Financial chaos in Kouga

Kouga Municipality has just been rated as the worst financially sustainable municipality in the Eastern Cape and the third worst in South Africa by Ratings Afrika. Kouga was disgraced once more by an independent public entity analysing the financial sustainability of municipalities of 102 out of the 184 municipalities in South Africa.

Ratings Africa singled Kouga out as the worst financially sustainable municipality in the Eastern Cape and the third worst in SA scoring 21 points out of a possible 100.

Elza Van Lingen, the DA member of Parliament is highly concerned about the ailing Kouga Municipality.

In 2003 Kouga, under Democratic Alliance (DA) control won a Vuna award for the best run municipality for its size in the Eastern Cape, turning around its adverse financial position to a financially sustainable position after financial decline had set in under ANC rule in the late 1990’s.

The DA took over the five local municipalities of Jeffreys Bay, Humansdorp, St Francis Bay, Hankey and Patensie from the Transitional Local Councils into the consolidated newly demarcated Kouga local Municipality. At the time Jeffreys Bay and St Francis Bay were financially sound, but the other three were in an extremely poor financial situation.

In the 2008/2009 Financial Year Kouga Municipality under ANC control suddenly had a “Clean Audit” Report issued by the Auditor General (AG). This incidentally only indicates the financial systems were in place and that these were correctly applied. The AG Report did however refer to “wasteful and fruitless expenditure”. It has subsequently discovered that three members from the AG’s office were appointed at Kouga Municipality in very high positions (and of course at higher salaries) a month after the release of the “clear audit report”.

There is no money left to fix the sewage spills.

Kouga receive a qualified report for the 2009/2010 financial year in spite of the new employees who should have known the requirements of the AG. In the 2010/2011 Kouga received a “disclaimer” from the AG, which is the worst possible classification to receive on financial reports for a municipality.

The DA has applied to MEC Gobana in January 2010 to place Kouga under administration. In November 2011 the DA again requested Cogta MEC Qoboshiyane to place Kouga under administration after his personal reference in the press to the “ailing Kouga”.

Kouga Municipality last week owed Nelson Mandela Bay Metro R 22,333,555 for water, Eskom R11,388,742 for electricity, the Department of Transport (Eastern Cape) R15,453,167 for vehicle license renewals and new registrations and the AG is owed the fat sum of R7,299,074. This is outstanding debt over and above the loans to banks such as DBSA and INCA, where Kouga cannot possibly extend its credit.

According to the Municipal Finance Management Act, municipalities and state departments must pay their creditors after 30 days. Due to its serious cash flow problems, two creditors have successfully applied to have Kouga municipal vehicles repossessed by the sheriff of the Court to recover their money. Every time the municipality has defaulted on their settlement agreements, the creditors take to the courts. Kouga only paid the creditor once the sheriff took action. Every time this happens there are additional costs amounting to around R14,000 due to the poor financial management.

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At present the DA’s caucus leader Dr Chimpie Cawood is the chairperson of the Municipal Public Accounts Committee (MPAC). There are 5 DA members on MPAC and 4 ANC members – all in line with the legislation. This committee has already done extensive work, so it will be sad if a new committee must now catch up and start training from scratch. Cllr Vernon Stuurman, who proposed the original composition of MPAC in council, will table a motion in council on Wednesday 29 February to change the chairmanship from DA to that of the ANC and membership to 5 ANC and 4 DA councillors. This will give the ANC a majority vote and allow them to once again manipulate the access to the financial information. There is also a possibility that the chairperson may be funded as a “full-time” position.

Kouga Municipality is in this financial crisis because of the incapacity of the ANC and now they are planning to further manipulate the finances into deeper darkness than ever before.

It is now clear that Hon Qoboshiyane, EC MEC for Cooperative Governance (Cogta) is not fulfilling the mandate of his portfolio and he is completely ignoring his obligation and the legal framework under which he should place Kouga Municipality under administration.

Complaints have been lodged on the Presidential Hotline, complaints registered with the Public Protector and letters have been submitted to MEC Qoboshiyane, yet the MEC is ignoring all this.

The DA will again write to MEC Qoboshiyane to remind him of his responsibilities and submit a letter to the national Minister of Cogta to inform him of Kouga’s current financial woes and the lack of action by the MEC. DA will further request an urgent appointment with MEC Qoboshiyane to address the situation in Kouga and to present an alternative turnaround plan.

Elza van Lingen, MP

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