt municipal officials to water and electricity payments in the first place, which is what is required for a long-term solution. To this end, Sakeliga is requesting the court to appoint a special master - such as independent auditors – to take control of water and electricity payments. The special master may then make payments directly to Eskom and water suppliers, as well as for maintenance of electricity and water infrastructure. Only a remaining portion will be made available to the municipality and the administration team.

“The purpose of the court case is to save local economies, by providing a structural solution. Although we and other organisations are regularly successful with interdicts and other short-term interventions, lasting solutions require control over the flow of money. After years of failure at all levels of government to intervene as they should have, we are now asking the court to order that the Special Master take control of the most important financial matters – those regarding water and electricity – until such time as National Treasury’s financial recovery plan has been properly implemented.”

Le Roux says Sakeliga is trying to defuse a situation that threatens to destabilise the whole country. “The failure at local level is a result of a collapse of management and control at all levels of government, up to the cabinet. If we were to simply continue obtaining interdicts banning service interruptions by Eskom and water boards, then Eskom and those water boards would collapse financially, taking the whole fiscus with them. On the other hand, if we allow electricity and water to be cut off or interrupted, then it heralds the end of that local economy – property values would fall to zero and whole populations would migrate to the metros, which only shifts the pressure and destabilises the larger centres. A third way is required: services must be rendered and payments for those services must reach the right destinations.”

The litigation strategy forms part of Sakeliga’s larger strategy for local economic recovery. Central to the larger strategy is an affiliate program for chambers of commerce, since chambers can play a key role in local economic recovery. The affiliate program promotes cooperation between chambers, reduces litigation costs, and leverages economies of scale for greater efficiency. Sakeliga invites chambers that support a market economy and a constitutional order to affiliate with Sakeliga.

Click here for the notice of motion.

Click here for the founding affidavit.

Click here for the supporting affidavits.

Click here for the supplementary founding affidavit.

Click here for more information on business chamber affiliation.

Issued by Piet le Roux, CEO, Sakeliga, 31 May 2021