Report flags possible fraud, corruption in tender systems within Gauteng municipalities

A committee probing the state of municipalities in Gauteng says it is concerned by procurement and weaknesses in supply chain management systems, with several warning indicators.

“Resources within municipalities are scarce and dwindling. The Covid-19 pandemic has exacerbated this situation,” stated the report, released by  (Cogta) MEC Lebogang Maile on Tuesday.

“The tender systems utilised do not ensure value for money, and in some instances raise a red flag about possible fraud and corruption. Other warning indicators include the abuse of deviations … and the utilisation of tenders by other organs of the state.

“Greater monitoring of this is needed. Proper contract management is an imperative and the extensive practice of extending contracts both in scope and time are of concern.”

The committee was established in August 2019 and was mandated to analyse the performance and internal affairs of municipalities by looking at, among other things, their sound financial governance, service delivery and whether the municipality was fulfilling its constitutional mandate.

‘Resource constraints’

The committee, headed by adjunct professor Trevor Fowler, began its work in September 2019 through various interactions with relevant stakeholders in the province’s 11 municipalities, and concluded in September 2020.

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It warned it could not fully, at a technical level, scrutinise unauthorised, irregular, fruitless and wasteful expenditure as required by the terms of reference, given time and resource constraints. Instead, it proposed that areas of concern should be investigated by the relevant departments and agencies.

The committee said it was alarmed by the regression in the number of senior officials in the local and district municipalities that met the minimum competency requirements.

The committee said it was alarmed by the regression in the number of senior officials in the local and district municipalities that met the minimum competency requirements.

It found that out of 110 senior managers in the province’s municipalities, only 80 met the minimum competency requirements as of March 2020.

“This has necessitated initiatives to train these managers [Sections 56 and 57] by both Cogta and the Gauteng provincial treasury,” the report stated.

“The primary overarching issue emerging from this assessment is that weak and inadequate individual and collective governance are at the heart of the difficulties confronting municipalities,” it added.

Inability to attract skills

The report found vacant posts and the inability to attract skilled labour contributed to some of the issues within municipalities.

“In Johannesburg, the vacancy rate for top management is 29% and senior management, 10%. In Tshwane, the overall vacancy rate is 26%, largely the effect of political instability. In Johannesburg, the vacancy rate for the rest of the categories of employees was 6% during the 2020 year.

“Johannesburg found, in its ongoing skills audit, that managerial skills are partial to service delivery and often do not have tactical and strategic management capabilities.”

The committee also found local municipalities were unable to acquire relevant skills because of the packages on offer at metropolitan municipalities and in the private sector.

“The loss of skills at lower grade municipalities is concerning. The inability to attract professionals such as chartered accountants and practising engineers has impacted the strategic capacity of municipalities.

“The remuneration of these professionals is regarded as being beyond the rates prescribed for public service. However, the cost of using outsourced services to perform these professional functions has not been compared to their being performed internally.”

Smaller municipalities also saw a loss in primary technical skills such as artisans, plumbers and electricians.

Political instability also plays a part in the shortcomings in the governance of municipalities.

“The inability of local municipalities to produce funded budgets at the first attempt is exacerbated by several different political and administrative factors. The budgeting process in most municipalities is driven largely by compliance requirements and to meet prescribed submission deadlines.

“This detracts from a more considered approach based on the unique developmental agenda and individual chief interests of each municipality. This may be a contributing factor to the number of local municipalities that produced unfunded municipal budgets (not supported by monetary flows) for the years up to and including the 2018/19 financial year.”

The report made a number of recommendations to address each of the major issues identified. During the briefing, Maile said some of these recommendations were already in the implementation process.

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