Former members of the Umgeni Water Amanzi board have gone to court to challenge their removal by Water and Sanitation Minister Senzo Mchunu
Former members of the Umgeni Water Amanzi board have gone to court to challenge their removal by Water and Sanitation Minister Senzo Mchunu “for no rational reason”, claiming he did so unlawfully and with a “sinister” motive.
They also claim that the board appointed by Mchunu to replace them has been constituted irregularly and without the necessary security and other vetting processes being conducted.
According to court papers filed this week in the Pietermaritzburg high court by dismissed board member Visvin Reddy, the appointment of interim board chairperson Mzimkulu Msiwa, a former Umgeni chief executive who is at the centre of a R3 million legal battle with Umgeni Water, constitutes a conflict of interest.
Umgeni Water supplies most of KwaZulu-Natal’s municipalities — including the eThekwini metro — and is in the process of being amalgamated with Mhlathuze Water, which supplies Richards Bay and the areas in the north of the province.
The entity has been rocked by allegations of failed corporate governance and ran up irregular expenditure of R2 billion over the past two financial years.
Earlier this month Mchunu fired the Umgeni board — which had been axed by his predecessor, Lindiwe Sisulu, in August 2020 before being reinstated by the court in November 2021 — over alleged irregularities in the appointment of lawyers and in recruiting a chief executive.
The minister also threatened to refer the appointments, which he claimed were irregular and bypassed procurement protocols, to law enforcement agencies for further investigation and to recover losses incurred from board members.
In court papers Reddy said Mchunu had made some of the same mistakes as his predecessor in firing the board, and that he “follows in his predecessor’s footsteps by perpetrating the exact same illegality”.
Reddy said the decision to remove the board was based on the findings of a report by Gobodo Inc, which had been appointed by Mchunu to do work that should have been undertaken by the department’s internal audit unit.
Mchunu had acted without affording the board members a proper hearing and had failed to consider the representations they made to him after having been given notice of his intention to remove them.
Mchunu had “acted in bad faith” in appointing an external investigator, a decision that was “irrational, not justified by the prevailing circumstances and facts and stands to be set aside”.
Reddy said certain members of the interim board appointed by Mchunu had been involved in litigation against Umgeni Water and were “therefore conflicted and should not be members”.
Msiwa, who served as chief executive from 2006 to 2011, had subsequently successfully sued Umgeni Water for nearly R1 million over his forced retirement and secured a judgment in November 2021.
His lawyers had since then written to Umgeni Water demanding a total pension payment of R3 million.
“This issue is still being negotiated as well as the issue of the interest calculation … a conflict of interest now arises due to his unlawful appointment as the chairperson of the interim board,” Reddy said.
“Msiwa instituted action against the board and obtained monetary judgment. In light of this clear conflict of interest which he has with Umgeni Water, how could he ever make any decisions in the interest of Umgeni Water, when he is currently involved in litigation against the very entity that he is now going to have an oversight over in his capacity as the chairperson of the board?”
Reddy said the Gobodo report was “factually and legally flawed and it failed to comply with the basic principles of investigative and or administrative procedures”, adding that he and other board members were not given the opportunity to respond to its findings and recommendations.
Reddy said that the board had “acted with fidelity” in its attempts to appoint a new chief executive, deciding to appoint a recruitment agency and to act on legal advice and with “extreme caution” because of the “severe difficulties” in appointing a “qualified and effective” chief executive.
“There has always been contestation or threats of litigation leading to financial losses for Umgeni Water in respect of the position of CEO,” he said.
One former chief executive, Cyril Gamede, had been removed but won a R5 million settlement from Umgeni, while the refusal of former water and sanitation minister Gugile Nkwinti to approve former chief executive Thami Hlongwa’s salary had been an “enormous embarrassment” to the board.
Hlongwa resigned ahead of the adoption of an earlier forensic report into his relationship with service providers whose owner, Sibonelo Shinga, was shot dead in 2021.
Reddy asked the court to set aside the removal of his board and to restrain the interim board from performing any functions because it is a “non-existent legal entity”.
He said there was “simply no reason to disband the board let alone a rational reason” and that there was no legal provision for Mchunu to appoint an interim structure as this role should be assumed by the chief executive while a new board was put in place.
Mchunu had failed to follow appropriate selection procedures when he appointed the interim board.
“Instead he merely on the face of it selected candidates of his preference,” Reddy said.
The board had acted on legal advice throughout the process, and was not to be held responsible if that advice was flawed, he said. There was “no basis to indicate that the board did not act in the interests of Umgeni Water”.
“The board in fact did so by taking care and acting diligently by appointing legal experts in the field to advise it. The fact that such advice retrospectively may have been incorrect is not the fault of the board. To blame the board for following legal advice in this regard is spurious.”
Reddy said Mchunu had overstepped his role in the chief executive process and that his “interference in the process” went further than an “oversight role”.
The interim board “has not been lawfully appointed” and Mchunu’s rationale for appointing it was “flawed,” he said.
“He is allegedly concerned with one aspect of the board and then elects to appoint
another totally unlawful board to replace it.
“The minister cannot lawfully ignore all processes and appoint an illegal interim board. It is an illegality to do so, and should accordingly be reviewed and set aside and the functioning of the interim board should be interdicted as a matter of urgency,” Reddy said.
Mchunu’s spokesperson, Kamogelo Mogotsi, said he had not yet referred the matter to law enforcement authorities. He confirmed that summons had been served on the ministry.