Msukaligwa Municipality recently held its fourth ordinary council meeting and opposition parties pulled no punches about the financial situation.
From the dreaded word ‘bankrupt” to concern about spending came to the forefront.
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The AG was concerned about the municipality’s ability to continue functioning as it showed a loss of R281,5-mil with their current liabilities exceeding its current assets by R613-mil.
Some of the findings were that effective steps were once again not taken to prevent the irregular expenditure of R120-mil on contracted projects for water, sanitation and the building of a substation bringing the total to R428,9-mil.
The AG was unable to determine and confirm, with the lack of internal controls, if the municipality had accounted for all irregular expenditure.
Fruitless and wasteful expenditure to the amount of R41-mil was caused by among others, the interest on late payments to Eskom and Department of Water Affairs.
Unauthorised expenditure amounting to R137-million was caused by overspending.
All of the above expenditure was not investigated to determine if any person was liable for it as required by the relevant act.
In the annual report, Mr Daniel Maluleke, the Acting Municipal Manager, said their financial position continued to be under severe pressure since the municipality was dependent on the equitable share allocation of the previous year.
“Considering the liquidity of the municipality, it is evident that it may in future struggle to finance its short-term liabilities should drastic steps not be taken on the implementation of strategies to increase its revenue streams.”
Regarding the AG outcome, he said there is an improvement as the municipality has received a qualified audit opinion as opposed to the previous year’s disclaimer audit opinion, which is a sign of their commitment to improve performance.
However, Economic Freedom Fighters (EFF) council member, Mr Themba Soko, did not share the same sentiments, saying the municipality is in bad shape with things getting worse daily.
“The municipality spent more on contracted services last year, an increase from the 2015/16 financial year,” Mr Soko said.
“No contract was brought to council as per legislation and Information Technology Services increased from R9-mil to R13-mil without a tender being advertised.”
Mr Herman Swart from the Democratic Alliance (DA) said the municipality has been technically insolvent for years and the position has deteriorated further.
“If nothing changes, the municipality will become bankrupt.”
According to Mr Swart, his party will submit a motion to council to investigate, in terms of the Municipal Finance Management Act, if any person is liable for the irregular, fruitless, wasteful and unauthorised expenditure.
They will take the necessary action and if appropriate, lay criminal charges.
“Msukaligwa deserves a new beginning under leaders who put the interests of the people first.”
The reports are available at the municipal offices and the public are encouraged to peruse and add their comments.
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