Councillors in Mpumalanga’s second biggest municipality, Enhlanzeni District, must be especially relieved that the Municipality Finance Management Act only came into operation on Thursday and is not retrospective.
Last week the Mail & Guardian revealed that the municipality’s mayor Jeri Ngomane’s two wives won council tenders totalling almost R2-million while Ngomane was in charge.
In addition, a KPMG forensic audit report showed that Ngomane’s questionable tender processes were part of a plethora of conflict-of-interest issues prevalent in that council. The audit report showed that between January 2000 and January this year payments worth more than R30-million had been made to ”entities in which councillors/officials hold direct/indirect interests”.
As a result of the report, Mpumalanga’s local government minister, Jabu Mahlangu, suspended the council’s municipal manager, Thoko Mashiane, her deputy, Nelson Mkhatshwa, and the chief financial officer, Gerhard Landman.
Ngomane and his councillors were spared because, according to the Local Government Systems Act, Mahlangu had no authority to act against either councillors or the council.
But with the enactment of the new Act, elected public officials will now be made to account for their stewardship of the councils or face up to five years’ jail if they fail to act in accordance with the laws governing how local authorities should handle their financial matters.
It is seen as an improvement on the Public Finance Management Act, which stipulates that officials of central and provincial government — but not political heads — do a stint in jail if found guilty of violating public finance procedures.
Tania Ajam, director of the University of Cape Town-based Applied Fiscal Research Centre, says some of the benefits of the Act include the streamlining of financial reporting policies across municipalities in the country.
”Without standard reporting, a financial officer of Cape Town could not read the financial books of Johannesburg, [for example]. That meant people could get really creative with the books. Also, there was no definition of what capital expenditure meant,” says Ajam, whose centre participated in the drafting of the law.
The Act also allows for councillors with objections to the decisions taken by their colleagues to write to the provincial local government minister raising their concerns. If the council is deemed to have flouted the rules, councillors making their objections known would be spared any legal action taken against their colleagues.
Ajam says the fact that the Act demands that municipalities inform the provincial minister if they land in dire straits, and if they find no joy, they must inform the national local government minister, ensures ”that the ministers do not sit and do nothing about the problems” of a municipality.
The Act also allows other parties with an interest in the financial health of a municipality to ask for court intervention if necessary. However, Ajam says the success of the Act will depend on communities being trained to exercise the powers given to them.
Ajam criticises the law for linking an inability to deliver services to maladministration. She says in some cases councils may be prevented by lack of skilled personnel from effecting improvements.
South African Local Government Association spokesperson Mbangwa Xaba says the association welcomes the law because it will ensure early detection of possible irregularities.