Update
KNYSNA NEWS - In a complete turnaround, the Knysna Municipal Council yesterday (27 August) set aside its decision taken on 28 May this year to write off R93-million of irregular expenditure relating to some of the so-called ‘’piggy back contracts’’ referred to in the Auditor General’s 2018/2019 report on the municipality.
Piggy-back contracts deviate from a competitive bidding process and merely rely on a tender process from another municipality.
By reversing this decision, the Council yesterday in effect admitted that it had erred by not following due process. Last week the Knysna Ratepayers’ Association (KRA) called on the Council to rescind its “illegal decision” – which was made on the recommendation of former Acting Municipal Manager (AMM) Dr Michele Gratz in May – and to follow due process by referring the irregular expenditure to the Municipal Public Accounts Committee (MPAC) for investigation. Gratz, via her legal counsel, last week denied any wrongdoing by her or the Council.
Yesterday Council resolved that the irregular expenditure be referred to MPAC to consider the recommendations of current AMM Dr Louis Scheepers, who said, ‘’Council must comply with the legislative provisions that a committee of Council investigates, even if the circumstances dictates or warrant otherwise.’’
Scheepers said that even if none of the irregular expenditure can be recovered, that Council must nevertheless ‘’comply with the prescripts of the Municipal Finance Management Act (MFMA). Council must refer the matters to MPAC and only after receiving the recommendation from MPAC can Council decide to write off the expenditure”.
The Council resolution:
COUNCIL UNANIMOUSLY RESOLVED AS FOLLOWS:
[a] That the content of the report on irregular expenditure as identified during the Audit – Regulation 32 piggy-back contracts, be noted;
[b] That the decision taken on the 28th of May 2020, as set out hereunder, be reviewed and rescinded:
C16/05/2020 REPORT ON IRREGULAR EXPENDITURE AS IDENTIFIED DURING THE AUDIT SCMR 32 PIGGY-BACK CONTRACTS
[a] That the report on irregular expenditure as a result of SCMR 32, be noted;
[b] That management never use SCMR 32 again and that tenders/quotations be invited for the procurement of all services and goods within the Municipality;
[c] That the expenditure as mentioned in [a] above be deemed irrecoverable and be written off; and
[d] That National Treasury be approached to condone the current and prior year’s potential irregular expenditure, due to retroactive application of MFMA section 170(2)
[c] That the matter be referred to the following meeting of the Municipal Public Accounts Committee (MPAC) to consider the recommendations of the Acting Municipal Manager with regards to the findings of AG pertaining to Regulation 32 piggy back contracts;
[d] That the recommendations of the Municipal Public Accounts Committee (MPAC) pertaining to the above be submitted to the first Council Meeting following the MPAC meeting.
[e] That Provincial Treasury and the Auditor General be invited to a council workshop about the piggy back contracts before the MPAC meeting
Related article: Municipality to revisit R93m write-off "in due course"
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