Cogta MEC places Umzinyathi finances under administration

2013-05-08 00:00

THE Umzinyathi District Municipality was forced to eat humble pie when the Co-operative Governance and Traditional Affairs Department (Cogta) placed its finances under administration by yesterday.

A report in The Witness last month about the pending intervention, after the municipality was reported to be about R350 million in the red, was vehemently denied by municipal spokesperson Jeff Hassan.

He said at the time that the article painted a defamatory picture of the municipality, which had received a clean report from the Auditor-General in the 2011/12 financial year.

He said Umzinyathi had shortfalls like any other municipality, and was adamant the municipality would not be placed under administration.

But that confidence proved to be misplaced yesterday when Cogta MEC Nomusa Dube descended on the municipality to announce to a full council meeting the take-over of the municipal finances .

Dube said an assessment of the municipality’s financial statements showed it faced serious financial problems, including:

• The municipality had appointed consultants since 2007 instead of a chief finance officer;

• A significant increase in the employment of security guards, particularly in the mayor’s office, costing R1,5 million in 2011/12;

• Staff appointments were not conducted according to the recruitment policy and unqualified personnel were engaged;

• The municipality is technically insolvent;

• Fears of overexpenditure after the municipality spent almost two-thirds of its capital midway through the financial year;

• R24 million in conditional grants were not spent in 2011/12;

• The municipality was likely to repay a R303 million loan from the Development Bank of Southern Africa;

• A total of R71 million in arrears was owed to Uthukela Water.

Dube said a team of experts from Cogta and the Provincial Treasury would be dispatched to Umzinyathi to help turn around its finances. She ordered the municipality to conduct investigations into the issues identified in her department’s assessment.

The MEC warned that her department could take over the entire Umzinyathi administration if the municipality failed to co-operate with the support team.

The warning was apparently in reference to a court application the municipality had lodged against Dube in connection with a matter involving Uthukela Water.

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