Tension brews over municipal finances

AMAJUBA – Newcastle Municipality received an unqualified audit opinion for period 2015 to 2016.

However this improvement on a string of qualified audit reports took a back seat to a press release by the Amajuba branch of the Democratic Alliance last week, making a number of serious allegations.

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This was met with criticism by at least one former office-bearer.

In the release, DA Member of the Provincial Legislature, Dr Imran Keeka, condemned a decision by MEC of Cogta (Cooperative Governance and Tradition Affairs), Nomusa Dube-Ncube, to not investigate officials in light of Newcastle’s dire financial situation.

This includes both current and former councillors.

Dr Keeka highlighted sections of the Municipal Finance Management Act, with specific regard to fruitless and wasteful expenditure, and said the financial turmoil was due to irregularities and possible fraud.

“There is an unfunded budget. The municipality’s financial reserves are now depleted and [Department of] Treasury has denied a loan of R90-million, which leaves the municipality unable to carry out any capital projects or basic service delivery functions.”

In response, former Mayor, Afzul Rehman accused the DA of not understanding municipal finance.

He further stated the unqualified audit opinion should silence many who claimed financial wrongdoing or malpractice put the municipality at financial risk.

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“Cash flow problems are part of any organisation where money is used to intensify capital expenditure and change the lives of people for the better.”

Cllr Rehman expressed pride at the work put in towards the unqualified audit opinion, and said the last year of his administration bore witness to many changes put in place.

“Remember that when we took over, this municipality could not even provide sufficient evidence for payments and a proper audit.”

According to Cllr Rehman, the unqualified audit and numerous completed projects had placed Newcastle well on the path towards being a model city.

“[Dr] Keeka speaks of the MEC’s comments, yet he was not present at that meeting himself. We also need to remind the DA they were part of every decision of council during my term. Their objections were never that [the budget] was unfunded; it only objected to the manner in which the capital budget will be spent.”

While current Mayor, Makhosini Nkosi declined to comment on either the DA’s allegations or the unqualified audit, Cllr Rehman said the municipality had to be likened to a business.

He said cash flow problems were painful, but could be turned around easily.

“Any business with no money and no stock is in trouble, but a business with lots of stock and no cash is poised to make money.”

Similarly, Cllr Rehman said money had been invested in viable infrastructure projects, and the community had no excuse not to pay its dues.

He suggested this was where the current council had to begin.

“Debt outstanding is close to a billion Rand; that will replenish reserves and put the municipality on another growth path.”

Speaking on the unqualified verdict, Cllr Rehman stated it would be easy for Newcastle Municipality to attain a clean audit, as the remaining items flagged by the Auditor-General were non-material.

“We always struggled with a qualification on our asset register. That was the most difficult to rectify because it was compounded over many years.”

Most recently, Dr Keeka moved a motion with notice, asking the Provincial Legislature to instruct MEC Dube-Ncube to launch forensic investigations into Newcastle’s finances.

He expected those found culpable to face prosecution.

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Dr Keeka said the rot in municipality could not be protected or covered up, or the result would halt adequate service delivery and the suffering of residents.

“If these MECs shy away from doing their jobs, it will confirm how they further undermine a society underpinned by freedom, fairness and opportunity. This will confirm their noncommittal to clean governance.”