Reinstatement of VBS-linked mayor sends free-for-all message
With his term nearing its end, auditor-general Kimi Makwetu has released his most damning local government report yet, condemning the flagrant abuse of public funds in the local sphere. And for good reason — despite policy utterances, numerous support programmes and a collaborative approach by his office, local government continued to experience a deterioration in audit outcomes in the 2018/2019 financial year.
In his report “Not much to go around, yet not the right hands at the till”, Makwetu bemoans the fact that “billions of funds allocated to municipalities are managed in ways that are contrary to the prescripts and generally recognised accounting disciplines”. This is especially pertinent in a time of recession and austerity, when every cent from the public purse needs to not only to be accounted for, but be well spent.
A parliamentary briefing outlined the disheartening results for 2018/2019: only 8% of municipalities achieved clean audits; quality financial statements slipped from 52% in 2017/2018 to 48% in 2018/2019; 28 municipalities still had outstanding audits by the end of January; a total of R1.26bn was spent on consultants, with only 15 of the 183 municipalities responsible receiving clean audits due to limited skills transfer; rising irregular expenditure (from R24.38bn in 2017/2018 to R32.06bn in 2018/2019), with goods and services not received or overpriced, or assets not safeguarded, especially in KwaZulu-Natal, the North West, the Western Cape and the Eastern Cape; fruitless and wasteful expenditure of R2bn (up from R1.3bn in 2017/2018) and unauthorised expenditure of R11bn; and an increasingly precarious financial position, with 34% of auditees in deficit, debt rising and creditors waiting an average of 180 days for payment.
The message being put out is that transgressions can be forgiven, regardless of the cost to the public purse and service delivery
In addition, provincial interventions have not had the desired result. Local government generally remains stubbornly unwilling to account for its financial management, and is bedevilled by failing municipal systems, poor oversight and a lack of political will. According to the auditor-general, “In some cases those responsible for the transparent management of these resources do not do it, while no proper oversight over these lapses is effected. This makes for very weak accountability and the consequent exposure to abuse of the public purse. There are limited resources across all provinces, however, no proper care is applied to manage and spend diligently.”
Not only are systems to identify failures left wanting, but the underlying concern is that even when irregularities do surface — as in the case of doomed VBS Mutual Bank investments — there is no “consequence management”. In effect, local officials and elected officials act with impunity. The most striking current example is the ANC’s reinstatement of former Vhembe mayor Florence Radzilani, who was implicated in the VBS Mutual Bank forensic report, on the basis that she has not been arrested. While this decision may prove to be embarrassingly premature, by refusing to hold Radzilani and others to account, the governing party has in effect condoned the corrupt behaviour of a number of its members.
According to the auditor-general’s report, the R369m loss in revenue in Vhembe negatively affected the impoverished district’s ability to deliver services “as the district was unable to pay for repairs and maintenance of water pipes and boreholes due to the lack of funds, which resulted in water interruptions for citizens and escalated water losses”. This is likely to compound the spread of Covid-19 cases in the water-scarce area and Radzilani, as former mayor, should be held accountable as political leader regardless of the strong allegations of criminal culpability against her.
By reinstating Radzilani, the ANC is publicly undermining the auditor-general’s calls for “consequence management”. This will not go unnoticed by other errant politicians — the message being put out is that transgressions can be forgiven, regardless of the cost to the public purse and service delivery. Party loyalty and machinations trump local service delivery and accountability.
Without leadership, from political parties, national and provincial structures, and from the branch level up, the public will increasingly have to consider the undesirable route of approaching the courts to intervene in ongoing and depressing municipal dysfunction, as has been starting to occur in the Eastern Cape.
What an indictment of the sphere of government designed to be the “hands and feet of delivery” that poor accountability and consequences should require litigation. Little wonder that the auditor-general despairs. All members of the ANC national executive committee who supported Radziani’s reinstatement should reflect on their role in undermining municipalities as a democratically accountable sphere of government. Without decisive leadership to hold errant elected officials to account, the auditor-general’s efforts will be for nought.
• Heese is Municipal IQ economist and Allan its MD.
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