Oversight Report of 2020/2021 Bitou Annual Report

AGM date change and Signal Hill boutique hotel
February 25, 2022
Appointment of Municipal Manager Memani
April 3, 2022

Oversight Report of 2020/2021 Bitou Annual Report

Dear Members

The Annual Report is an accountability tool to assess the effectiveness of the Municipality and the impact it had on the community/residents.  It is not only an overview of financial affairs, the administration and governance, but it provides a synopsis of the successes achieved and challenges experienced.  It covers the financial year from 1 July 2020 to 30 June 2021.  Below is our letter to Council with our Oversight Report.  The Draft Annual Report can be found on the Bitou website.

25 February 2022

Dear Bitou Councillors,

It is our understanding that the purpose of the Annual Report process is to report on the executive management of the municipality by providing an honest and intelligible report so that residents can evaluate their performance, obtain the necessary responses, and ultimately to hold them to account for the spending of our money.

The standard of reporting in the Annual Report has sharply deteriorated over the years, a trend which accelerated over the past four years. There are millions of rands of “Other” with no explanations or details. We have raised several questions for the administration to address in the annual report, and we draw your attention to areas that need investigation and/or require council resolution.

We would like to know what the consequences will be for this shockingly poor performance on the part of management. What corrective steps have been taken? What planning, together with a time frame, has been put in place to rectify and prevent a recurrence? What has been done to hold those responsible accountable?

Only once that is achieved will the report be meaningful and achieve its purpose. We, therefore, ask you to respond with the requested information, initiate the investigations and take corrective actions.

Kind regards,
Peter Gaylard

Ratepayers’ Association’s Oversight Report: 2020/21 Draft Bitou Annual Report 

1 – In-Committee council meetings.(pg 9) The report says there were eleven in-committee meetings last year, held in secret out of the public’s eye. Everything council says and does should be open to the public, with very few exceptions. We ask the new council to be transparent going forward.

2 – Ward Committee Stipend. (pg 35) The stipend for ward committee members is R500 per month “conditional that they attend the meetings” yet committee members are paid regardless if they attend a meeting or not. Please publish the attendance records of each member/each ward. Ask that minutes of meetings be published on the municipal website within seven days of meetings.

3 – Municipal Public Accounts Committee (MPAC) (p 39-51) Under Corporate Governance, there is no evaluation of MPAC’s performance, or lack thereof. How many investigations did they conduct, how much unauthorized and/or irregular expenditure was recovered, how many employees were held accountable, how many disciplinary hearings resulted, and how much debt prescribed because of their inaction? The Auditor-General (A-G) reported “management did not comply with s32(2) of MFMA to ensure unauthorized, irregular and fruitless and wasteful expenditure was investigated by MPAC, and investigations concluded in a reasonable period of time.” Please provide assurance that MPAC will function properly going forward.

4 -Supply Chain Management/Staff Disclosures (pg 57-58; pg 107 of Audited Financial Statements (AFS)) SCM employees are “not trained or have qualifications” says the A-G; they are obstructive and contribute to hundreds of millions of unauthorized and irregular expenditure.

Municipal employees’ families are awarded tenders year after after, even though it is not allowed, and it is escalating. The Auditor-General cautioned “close family members are not disclosed” when receiving tenders. The disclosure report says Senior Traffic Manager Ganga’s family received three tenders valuing R2.8 million; Mnerah Siko receives tenders year after year, totaling R300k this last year; and CFO Dyushu’s cousin’s legal firm was awarded R1.5 million for legal services. MPAC needs to investigate these tenders. What is the consequence imposed for not disclosing family interests in tenders, and should it be allowed? What is management’s plan to clean up the SCM department?

5 – Water and Electricity Losses. (pg 98 of AFS) Water losses increased from R2.2 million in 2019, to R3.1 million in 2020, to R4.3 million in 2021. This is a clear indication that the water infrastructure is failing and that insufficient attention is being given to repair/replacement. The A-G reported 36% water loss (2019/20: 31%) of total water purchased. Electricity losses represent 21% (2019/20: 15%) of total electricity purchased. Please report what is planned to fix this huge loss of revenue.

6 – Legal Costs.(pg 96 AFS) Costs increased from R15.5 million to R17.6 million last year. The Ratepayers’ Association has offered to settle our two cases of the Mayoral Car and Overpayment of Salaries with the Council repeatedly with no success. They could save the ongoing legal costs of opposing these cases, but they refuse. Even the Audited Financial Statement (pg 93), MFMA s124(1)(a) confirms “The executive mayor has use of a council owned vehicle for official duties.” Not a dedicated vehicle 24/7.

7 – Laptops.(p 139) R362k was spent on laptops for new users, R198k for replacement laptops, R265k for Covid computers, R98k for EPWP computers, and R57k for FMG computers, whatever that is. There has to be an urgent in-depth investigation into the necessity of all these computers.

8 – “Other” Municipal Staff/Overtime.(pg 165) The category of “Other municipal staff” refers to non-senior managers; their remuneration increased R30 million last year. Unspecified benefits and allowances totaled R37million; that is 15% of total employee costs with no explanation or detail given. Please provide details. Does it include the R4.8 million for stand by allowance; R9.8 million for annual bonuses. R10.8 million for 13th cheques, paid leave, etc., or is that all extra? R20 million on overtime, increased from R17.8 m which is totally out of control and abused, per the Auditor-General. List the departments who are allowing the overtime, call for a council item to stop non-emergency overtime payments, and the consequence.

9 – Irregular Expenditure.(pg 101 AFS) reports R340 million in Unauthorized Expenditure. Fruitless & Wasteful expenditure increased to R4.46 million from R0.65 million the year prior. R226 million in Irregular Expenditure. The Municipal Public Accounts Committee (MPAC) was instructed every quarter to investigate but did nothing. Municipal employees act with impunity; there are no controls, no consequence management. Hundreds of millions in Irregular and Unauthorized Expenditure have not been addressed by MPAC nor the Council. This issue needs to be dealt with as a matter of urgency in order to recover what is recoverable, and the necessary disciplinary and legal action must be instituted.

10 – Mayor’s Grants in Aid.(pg 193-194) This fund was the focus of a Provincial Forensic Investigation in 2019 which ultimately resulted in the suspension of the executive mayor because of the alleged corruption. The Ratepayers’ Association repeatedly requested a “G in A” report, even though council should have demanded it be tabled. Now that it is published in the Annual Report, please bring a council item to investigate the recipients, how the money was spent, was proper reporting done, and bring a council motion to abolish the fund since it is too easily abused.

Several recipients received multiple grants, and we would like to know the details of how the ratepayers’ money was spent. Not implying that all funds were misspent, but in our oversight role we want details:

– Brighten Nation Foundation: 5 grants totalling R665,000
– Vusumzi Soup Kitchen: 3 grants totalling R650,000
– Weapon of Empowering Women: two grants totalling R130,000
– All Nations Satisfactory Centre: three grants totalling R570,000
– Phawulwethu Community Empowerment: two grants totalling R130,000
– Kwano Policing Forum: R80,000
– Bitou Women of Change: three grants totalling R305,000
Total: R3.17 million

11 – HR reporting.(pg 164) What is the cost to the municipality of EPWP workers, beyond the grant? Separate “other” on page 164 and indicate the number of “political appointees” hired by the political office bearers (mayor, deputy, speaker) and their cost to the municipality. How many of the political appointees were converted to full time employees at the end of the term, and was the proper procedure followed?

12 – Airport.(pg 175) The only mention of the Plett airport is that employee costs have increased and repair costs have decreased. What has been spent on security and upgrades? It is a critical component of tourism and remote working. What are the plans to manage it properly and ensure it remains open?

13 – Material write-offs:(pg 94 AFS) The municipality wrote off bad debts of R108 million (2019/20: R76 million). This means the revenue budget was hugely over-stated, and expenditure over-spent. What is the plan going forward?