Critics are questioning the value of financial assessments such as the auditor general’s report after the City of Cape Town received top ratings, despite a number of tender irregularities widely reported on last year.
For the second consecutive year the City of Cape Town received an unqualified report. The city was informed of its audit status in November last year, this despite the fact that the rest of the report will only be released by the auditor general in March.
The city’s financial management was found to be in order, despite reports earlier this month that the multimillion-rand Big Bay black economic empowerment property deal — where BEE companies were awarded tenders for plots of land — was not benefiting the intended people as 16 of the 17 companies were selling their plots for a nominal fee to white buyers. In an interview on Cape Talk, the council’s executive director for development and infrastructure, Mike Marsden, admitted that there was no tender process involved at the time of the sales.
City attorneys confirmed in January last year that the sale of the land was illegal in terms of the Municipal Finance Management Act and that the sale of any municipal property had to be competitive and that a tender was required. The deal was also shrouded in controversy after it was reported that most of the BEE companies that received land allocations belonged either to high-level individuals or people close to government circles.
According to Cape Town’s executive director of finance, Ike Nxedlana, the city was notified of its audit status in November last year. But, when the Mail & Guardian contacted the auditor general’s office to request the 2004/05 general report on the audit outcomes of local government, it was told the report was only scheduled to be finalised at the end of March.
Nxedlana said: ”It is there, I have seen it with my own eyes.” He added that it would be stupid of the city to claim it had received an unqualified audit unless it had. ”If there is anyone who you do not want to make angry, it’s the auditor general.”
The auditor general’s senior manager of marketing and communications, Joreta Linde-Ferreira, said the report had been issued to the Cape Town city mayor so that it could be submitted to council for review. She said that as the report had not yet been tabled, it was not a public document.
”In terms of the law, the auditor general can only comment on the contents of the report once it has been tabled,” she said. ”This report was unqualified. This report still needs to be tabled in council as part of the city’s annual report. The audit report should thus be regarded as confidential until it has been tabled in council.”
The Democratic Alliance’s national spokesperson for provincial and local government, Willem Doman, said that as far as he was aware the auditor general was still preparing the 2005 report and he expected that it would deal with the tender irregularities. Even though Cape Town is aware of its status, there is much secrecy around the auditor general’s report and many other municipalities will have to wait until March to know whether they have received a qualified or unqualified report.
The lateness of the final report is attributed to municipalities’ laxness in submitting financial records. Shockingly, 48%, or 136 municipalities, are not complying with the Municipal Finance Management Act. Of the 284 municipalities in South Africa, only 148, or 52%, met the submission date of end August. A further 35, or 12%, submitted annual financial statements by September 30 last year, while 101, or 36%, did not submit financial records at all.
The DA’s Doman, who was responsible for preparing a DA report titled The Rot in ANC Municipalities: Five Case Studies of Cronyism, Corruption and Ineptitude, said that the African National Congress currently runs more than 80% of all municipalities and that it appeared as if councillors were ignoring President
Thabo Mbeki’s call for clean governance.
According to the DA report, national government has declared that 136 out of 284 municipalities are unable to fulfil their basic functions. The report states that: ”Local government has become virtually synonymous with illegal tendering practices, unauthorised loans to councillors and, in some cases, outright looting.”
It says that the failure to deliver services resulted in protests in more than 50 towns and cities since the middle of last year. But Siyabonga Memela, the head of the Institute for Democracy in South Africa’s local government programme, said that the timing of the protests was linked to the upcoming local government elections in March.
According to the DA report, the amount paid to councillors and municipal officials outstrips spending on services by R10-billion. While it is accepted that salaries should not constitute more than 30% of a municipality’s budget, the national average is sitting at 54%.
Memela said the problem was that municipalities determined their own salaries and policy guidelines were still being developed for remuneration. Financial administrative bungling and corruption in municipalities have made headlines in newspapers last year.
In Bloemfontein the mayor of Manguang Municipality, Papi Mokoena, his council speaker Zongezile Zumane and three other senior officials were arrested in July on fraud and corruption charges, apparently involving millions of rand.
In Nelspruit, controversial mayor Jeri Ngomane, dubbed the ”Romeo mayor” because of his numerous wives and girlfriends, was found guilty on three out of four corruption charges following allegations published in the M&G. The disciplinary hearing was based on a report by auditing firm KPMG, which found wholesale corruption and nepotism within the Ehlanzeni Municipality — specifically that women romantically linked to Ngomane had won contracts for council projects.
