'A recipe for chaos': Judge lashes anarchic Karoo municipality

Dave Chambers Cape Town bureau chief
The Kannaland municipality in the Klein Karoo has been stopped from outsourcing the provision of electricity and water services at a cost of R735m.
The Kannaland municipality in the Klein Karoo has been stopped from outsourcing the provision of electricity and water services at a cost of R735m.
Image: Esa Alexander

The Klein Karoo is an unlikely setting for an outbreak of anarchy, but events in a tiny municipality forced the Cape Town high court to issue an urgent interdict against councillors and officials on Friday.

Acting judge Nobahle Mangcu-Lockwood's order stops the bankrupt Kannaland Municipality signing a R735m electricity and water outsourcing deal and making six new political staff appointments.

The 25-year deal with Inovasure to provide the municipality with an “energy vault” combining solar and wind generation with a massive battery would have cost more than four times Kannaland's annual operating budget.

The municipality, based in the town of Ladismith (population about 8,000), asked to be put under Western Cape provincial government administration in 2018 after its debts grew so large that it stopped making pension fund and medical aid contributions on behalf of staff.

Acting judge Nobahle Mangcu-Lockwood .
Acting judge Nobahle Mangcu-Lockwood .
Image: capebar.co.za

In her judgment, Mangcu-Lockwood said the administrator was making good progress until September 2020, when ANC mayor Magdalena Barry contracted Covid-19.

Barry's deputy, ANC councillor Philip Antonie, then formed a coalition with the Independent Civic Organisation of SA, the DA speaker was removed and a string of decisions were made that led to litigation between the municipality and the Western Cape government.

Mangcu-Lockwood said the council resolved to conclude its deal with Inovasure — intended to make Kannaland immune to Eskom load-shedding — sidelined the administrator and the financial recovery plan imposed on the municipality, and dumped the cost-saving organisational structure imposed by the administrator.

It decided to create five new posts in the speaker’s office and another in the mayor’s office, to reinstate the fired head of technical services and to award bonuses to two staff.

Local government MEC Anton Bredell said a R136,000 bonus was also agreed for former municipal manager Morne Hoogbaard, who had left in 2016.

Bredell said these decisions contravened Kannaland's financial management plan, the Municipal Finance Management Act and National Treasury regulations.

Mangcu-Lockwood said Kannaland had “committed itself to a path of unlawfulness” by seeking to accept Inovasure's unsolicited “energy vault” bid while under mandatory intervention by the provincial government.

“It is exactly this kind of contract that needs to comply with the [financial recovery] plan, and in respect of which the administrator was given exclusive authority,” she said.

“In taking steps towards this arrangement, the respondents have ignored a whole range of legal requirements and considerations, which were repeatedly pointed out to them in the correspondence from the National Treasury and the provincial executive.”

Turning to appointments in the speaker's office of an office manager, a driver, a clerk, a political support officer and a support staff member, the judge said: “There is no justification given for why, during a financial crisis which is common cause, and a global pandemic, a member of the municipal council whose office previously only had one assistant, should now require an additional five employees.”

The disputed bonuses were “astonishing”, said Mangcu-Lockwood, because “it appears to be common cause that there is no legal basis for the payments in the first place”.

She added: “This is exactly the kind of decision-making — the kind that appears to lack a principled approach — that requires supervision from the administrator and which demands conformity with the [financial recovery] plan.

“All of these decisions, if followed through, will no doubt have a significant impact on the municipality’s finances. They also undermine the municipality’s financial recovery, and are inconsistent with the plan.

“There is no doubt that the latest decisions made by the respondents have an impact on the financial affairs of municipality. The evidence shows that it is exactly the sort of conduct complained about in these proceedings — the profligate spending, unnecessary expenditure in litigation, substandard supply chain management controls, and fruitless and wasteful expenditure — that resulted in the mandatory intervention.

“This sort of conduct by public officials and political official bearers is harmful not only to the rule of law and the applicants, but to the residents of Kannaland. It is a recipe for chaos in governance.”

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