The Special Investigating Unit (SIU) has received authorisation from President Cyril Ramaphosa to investigate the five years since several members of the Eastern Cape and national governments submitted affidavits before the high court to insist that a turnaround strategy would be successfully implemented in the Makana Local Municipality, based in Makhanda.
There have also been five years of almost daily water outages, electricity issues and sewage spills. Despite millions of rands spent on a bulk water project, the town still does not have a consistent water supply.
Read more: Boil-before-drinking notice remains for Makhanda’s contaminated water
SIU spokesperson Kaizer Kganyago confirmed that the investigation would include the Makana Bulk Sewer Upgrade in 2019, flagged by the Auditor-General, professional engineering services for groundwater development projects and the appointment of implementing agents for water conservation and demand management.
Read more: R400m later, Makhanda is still facing a catastrophic water crisis
The investigation will include the electrification of the greater Makana and surrounding areas and the 11KV Line Project. The SIU will also investigate other contracts, including for hosting municipal emails, providing internet services and operating and managing the Makana landfill site.
“The SIU will look at payments made in a manner that was not fair, competitive, transparent, equitable, or cost-effective or in violation of applicable legislation, guidelines, or instructions from the National or Provincial Treasury – including the municipality or the State’s unauthorised, irregular, or wasteful expenditure. The probe will also look at any irregular, unlawful, or improper conduct by officials or employees of the municipality, its suppliers or service providers, or any other person or entity implicated,” Kganyago said.
Read more: The filth and the fury: Desperate Makhanda residents obtain court order forcing municipality to clean up the town
“The probe will include establishing any undisclosed or unauthorised interests that the municipality’s officials or employees may have had in suppliers or service providers bidding for work or doing business with the municipality or to whom contracts were awarded by the municipality, as identified by the Auditor-General.
“Furthermore, the SIU will investigate whether there is any undisclosed or unauthorised interest that employees in the service of the State may have had in suppliers or service providers bidding for work or doing business with the municipality or to whom contracts were awarded by the municipality, as identified by the Auditor-General.
He added that they would also investigate serious maladministration in the municipality’s affairs concerning the payment of stand-by allowances, overtime and benefits to employees contrary to the applicable manuals, policies, procedures, prescripts, instructions or practices of or applicable to the municipality.
Schools welcome investigation
Rhodes University and the private schools Kingswood College, St. Andrews College and the Diocesan School for Girls, Victoria Girls High School, Gadra Education, a local education NGO, another NGO, the ICDP Trust/Lebone Centre, and the Public Service Accountability Monitor, the Legal Resources Centre, the Allan Gray Centre for Leadership Ethics, the Village Scribe Association, the Assumption Development Centre, the Makhanda Business and Residents Association, the Makhanda Ministers Fraternal, the Makhanda Circle of Unity and the Makhanda Legends issued a joint statement on Wednesday welcoming the investigation.
“As invested stakeholders, we are committed to supporting efforts to build an efficient local administration and to ensuring that all practices within the municipality are transparent, ethical, and beyond reproach,” the statement reads.
“This proclamation can be linked to the sustained efforts and activism of residents and organisations that have long called for meaningful intervention in Makana through various forums, structures and campaigns.
“This investigation is crucial to promoting transparency, accountability, and good governance in our community. We encourage all organisations and members of the public to cooperate fully with the SIU as may be required.
“Our interest is in revitalising our municipality and removing any obstacles to positive development. We believe fairness, integrity and accountability are essential for advancement, and this investigation is a chance to address past irregularities and rebuild public trust in our institutions. We will continue to contribute to improving Makhanda and making it liveable, sustainable and attractive through social collaboration and activism,” the statement concluded.
Read more: Rhodes University suspends lectures as Makhanda despairs over prolonged water outage caused by sabotage
Finances in disarray
The investigation follows a damning report from the Auditor-General for the 2022/2023 financial year. The Auditor-General said she couldn’t express an opinion on the municipality’s financial statements, but gave it a disclaimer, the worst possible outcome.
“The basis for the disclaimer includes a lack of evidence for property, plant, and equipment and discrepancies – an enormous discrepancy of more than R200-million between the municipality’s assets under control and the assets declared in the financial statements.”
Auditors also flagged the value of heritage assets under the municipality’s control, as the declared amount of R32-million did not correspond with the available records or the records of receivables from transactions.
The financial statements also didn’t agree with records regarding inventories.
Auditors were also unable to obtain information on unspent conditional grants of R42-million. Sufficient appropriate audit evidence was also not available for employee-related costs, and auditors could not confirm contracted services of R30-million. Auditors also could not confirm bulk purchases of R135-million or operating expenditures of R42.2-million.
Auditors also struggled to obtain sufficient evidence to confirm R4.7-million in fruitless and wasteful expenditures and R779.3-million in unauthorised expenditures.
While the municipality disclosed electricity losses, this was not based on accurate and complete accounting records, leaving auditors unable to assess them.
The municipality also did not disclose all potential financial obligations and did not provide the Auditor-General’s staff with a cash flow statement.
For purposes of monitoring service delivery, auditors could not find evidence that 60% of targets to remove asbestos pipes had been met; the municipality declared that it met only 9% of a 100% target to refurbish the Belmont Valley Waste Water Treatment Works, but auditors said this was actually 27%. Another declared the achievement of 75% for the refurbishment of the Waainek Waste Water Treatment Works was declared, but auditors could find no evidence of this.
Auditors also identified material misstatements in the annual performance report.
Auditors also cautioned that the senior manager was not disclosing financial interests and that no performance management system was in place.
“Leadership did not effectively fulfil its oversight responsibilities on implementing and monitoring internal controls and compliance with laws and regulations. The audit action plan was not effectively monitored and implemented,” the auditors said.
Read more: Reprieve for Makana municipality after Eastern Cape treasury claws back half of unspent grants
The report noted that another financial recovery plan was implemented in 2022.
“However, slow progress has been made as the municipality is still in phase one – the rescue phase – which is anticipated to last only six months.”
Court action
In 2020, a group of activists and residents went to the high court to have the Makana Council dissolved – and won the case.
In her ruling, Judge Igna Stretch declared that the municipality’s lack of service delivery was unconstitutional. The municipality did not dispute this at the time. The court further stated that the municipality had failed to structure and manage its administration, budgeting and planning processes to prioritise the community’s basic needs and promote its social and economic development. This was also not in dispute.
The Eastern Cape government said at the time that it had staged (yet another) intervention, and as such, the court did not have to dissolve the council.
“I find it particularly disconcerting that the [provincial and national government] respondents have made no mention of the plan in their papers or in their heads of argument. Indeed, when I questioned counsel for the provincial respondents on the status thereof, I had the impression that the topic did not sit well with them and was best avoided.
“The existence of the plan and the fact that it has been avoided/ignored, together with the suggestion that a new and future recovery plan is the way to go, cannot, with due application of checks and balances, be ignored,” Stretch wrote in her ruling.
“[The national and provincial government] respondents have been resting on their laurels for an inordinately lengthy period of time, to the direct and substantial prejudice of the people of Makhanda. I have no doubt that, but for the resolute and determined intervention of the applicant in launching this application on behalf of the citizens of Makhanda, ‘same old, same old’ would have remained the order of the day, with Makana continuing to deteriorate at the rate it has been doing,” Stretch said.
Eastern Cape Premier Oscar Mabuyane appealed against this ruling, which was then settled on the condition that a judge monitor the implementation of the financial recovery plan.
Long overdue
Lungile Nxube from the political party Makana Citizen’s Front said they welcomed the investigation but added that it was very long overdue.
“The rot runs deep in this municipality. We hope there will be no sinister forces and political interference to quash this investigation. We don’t believe the political figures in this municipality are acting by themselves. But they have backup from high up,” he said.
He said the terms of the investigation should be broadened to go back to 2002.
“I am saying that because in 2005, Makana had over R100-million in its reserves, and it won an award. In 2009, the rot started kicking in, and it became uncontrollable.”
Luvuyo Sizani, the Democratic Alliance’s caucus leader in the Makana Municipality, said the party was confident that the SIU investigation would reveal numerous irregularities and unlawful activities related to service procurement.
“We have long maintained that some councillors and officials in this municipality have unlawfully benefited from specific tenders. In several instances, they have failed to disclose their interests and have wilfully allowed the municipality to conduct business with their family members.
“It is encouraging to note that the proclamation has specified the areas and time frame of the investigation.
“The DA trusts that the SIU will diligently uncover all improper dealings concealed during both the current and past administrations, ensuring that the residents of Makhanda in the Makana Local Municipality, for whom the DA has tirelessly fought, receive the services they deserve.
“We urge all individuals approached by SIU investigators – whether councillors or officials – to cooperate fully to ensure that those implicated are held accountable under the law. We believe and trust that our country’s justice system will carry out its duties effectively,” Sizani added.
Zolile Williams, the MEC for Cooperative Governance and Traditional Affairs, did not respond to a request for comment this week.
In September, the South African Human Rights Commission subpoenaed senior officials and political leaders of the Makana Municipality after a surge in complaints relating to the municipality’s provision of essential services.
On Thursday, Dr Eileen Carter from the Eastern Cape South African Human Rights Commission said that it had given the municipality 90 days to get its house in order and would return for feedback and to monitor improvements. DM