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Why Zandile Gumede was finally removed from office

2019-08-19 00:00

Former mayor’s administration punctured with ‘high levels of tender irregularities’

Damning findings by government departments and several unfavourable internal reports proved to be the Achilles heel that finally felled eThekwini municipality’s criminally charged mayor Zandile Gumede.

The first eThekwini mayor in democratic history to be removed from office, Gumede’s term was characterised by the rise of mafia-style business forums, declining service delivery, violent protests and allegations of serious political interference, fraud and corruption.

The now former mayor’s administration was punctured with such “high levels of irregularities around the procurement of tenders” that the city’s internal audit committee finally recommended audits be conducted “on a proactive basis” on all tenders above R50 million from July this year and that, for subsequent years, “audits be conducted on all tenders above R10 million”.

The report

The KwaZulu-Natal cooperative governance and traditional affairs department and the provincial treasury prepared the confidential 70-page State of Local Government Report: eThekwini Metro, which was part of a larger probe into governance at the province’s municipalities.

City Press has seen the report.

It was based on eThekwini’s audited financials, the Auditor-General’s report, section 71 reports, accounting records and verbal interviews with the executive committee (Exco), the mayor, city manager, speaker, whip, chief financial officer and the municipal public accounts committee chairperson.

The report’s “key issues and challenges” noted that:

. Service delivery was acceptable, key outputs had been met and compliance achieved, but service delivery was compromised by ineffective spending. There were numerous outsourced contracts that compromised value for money;

. Basic service delivery had declined as a result of vacancies at senior management level, particularly corporate and human resources, as well as community and emergency services. Community stability was compromised by a lack of enforcement;

. There had been a significant increase in service delivery protests and damage to council property and infrastructure;

. Exco decisions were not implemented. The finance portfolio committee had been disbanded and financial oversight was compromised;

. Debate and discussion in council was stifled, frustrating decision-making processes and compromising transparency;

. There was some intra-party tension within the ANC;

. Business forums and political interference in administration negatively affected service delivery. Project implementation was compromised as a result of delays in procurement processes, decision-making, poor project management and oversight;

. In opposition-led wards, councillors were not fully engaged on ward projects and contractors reported to proportional representation councillors;

. The image and reputation of the municipality had been severely affected by negative media coverage, which had the potential to create negative economic consequences through credit ratings; and

. Allegations of fraud and corruption were evident.

The city was involved in 399 cases of litigation – 124 instituted by the city and 275 instituted against it.

The report found that, since July last year, 320 instances of fraud and corruption had been reported at eThekwini; 179 disciplinary cases for fraud and corruption had been instituted for the same period and there were 42 dismissals.

In the past quarter, 92 forensic investigations into fraud and corruption were initiated, 87 were conducted.

It was found that since July last year 11 councillors had been fingered for noncompliance with the councillor’s code, but no one was dismissed.

There were 12 unprotected strikes within the municipality in the past quarter, with grievances against management cited as the cause in each one.

There was no indication that the “no-work, no-pay” rule was used for strikers.

Although not mentioned in the report, the municipality waived the “no-work, no-pay” policy when waste collection workers took part in an illegal strike in late April that resulted in them rampaging through the city centre.

They were protesting against the municipality flouting its own policies by promoting 55 Umkhonto weSizwe veterans whose salaries were consequently hiked from about R9 000 to R20 000 a month.

Despite the striking workers sabotaging water infrastructure, blocking freeways, damaging property and making the city a no-go zone, the Gumede-led executive council offered them the opportunity for promotion.

As for intergovernmental relations (IGR), the report said all the city’s clusters – human resources and governance; community and health services; infrastructure, human settlements and transport; finance; economic development; and safety and security – were “partially functional”.

“The IGR clusters are not meeting objectives as they are factionalised politically. ANC caucuses are not meeting in preparation for meetings.”

Read: Gumede axed as mayor after ANC KZN enforces sweeping changes

Decisions of “poor quality” were being taken at the cluster meetings.

“The municipality is struggling to deliver services to the community,” said the report, but a war room had been established to deal with the issues.

The ANC’s deputy chairperson in the province, Mike Mabuyakhulu, was leading the war room.

(He is out on R50 000 bail for his alleged role in a scam related to a multimillion-rand KwaZulu-Natal jazz festival that was paid for and did not take place. He was an MEC at the time of the alleged crime and has denied any wrongdoing.)

Internal reports

Several damning findings were made in meetings open to the media and in documents that were publicly available, should the ANC have wanted to have axed Gumede sooner, based on her performance.

In the 2017/2018 financial period, the Auditor-General found the city racked up R732 million in irregular expenditure, with “no reasonable steps” being instituted to curb it.

The majority of the irregular expenditure was as a result of “noncompliance with supply chain management regulations to the procurement of goods and services”.

An irregular expenditure report prepared at the end of June and presented at an open Exco meeting found that for the 2018/2019 financial period, the city had racked up irregular expenditure of R581 492 759.38.

Included in this amount was R138 272 435.63 relating to previous financial years (prior to 2018/2019) and R443 220 323.75 relating to the 2018/2019 financial year.

The amount again related to non-complaince supply chain management that had been submitted through the bid adjudication committee in terms of section 36 of the supply chain management policy.

Ethekwini’s chief financial officer, Krish Kumar, told Exco that there “could be” fraud and corruption among the irregular expenditure, but added that the city had contained it by instituting better controls.

In July an internal audit committee report for the third quarter that was presented at another open Exco meeting showed that the city had racked up R50.2 million in irregular expenditure in three months, for the period ending in March this year.

The breakdown of the irregular expenditure showed that the city’s electricity and water and sanitation units had procured services on expired contracts and its human settlements department had allowed for upgrades at the notorious Glebelands Hostel in Umlazi without a tender process.

Services were provided to Moses Mabhida Stadium without valid contracts, while the economic development department flouted supply chain management processes for a low-cost housing development.

Damning findings by government departments and several unfavourable internal reports proved to be the Achilles heel that finally felled eThekwini municipality’s criminally charged mayor Zandile Gumede.

The same department did not comply with the Municipal Finances Management Act for the upgrade of water mains projects.

Several “other” business units had provided services without contracts, noted the report.

In each case the report stated that “no action [had been] taken regarding consequence management”.

The report was presented by the audit committee chairperson, Nala Mhlongo, who told Exco he disagreed with the reasoning that, “no corrective action had been initiated because no fraud had been committed”.

The audit committee is an independent advisory body appointed by council but has no executive powers.

The committee recommended that “consequence management” be initiated against deputy city managers who “failed to take corrective actions on matters associated with irregularities”.

As for the city’s disciplinary board – established in 2017 to ensure cases of financial misconduct were investigated impartially and corrective action taken – the same audit committee report found its scope was restricted because it didn’t deal with “oversight of the entire value chain”, including hotline allegations, investigation and disciplinary processes.

The disciplinary board dealt only with financial misconduct, had not reported to Exco or the municipal public accounts committee and there were “challenges” about disciplinary board meetings.

There was a high backlog of disciplinary cases for financial misconduct.

The report highlighted the “inactivity” by management to deal with employees who had been arrested based on allegations of fraud and corruption as the implicated were still performing their duties.

City management did not provide the audit committee with risk mitigation controls relating to victimisation of witnesses who were the subordinates of those involved in allegations of fraud and corruption.

There were also no risk controls provided to prevent tampering with “essential evidence such as audit trails and physical supporting documents”.

“New allegations of similar irregularities may arise as a result of their continued involvement with the functions,” said the report.

It was noted that “a bad perception that the city is tolerant of corruption may be created among other employees”.

The report also highlighted the city’s failure to implement the City Integrity and Investigation Unit recommendations against staff implicated in wrongdoing.

There were a total of 400 matters that still had to be resolved.

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September 15 2019