Gratz rejects KRA allegations

Update

KNYSNA NEWS - Knysna's former acting municipal manager, Dr Michele Gratz, has rejected allegations by the Knysna Ratepayers' Association (KRA) that the Knysna municipal council illegally wrote off millions of rand worth of alleged irregular expenditure.

Her legal representatives said the KRA's statement is calculated to diminish Gratz's standing in the community by accusing her of unethical and unlawful behaviour and of contravening legislation - all of which allegations are denied by Gratz.

This was in response to a statement by the KRA in which the association claims that in defiance of the Auditor-General (AG), Council deemed the so-called irregular expenditure irrecoverable, and wrote it off without an investigation by the Municipal Public Accounts Committee (MPAC) in terms of section 32(2) of the Municipal Finance Management Act.

It stated Council may only write off irregular expenditure after it has been investigated by the relevant committee of Council.

"On 28 May 2020 the Knysna Council, on the recommendation of the then Acting Municipal Manager Dr Gratz, unanimously resolved to write off irregular expenditure totalling R93-million. This included R41-million that had been spent in connection with prepaid water meters. This expenditure was written off, despite a recommendation from the Disciplinary Board that a forensic investigation into the conduct of the CFO, in connection with the water meters contract, be conducted. Council's unlawful decision to write off the expenditure may compromise the forensic investigation," the KRA wrote in its statement, requesting that council rescind the decision.

The statement said that during the 2018/2019 financial year audit, the AG identified irregular expenditure in respect of the so-called "piggyback" contracts totalling R93 761 895, explaining that piggyback contracts deviate from a competitive bidding process and merely rely on a tender process from another municipality.

Former Knysna acting municipal manager Dr Michele Gratz

In response to the KRA statement, Gratz's legal council denied that Council's decision was unlawful and stated the following:

• There was nothing unlawful about the decision taken: the Auditor-General (AG) had retrospectively changed the manner in which it views section 32 "piggybacking" on another municipality's tender. The process that had always been followed, was followed and the services were delivered.

• For accounting purposes for the AG, the manner in which certain of the tenders were awarded in the 2018/2019 financial year were revisited and as the AG had changed his position on the interpretation of the section retrospectively, these amounts were deemed to be irregular expenditure. The AG met with the MPAC (Municipal Public Accounts Committee) on 4 March 2020 and discussed the matter with them as well as the senior officials. The AG confirmed that it is an interpretation issue.

• There were historic amounts on tenders that had been awarded in the previous financial year.

The work was done and the monies were paid. No money was stolen and there was nothing amiss with the manner in which the expense was incurred at the time it was incurred.

• The only reason it became regarded as "irregular" is due a change in the interpretation by the AG who wanted to apply the change retrospectively. Nothing more, nothing less.

• There is no money missing and services were rendered for the payments made.

• As an example of how something can be deemed to constitute irregular expenditure, there was a further item at that same council meeting on 28 May 2020 where an amount in excess of 22 million rand had to be written off as the AG deemed that tenders should not have been awarded as the BAC (Bid Adjudication Committee) had one senior member short. (The director of planning, Ms Boyce, had failed to attend at least 10 meetings leading to that being deemed to be irregular expenditure.)

• In respect of the complaints against the CFO and the findings of the disciplinary board we wish to reiterate that this was an item that was in-committee: in other words, on green papers and nobody has given any consent to anybody to publish any information.

• Without going into the merits of the matter we wish to record that conduct of the CFO which matter served in green papers on 11 June 2020 is largely based on the handling of a tender post 30 June 2019. The irregular expenditure which our client recommended to Council to write off is for the 2018/2019 financial year. Dr Gratz's lawyers also placed on record that they are aware that notwithstanding numerous requests to the Knysna Ratepayers' Association to divulge the size of its membership base they have not done so. "Suffice it to say that KRA is very definitely not representative of the town. There are many other civic organisations who represent various interest groups in Knysna."