Failed Nala Municipality: Treasury makes historic intervention
The DA welcomes the historic intervention by the National Treasury to stop financial transfers to the Nala Municipality in the Free State. This comes after over four years of financial maladministration, during which the municipality regularly failed to deliver services to its people.
The intervention by National Treasury is in accordance with section 216(2) of the Constitution, which states that it "may stop the transfer of funds to an organ of state if that organ of state commits a serious or persistent material breach of those measures". It now falls to the provincial government of the Free State to ensure that services to the municipality are continued.
The DA will liaise closely with Minister Gordhan and the relevant provincial authorities to ensure that the cash flow needs of the municipality are addressed urgently so that residents are not left in the lurch. It is essential that the residents of Nala do not suffer any further deprivations.
The Auditor General (AG) had identified serious problems in Nala municipality way back in 2008. These included maladministration, flouting of procurement processes, corruption and fraud. The municipality also failed to submit audit reports and financial statements for 2009/10 and 2010/11, or to complete performance management reports as is required by the Municipal Finance Management Act (MFMA). None of the AG's recommendations were ever implemented, and no one was ever held accountable.
As a result, the residents of Nala have laboured under the weight of a municipality riddled with corruption and financial mismanagement for far too long. The failures of the municipality have crippled the local economy and cost jobs.
Now, up to R120 million of the R203.9 million allocated to the municipality will be held back by the National Treasury because the ANC-governed municipality cannot be trusted to manage the money honestly or correctly
This intervention comes not a moment too soon. It is about time the National Treasury starts taking a hard line on local governments that show complete disregard for municipal law.
It is concerning, however, that transgressing municipal representatives have yet to be charged for the mishandling of public funds. In 2010/11 an independent auditor, KPMG, was commissioned to investigate the allegations of financial mismanagement in the municipality. Several municipal officials and councillors were implicated in the report. To date only the municipal manager has been fired.
This is an unacceptable outcome. Public representatives found to have transgressed the law should be held accountable for their actions. It is not enough to simply act against a single transgressor. The law cannot be selectively applied at the whim of the national administration.
I will therefore request a meeting with Minister Gordhan in order to hand over the KPMG report to him in person so that he can ensure that justice is done. Subsequent to the Treasury's recent intervention, I will urge the Minister to ensure that due process is followed in accordance with the MFMA and the Constitution to ensure the continuation of services to the residents of Nala.
It is to be hoped that the action taken by the National Treasury is a declaration that enough is enough. Failing local governments must either align their provision of services with the Constitution or face direct intervention by Treasury.
Statement issued by David Ross MP, DA Shadow Deputy Minister of Finance, September 16 2012
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