TSHWANE COUNCIL CASH FLOW PROBLEMS COULD SEE OFFICIALS WITHOUT SALARIES

Issued by Fred Nel, DA Tshwane spokesperson on Public Accounts

The Democratic Alliance has confidentially learnt that the Tshwane Council’s cash flow headache has now reached crisis proportions.
“Our information from reliable sources is that the Council is struggling with its cash flow and that its officials are scratching their heads to find enough income to pay salaries at the end of the month” said Fred Nel the DA’s spokesperson on Public Accounts in the Tshwane Metro.
“We were aware that there were concerns about the Council’s cash flow last month when a turnaround strategy for its finances was submitted to Council, despite the Mayor assuring Council that there were no problems with the Council’s finances. Why would we need a turnaround strategy when there was nothing wrong with Council’s finances? The item was withdrawn from the agenda when the DA wanted to discuss the content of the report at the meeting.” said Nel.
The DA is concerned that the turnaround strategy seemingly followed by Council only concentrates on cutting expenses and freezing vacancies in the Council but ignores collecting money owed to the Council. The Council’s outstanding debtors amounts to an excess of R 3 billion.
“Current debt collection strategies are failing and the lack of political will to collect on outstanding debts is pushing the Council further into the red. We warned council in August already that this was going to happen but the ANC did not listen. If the DA was in control we would have concentrated in getting the money in instead of cutting expenses which could negatively affect service delivery.” said Nel.
The DA calls on the Mayor to ensure that a suitable and realistic turnaround and debt collection strategy is tabled at the next Council meeting in order to address this crisis. Although, by then it may already be too late.

DA REQUESTS PROBE INTO MISUSE OF COUNCIL RESOURCES FOR MAYOR’S DAUGHTER

Issued by Fred Nel, DA Tshwane Spokesperson on Public Accounts

It is with shock that the DA learnt that Tshwane Council VIP vehicles and body guards were used to escort the Mayor’s daughter to the Hatfield Community Court to appear on charges of alleged drug possession and assault on Tuesday 24 March 2009.
“The Mayor’s misuse of council resources for a private matter is shocking and can be viewed as a wasteful expenditure under the Municipal Finance Management Act. Consequently we will request the Council to investigate the misuse of Council resources (VIP vehicles and bodyguards) by the Mayor and her family” said Fred Nel the DA’s spokesperson on Public Accounts in the Tshwane Metro.
The DA also mentioned that the Mayor’s daughter did not qualify for such special treatment by the Council and should have travelled to the court on her own steam. Although the mayor attended to support her daughter it was a private matter and not part of her official duties, and therefore she did not qualify for the use of official Council resources.

DA Pretoria Candidates Announced

The DA in Pretoria is proud to announce the names of 10 candidates who obtained high positions on the DA's provincial and national parliamentary lists for the 2009 elections. In the photograph above are:

Back: Kenneth Mubu (Academic), Stevens Mokgalapa (Councillor), Dr. Manie van Dyk (MP), Fred Nel (Councillor), Justus de Goede (Councillor).

Front: Les Labuschagne (MP), Rika Kruger (MPL), Sej Motau (Businessman), Natasha Michael (Councillor).

Absent from this photograph is Juanita Lourens-Klopper (Academic).

You may contact any of these candidates to address a house meeting or other event or just chat with them about the DA through the DA Gauteng North Regional office at Tel: 012-343-1358.

Council 2 October 2008 Speeches: Annual Report 2004/05 & 2005/06

COUNCIL: 2 OCTOBER 2008; ITEM A. FROM THE SECTION 79: PUBLIC ACCOUNTS COMMITTEE: 15 AUGUST 2008

SPEECH BY CLLR. FRED NEL DEMOCRATIC ALLIANCE TSHWANE CAUCUS SPOKESPERSON ON PUBLIC ACCOUNTS

What is an Annual Report?
An Annual Report is in reality a performance report of an organisation’s performance; primarily the financial performance of that organisation. However, with the rapid developments over the last ten years in corporate governance frameworks, annual reports also illustrate the management, environmental and social performance of an organisation as well as an opinion from an independent auditor, or the Auditor General in our case.
The annual reports, usually glossy colourful reports that we receive every year, of our city does exactly the same as the annual report of any business. It reports on the performance of the organisation and its management.

Organisational Oversight – A Comparison with a Private Sector Company
If we compare our municipality with a private sector company we can draw the following comparisons.
Private sector companies are governed by a board of directors (in our case the Council) who has the role to oversee the activities of the management of the company (in our case the municipal manager and his officials) on behalf of the company’s shareholders (in our case the ratepayers).
The oversight task of a board of directors is to ensure that:

* Shareholders’ investments are protected through diligent management by the management;
* Shareholders’ investments are generating a return (so that their money will remain invested in the company); and
* The management discharges its responsibilities legally and morally defensible.

In our case it means that Council must exercise oversight over the administration of the Municipality to ensure that they:

* Use the money paid by ratepayers responsibly (diligent management);
* Use the monies paid by ratepayers to provide them with infrastructure and services as described in Chapter 7 and Schedules 4 and 5 of the Constitution (return on investment); and
* Exercise their duties and responsibilities within the parameters of South African law, regulations and moral standards (i.e. corporate governance requirements).
Oversight is exercised by the Council in the following ways.
* Through management reports that serve at the various portfolio committees and Council meetings during a financial year within the framework of Council’s budget, policies and procedures.
* By analysing and resolving on the Annual Report of Council that also contains the report from the Auditor General.

The first mechanism of oversight involves the ongoing activities of Council through Council and portfolio committee meetings.
The second mechanism is the one we are engaging with in this report that will serve before Council.

What Does Tshwane’s Annual Reports Say?
The annual reports that we have to express an opinion on today, raises certain concerns that needs serious attention. Granted that these annual reports can be described as historical, but with insight into the 2006/07 annual report one can analyse then within the context of the municipality’s overall financial and managemt process.
The main concerns emanating from these reports relates to the municipality’s administration’s failure to address recurring problems. The first glaring concern is the recurring qualified audit opinions received from the Auditor General. When the Auditor General expresses qualifications to the audit executed by him it means that discrepancies were found in the statements which could not be disproved or reasonably explained.
Of specific concern are the reoccurring problems with regards to

* Debtor management;
* Creditor management;
* Reporting on utilities’ performance and management; and
* A lack of input from the public and external stakeholders.

Furthermore we have found that these reports do not fully adhere to the provisions of the Municipal Finance Management Act.

Why Should We be Concerned?
The qualified opinions with regards to our debtors and creditors are of specific concern as these two elements of the organisation’s financial management represent the basics of how any organisation functions financially. If you have inaccurate data with regards to your debtors and creditors you will never know how much income you can expect nor do you know how much you have to pay to creditors.
No business can operate in this way. If you cannot get the basics right you will fail financially. Just look what is happening to institutions all over the world today that were viewed as safe investments. If these reputable companies can fail, so can we.
If you are unable to collect all the monies owed to you, you experience reduced income, which means you cannot pay your bills nor do the things you are supposed to. You experience cash flow problems and have to borrow money in order to pay for your operations. This was the cause of Bear Stearns’ downfall and many other well-known financial institutions around the world. With the financial markets as they are today we will find it increasingly more difficult to raise money through borrowing meaning we are approaching a situation where we may not be able to pay salaries in the near future.
The inaccurate data with regards our creditors cause equal concern. The only way you can determine whether your are getting bang for your buck is if you know how much you need to pay a creditor and what you are getting in return for it.
It is the same with our utilities; we pay money over to them without the necessary oversight and without knowing whether our investments in these utilities are creating any value for us as a municipality and our shareholders on whose behalf we are investing the money.

So What Should we Do About it Today?
The decision we have to take today on these financial statements are an ideal opportunity for us as Council (or board of directors) to express ourselves towards the management of the organisation based on the performance data in these reports. We can today express to the municipal manager and his management whether we are satisfied with the standard of management and performance we and our shareholders are receiving from them. We must express ourselves about whether we are happy with the standard of the organisation’s performance, or not.
We have three options available to us in this regard.
* Approve the reports without reservations – indicating that there are no problems with the organisation’s performance and therefore our satisfaction with the way the municipality was run during these financial years.
* Approve the reports with reservations – indicating that the Reports reflects the true performance of the organisation but there were financial and management deficiencies identified that needs to be corrected – especially because the AG qualified his opinion. This would be an expression of our dissatisfaction and a message to our municipality’s management to improve their performance.
* Reject the Annual Report – it is not a true reflection of the organisations financial position and/ or performance – the statements can’t be accepted.
* Refer the Annual Report for revision – mistakes were made in the Annual Report that must be corrected excluding items that may not be revised.
The DA’s recommendation is that we approve the annual reports with reservations to indicate our dissatisfaction with the qualification by the Auditor General and the reoccurring problems with debtors, creditors, utilities and deficiencies in the reports themselves.
In actual fact, the guidelines from Treasury prefer Council to take this position when expressing itself on the annual reports.
There is no shame in doing this and will show that we as the Council (board of directors) seek prudence in the financial management of our municipality and performance when it comes to service delivery. We have a corporate governance duty to take such a position.

The ANC Position
However, I suspect that the ANC would not agree with this course of action today which is a pity and a shame insofar as good corporate governance is concerned - which so by the way is one of the municipality’s key performance areas.
The ANC argument is that corrective steps are being taken and that we should therefore take the municipal manager’s word that all the problems will be solved. However, this position is ill conceived and irresponsible. Enron, WorldCom and other corporate governance failures also took decisions based on the promises of its management executives instead of taking decisions based on the performance of its management. We can only take decisions based on fact and not on promises from the administration. This argument therefore does not hold water.
We can only accept these and future annual reports if the Auditor General opinion is unqualified. This should be the standard we should be setting our administration today. The ANC position of accepting these reports without reservations just once again indicates the low corporate governance, management and service delivery standards it sets itself.
The ANC is also politicising our public accounts committee and reports with its insistence that these reports be accepted without reservation when even the guidelines from treasury advises otherwise.
* It is clear that the ANC views it as a personal embarrassment if we accept the reports with reservation. This is once more proof that the ANC has extended itself beyond the boundary between party and state and has made the municipal administration an extension of itself. Otherwise the ANC would have been objective in its approach to this matter. It would have truly represented its voters by voting on their behalf today and sending a message on behalf of their voters to the municipal administration that it needs to improve itself.
* But I suppose it is difficult to act independently from the municipal administration when the municipal manager himself is a political deployment who politically outranks most of his superiors within the political structure of the municipality. This undermines the whole notion of oversight by the municipal public accounts committee and this council when those over whom we must exercise oversight, tells the ANC what their decisions should be. Another example of atrocious corporate governance.

Conclusion
If we accept these annual reports without reservations it will mean that everything is just fine and that there are no problems, business can continue the way it has thus far. The DA cannot accept the low standard set by the ANC with regards our annual reports and strongly urges all councillors to vote in favour of accepting these reports with reservations.
END

SPEECH BY COUNCILLOR HEIN REDELINGHUYS

Mr. Speaker
(1) According to the Municipal Finance Management Act [MFMA] (sec. 127 (2), the mayor of the municipality must within 7 months after the end of the financial year table in the municipal council the Annual Report[AR], i.e. January. And then within 2 months after the tabling of the Annual Report council must adopt an Oversight Report containing Council’s comments on the AR, which must include a statement whether council --
(a) has approved the AR with or without reservations’
(b) has rejected the AR; or
(c) has referred the AR back for revision, i.e. end of March
(2) Tshwane has not achieved this
(3) It seems to me a serious “Wake-up!” call is necessary here in Tshwane
(4) It further seems to me that councilors need more training, including the councilors sitting on the MPAC Committee
(5) It is supposed to be an a-political committee where all political parties should put their party political agendas aside and work together, but it seems to me that some of the ANC members on the committee have not yet grasp this
(6) The ANC members on this committee seem unable to differentiate between party ideologies and the reason for the existence of MPAC. If one tries to assist them, one is faced with obstinate resistance
(7) We are very far from National Treasury’s idea that all councilors should also conduct their own investigation and that ward committees should also make an input
(8) Councilors should make a rigorous analysis of the AR with inputs from other stakeholders and ALL councilors should fully understand the AR in order to identify matters that require further information from the accounting officer
(9) The Municipal Manager attempted to consolidate the Auditor-General’s Management letter of 23 pages into less than 2 pages in the minutes of MPAC’s meeting of 15 August 2008, thereby leaving out important information
(10) The A-G allows time and assists with the problems, yet there are still exceptions in the annual Report
(11) The Tshwane Metro received the management letter during December 2007, yet MPAC only received it in August 2008, 8 months later
(12) The 05/06 management letter has not yet been received, but certain aspects of previous years were covered in the 06/07 management letter, like the R3,8 billion assets that could not be verified in the assets register as the location of these assets is not available. QUESTION: Do we still have these assets?
(13) How ward committee fees expenses could be set-off from land sales is a mystery to me
(14) Creditors were understated by R40 million and the Municipal Manager conveniently left out the comment of the “in kind disclosure on the number of the mayor’s body guards”
(15) The Municipal Manager described the management letter as shocking. I agree with him – it is a disaster
(16) A Report was requested on fruitless and wasteful expenditure, what actions were taken in terms of the MFMA against officials responsible for this expenditure. So far: “No reply”

CONCLUSIONS:
(1) This Council will be foolish to accept the 04/05 and 05/06 Annual Report without reservations
(2) The time allowed by the MFMA to adopt an Oversight Report is no later than 2 months (March) after tabling the AR in Council (January). This is made very clear by National Treasury in its CONCLUSION in Circular 32 (page 7 of 17)
(3) If at that time all the components of the Annual Report are not yet completed on time, the Oversight Report must then be approved with reservations and be amended when the remaining components are tabled
(4) This Council must therefore also adopt the 06/07 Annual Report with reservations

(Prof) Hein Redelinghuys
Member, MPAC, 2 October 2008.

DA Calls the Amalgamation of Northern Gauteng Municipalities Unpractical, Non-Viable

Media Release Issued by Fred Nel, Leader DA Tshwane Caucus
Date: Monday 26 May 2008
Immediate release

Fred Nel, Leader of the DA Tshwane Caucus, today reacted to the proposed merger of the Tshwane (Greater Pretoria), Kungwini (Bronkhorstspruit) and Nokeng Tsa Taemane (Cullinan) councils and called it an unpractical and non-viable proposal. “The proposal by the Municipal Demarcation Board that these municipalities be merged is definitely a political decision and not a practical or viable one. It is clear that that due to the political problems in the various municipalities and the threat from the DA to win some of these in the next municipal election has played a role”.

“In our view the Municipal Demarcation Board was influenced by the ANC who was unhappy with the original proposal and it has buckled under the political pressure. There are problems in those municipalities and these could have been sorted out by restructuring the municipal system in those areas. Now it becomes the Tshwane Metro’s problem and the question that we have to ask is who is going to foot the bill to get service delivery restored to these areas said Nel.

Nel commented that the proposal made no sense geographically, economically or socially and will cause massive problems during the merger process. “We have just settled the Tshwane Metro Council’s integration almost eight years after it was formed and now it is going to be disrupted again due to this proposed merger. Service delivery will experience a further decline when this monstrously large municipality has to serve such a large geographic area.”

Nel also commented that millions has been spent by the Tshwane Metro Council to develop spatial development frameworks and to put a uniform planning system in place. “Our administration already creaks under the heavy load and now it will inherit three more councils that are in disarray. This will lead to another process where internal systems will have to be integrated causing further delays in municipal services.”

According to Nel the DA supported the original proposal that would have seen Silver Lakes, Mooikloof and other areas on the eastern urban edge of the Municipality be incorporated into the Metro. “The original proposal made sense as these areas formed natural linkages with the Tshwane Metro. However, the new proposal which will result in at least three major town centres very far apart from each other, does not make sense.”

END
Enquiries: Fred Nel - 0832632427

DA CONDEMNS XENOPHOBIA IN GARSFONTEIN

Statement issued by Fred Nel, Leader of the DA Tshwane Pretoria Caucus

Fred Nel, Leader of the DA’s Tshwane Caucus, today condemned the xenophobic attacks that occurred in the Moreleta Park/ Garsfontein area east of Pretoria. “We have been warning the council for a long time now that the informal settlements in the Woodlands area need to be addressed; however, they chose not to take action. We condemn the attack on foreigners in the area and request the government and security forces to step in and take control of the situation.”

Nel commented that apart from crime, the eastern side of Pretoria has always been a peaceful area and actions like this would no doubt shock the residents. “I am just scared that residents in the area, who are already fed up with violent crime, will take the law into their own hands if the police don’t step in and solve the problem. We could sit with a mini war on our hands if the situation is not calmed down immediately.”

Nel called on all political parties to play a role in educating their members in the art of tolerance in order to stem the wave of xenophobia. “I think we all have a role to play in educating communities to tolerate each other. Political parties, government and NGO’s need to step in and educate people that violence is never the solution to our problems. We already live in a violent and criminal society we don’t need to add these xenophobic attacks to our growing list of societal threats.”

END

Enquiries: Cllr. Fred Nel 0832632427