Mending Maritzburg

2010-08-25 00:00

WHEN Pietermaritzburg’s Mr Fixit, Johann Mettler, arrived in March to rescue KwaZulu-Natal’s maladministered capital city, he had no illusions about how tough his job was going to be. The enormity of the task became evident weeks later­ as evidence mounted of empty coffers, misinformation, cover-ups, broken-down services and a city staring bankruptcy in the face.

Mettler said that one of the surprises was finding out the extent to which councillors were misled.

“When we put certain facts to them they were completely misinformed. They believed that the municipality had R150 million in the bank, but this was money that had been ring-fenced for councillors’ infrastructure pro- jects,” he said.

There was also a R162 million loan taken from the Development Bank of South Africa (DBSA), which councillors had been told was for infrastructure projects. It was later discovered that the money was used for operational costs.

Equally shocking was the extent of graft and corruption in the municipality. Mettler described the abuse as like nothing he has seen before.

He found a top-heavy municipality with managers for just about every process — the problem was that most were not qualified for the posts they held.

His first impression driving into Pietermaritzburg­ was of a filthy city.

“I had never seen a place so dirty in my entire life,” he said. The administrator is equally taken aback by re-sidents who didn’t seem to care much for the city. “We have horrific practices here. People just dump their rubbish on the pavements,” he added

Six months down the line, Mettler, who has a legal background and who is an executive director of the South African Local Government Association (Salga), is able to report to residents on what has been done and what is left to do. Some tough and unpopular decisions have had to be made, but he says there is no choice, he and his team have a mandate to fulfil.

Mettler’s report card on Msunduzi lays bare the critical aspects of the city’s turnaround strategy.

 

The Budget

When the team arrived they found no adjustment budget, which is legally required by law. With no budget it was difficult to assess the status quo. However, probing the accounts revealed a draft budget that was completely flawed and based on false figures. They found a bankrupt city with a deficit that stood at R572 million. The team’s first task was to meet National Treasury regulations and get a budget done, one that fulfilled all legal requirements and matched the city’s integrated development plan (IDP).

This took weeks, but it was eventually completed. The toughest part was matching income to expenditure and here the team discovered that income generated in addition to huge debt owed to the city fell far short of the R200 million a month that is needed to run the city.

 

Bankruptcy

The city was existing on a hand-to- mouth basis and on a three-day cash flow, which dipped at times to one day, when salaries and Eskom had to be paid. The situation was so bad, said Mettler, that they were not sure if they were in a position to pay salaries the next month. “From the start we had to concentrate on the finances before anything else,” he said. The team took drastic cost-cutting measures.

Mettler makes no apology for the R55 000 spent when the turnaround team and municipal staff went to the Richmond area for a strategic planning workshop. He says they were not at a Berg resort as media reports indicated. The getaway was for more than 40 people and this was the team that had worked night and day and over weekends for three months to get the budget sorted out. He said that many of the team were not from the city and had not been back to their homes for weeks. As for the accusation that there was no toilet paper in the municipal­ offices while they were out on a jaunt, he said the cupboards were full of toilet rolls, but somebody hadn’t bothered to take them to the toilets in 333 Church Street.

 

Finances, Finances, Finances

With no prospect of a bail-out from National Treasury, the team was left with no choice but to go on a drastic debt-collection drive to recoup outstanding monies. This resulted in a widespread disconnection drive among defaulters. This did not win the team any friends. There has been an outcry and a couple of court interdicts for wrongful disconnections. If the team’s popularity level went down, it plummeted even further with Operation Pitbull, an initiative to stop the widespread theft of electricity and water in the city. According to Mettler they were shocked at the level of graft and an initial investigation has revealed that at a conservative estimate 75% of the city’s small and medium-sized businesses had tampered with their water and electricity meters. As a result of Operation Pitbull the team discovered evidence of collusion between municipal staff and consumers. A forensic investigation was launched within the Electricity Department last week. He said that the widespread electricity theft did not just happen. “We came across a 2006 report, which indicated that there was theft and the electricity infrastructure was being compromised. Nothing was done about this. Four years later we are reaping the fruits of this inaction, to such an extent that it is now threatening the budget of this municipality.”

 

Forensics

The team has started acting on the recommendations of the 2007 forensic investigation that former municipal­ manager Rob Haswell and his team sat on. Suspensions in this regard have been carried out. The suspensions and inquiry into senior managers Roy Bridgmohan, Kevin Perumal, Francis Grantham, Zwe Hulane­ and Kenny Chetty are proceeding. Mettler says that the team is poised to suspend another 34 employees. They have also received further investigation reports from Co-operative Governance MEC Nomsa Dube. This includes the money purportedly spent on the Nkosi Mlaba festival that did not take place. Mettler said the report is to be presented to council at the next meeting with the team’s recommendations.

In addition, the turnaround team has initiated its own investigations into electricity and stores, building- plans approval and the supply-chain management unit. Here the brief is to investigate all transactions under R100 000, going back for the past four years. There is an investigation into diesel and petrol theft and the unauthorised use of motor vehicles. In addition, there are ongoing investigations into individual staff members who have allegedly flouted council’s employment rules. He said that some of these investigations are due to be completed at the end of August, others­ at the end of September. The electricity inquiry will take a bit longer. Mettler reiterated that they will stick to time frames and that he has made it clear that investigations will be carried out in all instances of non-compliance with the law and council’s policies, and will be done in such a way to ensure that, if required, criminal charges will be pursued. “We will stick to wherever these investigative trails lead even if it is to people who no longer work at council. Having resigned cuts no ice with me. I will do what I must do.”

Rates

Mettler acknowledges the widespread dissatisfaction at the manner in which the Municipal Property Rates Act was implemented. He says that this problem cannot be addressed in one year and there is ongoing work being done. While there has been an outcry from residents who felt their properties were overvalued, Mettler says that the bigger problem is the number of properties that have been undervalued. The result has been that the rates account does not pay for what it is supposed to pay and there is a huge deficit in this area. The municipality has just completed its fourth supplementary valuation roll, which is expected to be finalised by November.

 

Tariffs

Beleaguered city residents are reeling over revised tariffs, especially the huge increase in deposits for new connections that can be up to R3 000. Mettler says the revised amounts are an attempt to correct the tariff structures of the past which did not make sense. Sooner or later this would have had to be corrected and it is the only way that the city is going to get an income that will enable it to provide services.

Mettler says that more work needs to be done to get the city’s finances right. “The mayor knows that he is going to get a lot more phone calls from residents. We are just doing what needs to be done,” he said.

 

The Staff

These initial endeavours have highlighted the poor competence levels­ of senior management. According to Mettler they found that many people were not qualified to do their jobs. He said that his team are currently busy with an audit to find out skills, qualifications and competency levels in all departments of the municipality and especially among those involved in the city’s finances. This will be used as a basis for a formal organisational structure to match skills with positions.

He acknowledges that staff morale is low and says this comes with the uncertainty of restructuring. Mettler said that all is not lost and there are very committed junior staff who were never given the opportunity to work to their full potential. They are positive and committed to the turnaround process. “I have gone to the lower-level staff to look at what can be done to preserve jobs. However, there is a need to have fewer jobs in the top four to five levels. These levels were grossly overstaffed, with a process manager for every single process.”

 

Organisational Structure

There have been questions about why the turnaround team was fiddling with the city’s organisational structure, especially the political structures such as council committees. Mettler says that based on their analysis, they realised that systems had to be put in place to ensure that long after the turnaround team had left the checks and balances remained.

Similarly, the organisational structure has been trimmed down and ordered into more manageable units under four main functional areas. These are finance, good governance, infrastructure and development services, and community development services.

Six months down the line, Msunduzi Municipality has not plunged down an abyss. It is hovering on the brink, but Mettler says that they are beginning to see the light at the end of the tunnel. However, he describes it as a long tunnel. While the team expect to get most aspects sorted out, the financial recovery will take much longer. Mettler believes that it will be three years before Pietermartizburg becomes a financially sustainable city.

He and his team will be long gone by then, but they are confident that they will have put systems in place to ensure that the capital city maintains its status and does not fall from grace.

• Johan Mettler, who was brought in by the KZN provincial government of co-operative governance, has a contract until mid-September. A joint sitting of the provincial Scopa, Finance­ and Co-operative Governance Portfolio Committees earlier this month recommended an extension of his contract.

 

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