PLETTENBERG BAY NEWS – The Bitou council, run by a DA-led coalition, has unanimously accepted a far-reaching financial rescue plan to save the town from financial distress.
At last month's special municipal council meeting held on 29 September, Municipal Manager Mbulelo Memani presented the plan, which included a damning analysis of how a R123m surplus was depleted in the period leading up to the 2021 local government elections.
The presentation and recovery plan was drafted by Acting CFO Felix Lotter. It reconfirmed that poor financial management practices have, over the past five years, resulted in the dire financial position of the Bitou Municipality.
6 938% increase in wasteful expenditure
"Lack of long-term financial planning and capable financial decision-making has cost the municipality dearly and brought it to the brink of bankruptcy," says the presentation.
"What is indeed concerning is the fact that unauthorised, irregular, fruitless and wasteful expenditure increased from only R1,57m in 2015/2016, to an amount exceeding R663m over the next six years. This indeed is a matter of concern as it represents an increase an average of R110,5m per annum or 6 938%."
During this period, uncollected debt increased exponentially. An investigation into the misappropriation of Human Settlement grants of R17m is currently underway and the final amount will be determined in a forensic investigation.
In an interview Memani told KPH there are various legal criminal and civil actions underway to recoup some of the lost money. He did not want to comment yet as the matters are sub judice. "A painful road lies ahead for the implementation of the plan that will take between three and five years to make the turnaround," he said.
The plan will require the cooperation of all role players. Critical staff positions have to be filled and institutional arrangements have to be made.
To rectify the situation will require a holistic approach that, according to the presentation, must address strategic leadership, institutional stabilisation and transformation, financial management and focused sustainable service delivery.
"To do this, financial management has to be improved, which will require identifying key problems and setting key intervention projects. Top priority will be given to the current budgeting strategy and process, as well as expenditure and management systems to "ensure efficient and effective service delivery".
The ANC
ANC Chief Whip in the Bitou Council and former deputy mayor when the ANC held majority, Clr Sandiso Gcabayi, said the ANC will forever support genuine investigations of maladministration "but not politically driven agendas".
"The ANC is a major advocate of creating municipalities that are financially viable, corruption free and sustainable. These are contained in the ANC 2021 Local Government Elections Manifesto," he said.
"Based on this we are not opposing steps that are taken to ensure that the institution is financially sustainable, which I think the recovery plan sets out to achieve."
In response to questions from KPH, Gcabayi said, "We are also not opposed to individuals having to be held accountable for actions that they undertook. However, such consequence management steps should not be used as a political witch hunt to get rid of people without them being subjected to proper legislated processes. At this stage there has not been any legal basis to confirm the alleged maladministration claims."
The list of alleged financial misspending in the presentation included, but was not limited to:
- R11m legal fees;
- Critical managerial positions have been vacated through a combination of staff being unable to cope with the political pressure and incapable managers being appointed;
- Lack of oversight, risk management and control coupled with leadership inefficiencies created opportunity for the misappropriation of funds, non-value for money spending and excessive occurrences of wasteful expenditure.
- The budget for the 2021/2022 financial year was not appropriately approved;
- Lack of restraint in budgeting, management and control resulted in misappropriation of resources;
- Basic service delivery infrastructure has been allowed to deteriorate and requires excessive remedial work which cannot currently be afforded;
- The budgets for the 2021/2022 and 2022/23 financial years were found to be fundamentally flawed;
- Certain revenue streams included in the 2022/2023 budget are unlikely to be realised as budgeted;
- It was evident that the budget was fraught with blatant errors and omissions that were intentionally included or excluded to balance the budget;
- Fuel expenditure was under-budgeted by approximately R5m for 2021/2022 as well as 2022/2023;
- Staff members appointed on an ad hoc basis with total disregard for appropriate Human Resource processes, jeopardising employer-employee relationships and adding to the unaffordability of staffing cost. Junior staff members seem to have been promoted into higher positions and afforded appointments at the top salary scales without proper motivation or justification;
- Debt collection and credit control failed. Non-payment for services became the norm;
- Tariff structure applied by the municipality has not been cost-reflective;
- Danger pay in excess of R4,2m was paid during the pandemic to the majority of staff, irrespective of being front line workers or not. Bitou was one of few, if not the only, municipalities in the Western Cape paying these allowances.
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