Mangaung: The ANC’s shame

by The Editor

FEATURE: The ANC has spent much time over the past six months waxing lyrical about the deep significance of Mangaung and the Free State to the party, as it celebrates its 100 anniversary. But an overview of the way in which local government has been managed by the party suggests a different attitude. Indeed, so fundamentally mismanaged is the Free State, if anything the ANC owes its people an apology. What follows is a general overview of the way in which the various local authorities in the Free State – and Mangaung in particular – have performed according to the reports of the Auditor-General. It makes for disturbing reading and, I would argue, leads one to the inevitable conclusion that, if the ANC owes anything to the Free State, it is an explanation.

Mangaung: The ANC’s shame

By: Gareth van Onselen

5 April 2012

Introduction: Rhetoric and Reality

In a 2011 article for the ANC publication Umrabulo, titled ‘Leading the ANC Centenary celebrations: A Free State perspective’, the ANC’s Seiso Mohai waxed lyrical about the deep significance the Free State in general and Mangaung in particular held for ANC, and the central role both had played in ANC history:

“That Mangaung is the founding place of the ANC is not to be taken lightly, particularly by the residents of Mangaung and all the people of the Free State. It means we are the immediate heirs of a great revolutionary legacy and heritage that the ANC represents.”

He called the Free State “the mother province” and argued that, because “Mangaung in particular is the founding place of the ANC”, “the host of these centenary celebrations should find resonance in all centenary celebrations throughout the country”.

“The symbolism of the Centenary in the Free State as a birthplace of the ANC should never be lost throughout the celebrations and beyond.”

One wonders, though, whether the people of the Free State feel the same way.

There has always been a chasm between the ANC’s history and its record in government – its rhetoric and its performance. The former, a romantic ideal, is used by the party to mobilise support and legitimise action; the latter, an indictment, never dwelt upon or set out in detail, and almost always justified or explained away by reference to the former.

The past is used by the ANC to legitimate the present, the present an excuse to evoke the past, but never is any actual time spent in the here and now.

It is difficult to find words powerful enough to describe the extent of the gross maladministration and disgraceful governance that has hampered service delivery in the Free State under the ANC. Even to describe the province – and Mangaung in particular – as a basket case is perhaps to put it too mildly. And I chose my words with care.

To ignore the disastrous reality that is ANC governance in the Free State, reminiscing instead about a glorious past, is for the party to deny not only its more recent history but its present nature: like someone riddled with disease applying for life insurance on the basis they were once a healthy child.

Individually and collectively, and almost without exception, the various local authorities that comprise the Free State have been run into the ground. And, as if to exemplify the problem, Mangaung – recently elevated to the lofty status of metropolitan municipality – stands out as the very epitome of financial mismanagement.

Were the ANC honest about the Free State and what it has come to represent, they would hang their heads in shame. For the truth is that, while the Free State no doubt holds much in the way of historical significance for party, narrow that focus down to the last 18 years and it demonstrates little more than the party’s deep contempt for the people of that province and the faith they have put in the ANC, both to administer their respective governments and to deliver to them a better life.

Space does not allow for a full exposition of the extent to which the ANC has mismanaged the various Free State governments but an overview of the Auditor-General’s reports for those local authorities in the province give a fair indication as to the extent of the decay.

Thus, it is the purpose of this article to provide such a general overview, with a particular focus on Mangaung – the centrepiece of the ANC’s centenary celebrations – and to draw from that various conclusions.

The Big Picture

Before focusing on Mangaung it is necessary to set the scene, as it were. And, in order to do that, I have generated the table below, which summerises the A-G’s findings for each local municipality in the Free State (excluding district municipalities), for each of the last five years.

First, a few notes on the table. It was incredibly hard to generate. There exists no central repository for audit reports. It is true the Treasury is busy building one and that the A-G’s consolidated reports help provide an overview but, even then, mainly due to the fact that many municipalities in the province failed to get their finances audited on time (sometimes for two years or more) and that the A-G has only produced such reports relatively recently, there remain a number of gaps.

The further back one’s goes in time, the increasingly scarce such reports become. Anything more than five years old becomes painstakingly difficult to locate. I believe I have captured everything that can be captured without phoning each municipality individually. There are still one or two gaps. In these cases you can be sure the missing report will be or was not a favourable one. Submitting one’s financial statements late is not an indication of good governance and, where there are gaps, no doubt the type of opinion the respective municipality received the year before will again apply when the A-G’s report for the gap year is available.

That said, here is the table:

TABLE 1: Audit Outcomes for Free State Local Municipalities: 2006 – 2011

It constitutes a fairly breathtaking record of financial mismanagement. It is now common practice for the media to come down critically on any public entity that receives from the Auditor-General a qualified opinion, but qualified opinions in the Free State are like hens teeth, so pervasive are disclaimers – a far harsher indictment.

But let the statistics do the talking. From the available evidence, the following facts can be drawn:

• In five years and between 20 local authorities (including Mangaung) – effectively 100 audit opinions – four were financially unqualified, 16 were qualified, 66 received a disclaimer of opinion and four an adverse opinion.
• Put another way, approximately 90% of audit opinions received by Free State local authorities in the past five years have been qualified, disclaimed or adverse.
• In no year did more than one municipality get a financially unqualified report.
• Only two of 19 municipalities have ever received unqualified audits.
• At least six municipalities have received five adverse or disclaimed opinions in a row (in reality this number is probably more, as a number of those with reports missing suggest a similar record).
• At least 11 municipalities received five straight adverse, disclaimed or qualified opinions in a row (again, this number is probably higher).

To put those opinions into context: according to the A-G, an adverse opinion is awarded when the poor nature of the reporting is “so material and pervasive to the financial statements that the auditor concludes that a qualification of the report is not adequate to disclose the misleading or incomplete nature of the financial statements.” And a disclaimer is when the state of the financial statements were so bad, records so poorly kept, that the A-G was not able even to get enough evidence to form an opinion in the first place.

In other words, both indicate a level of maladministration so acute and wide-spread it is not possible for the A-G even to form an opinion about the state of a municipality’s finances.

But even that doesn’t give the full picture. It is possible, for example, to get a qualified audit opinion with just one area not being properly managed. But not with disclaimers – there need to be a wide range of concerns in order for the A-G not to be able to express an opinion on the finances in their entirety. And so the problems are immense. In the table below I have listed the number of points on which the A-G based his opinion for 2010/2011 – the more points, the bigger the problem.

Individual points include things like: a failure to properly register and maintain property, plant and equipment (i.e. the mismanagement of the municipality’s assets); irregular expenditure; bad revenue practice (rates not properly implemented or managed); procurement (the mismanagement of tenders); unspent grants; fruitless and wasteful expenditure; a failure to comply with legislation; a failure properly to spend capital budgets; the provision of bad debt (a failure to calculate the municipality’s debt); unauthorised expenditure; a failure to account for investments; the mismanagement of expenditure on personnel and employees, among many others. Each one is serious but five or so together is a sure sign service delivery across the board has been severely compromised.

TABLE 2: Number of Points Identified by the A-G in his 2010/2011 Reports

Some of those numbers are astounding. At least nine municipalities had at least 10 points raised; seven had 15 or more and two more than 20. You need to take a moment to register properly the longstanding extent of the financial mismanagement involved, after 18 years in charge of an administration, to have 26 points raised by the A-G in 2011. And remember, those numbers in the table above exclude Emphasis on Matter (non-material but significant other points the Auditor-General raises in each report).

And, only once you have done that, can you begin to imagine the effect on service delivery.

From Chaos to Corruption

In response to a parliamentary question last year, the minister of co-operative governance revealed the following about various Free State municipalities:

Nala Local Municipality: The Municipality was placed under administration. The Municipal Manager worked under the supervision of an administrator and a Forensic Investigation Report into the municipality was undertaken.
Mohokare Local Municipality: The Municipal Manager was suspected of financial mismanagement and maladministration and placed on special leave pending the outcome of Forensic Investigation.
Matjhabeng Local Municipality: Allegations of major maladministration, fraud, bribery, theft and corrupt activities were the subject on ongoing investigation.
Masilonyana Local Municipality: The Infrastructure Manager was linked to corrupt activities regarding a series of bucket eradication projects. A Forensic Investigation was undertaken. The municipality is now under administration.
Naledi Local Municipality: A Forensic Investigation was underway into the municipality’s financial management.

So often these disclaimed opinions are indicative not just of poor or incompetent financial management but corruption.

The effect on service delivery has been devastating and citizens have long since lost patience. As discontent has, with time, intensified, so has the response to the ongoing maladministration in the province.

It was in the Free State last year that Andries Tatane was killed during a service delivery protest in Ficksburg (Setsoto municipality) and across the province, widespread service delivery protests have been increasingly common as the people of the Free State, fed up with poor service delivery and what appears to them to be widespread corruption, have taken to the streets.

More recently, the unions – COSATU and SAMWU in particular – have hit out at the various Free State governments, threatening to make municipalities “ungovernable” if immediate action is not taken. In a statement in February this year, SAMWU stated that among many issues in the province, “blatant corruption in almost all Municipalities in the Province, ranging from awarding fraudulent tenders, fruitless expenditures, paying ghost employees, nepotism [and] manipulating the organisational structures to benefit individuals, friends and families” were among the most prominent. Their position has been publically supported by COSATU, which has also recently turned its attention to the Free State.

In a desperate attempt to help, in March this year, the Treasury announced it had deployed to seven Free State municipalities – Kopanong, Mangaung, Phumelela, Metsimaholo, Tswelopele, Mohokare and Ngwathe – various experts to save them from seemingly imminent collapse. As if to save face, Free State Premier Ace Magashule – the ANC’s longest serving Premier – denied, however, the intervention was an emergency one, saying the provincial government was already on the ground to help.

But let us turn our attention to Mangaung in particular – the cornerstone of the ANC’s romantic centenary propaganda. It is both cruel and ironic that it should exemplify the problem.

Mangaung: The epicentre of the ANC’s disdain for the Free State

At the advent of the 2011 local government elections Mangaung, along with Buffalo City in the Eastern Cape, were upgraded by the Municipal Demarcations Board to metropolitan municipalities. That elevation in status brings with it more financial resources. However, on the basis of its track record managing public monies, there is a strong case to be made that more money will only mean greater mismanagement.

The Auditor-General’s 2010/2011 report on Mangaung runs to 17 pages and includes 19 points on which basis the A-G came to the conclusion he could not express an opinion on the state of the metro’s finances, the fourth year in a row he has come to that conclusion. In addition, he raised nine points under Emphasis of Matter, for a total of 27 areas of concern.

To place the report in its proper context, however, one needs to look at Mangaung’s finances over time. The following table sets out the A-G’s findings for the municipality over the last nine years. Down the right hand side and for the last four years are the number of points the A-G has highlighted in his reports: the total number, the number of qualified or disclaimed points, and in brackets, emphasis of matter.

TABLE 3: Audit Outcomes for Mangaung – 2002-2011

It immediately becomes apparent that there has been a significant decline over time, although it’s a relative one – in nine years Mangaung has never received anything less than a qualified report. Not only has the condition of its financial management degenerated from a series of qualifications through to a series of disclaimers but, within the disclaimers themselves, there has been a steady worsening, from 11 points in 2007/2008 to 19 points in 2010/2011. Likewise, the number of points raised under Emphasis of Matter has increased, from four to eight.

This decline over time is important to identify, because it puts pay to the inevitable excuse that the metro inherited a weak administration and its problems are thus the best response to that legacy (not that this excuse holds much sway anymore, after 18 years). It might be relative but Mangaung was better managed in 2002 than it is today. And, even more disturbingly, better managed in 2007 than in 2011.

Only one party can be responsible for that: the ANC – the party in charge. It has over the past ten years mangled, mismanaged and misappropriated Mangaung’s finances to the point where the National Treasury has been forced to intervene.

A closer inspection of the metro’s 2010/2011 A-G report reveals the following:

• Fruitless expenditure worth approximately R41 million.
• Wasteful expenditure worth approximately R12 million.
• Irregular expenditure worth approximately R260 million.
• Unauthorised expenditure worth approximately R67 million for the year in question.
• Total unauthorised expenditure ‘under investigation’ worth approximately R466 million.
• Potential liabilities to contractors worth approximately R139 million.
• An approximate debt of R1.2 billion, owed to the municipality for water, electricity and sanitation services.
• An approximate debt of R950 million owed to the municipality for housing rentals, rates and taxes.
• The fixed asset register was unable to indentify property and equipment owned by the municipality to the value of approximately R875 million.
• Interest on loans was overstated by approximately R46 million.
• A failure to indentify or disclose its heritage assets.
• A lack of supporting contracts.
• An acute and widespread failure to properly measure, manage, report on rates and levies, which meant an inability to properly report on revenue.
• The municipality’s current liabilities “significantly” exceed its assets.
• Serious difficulties in debt collection.

The reasons for the metro’s poor management are numerous and a great many of them technical – that is, bad financial practice by those in charge – but even here the ANC’s internal political instability was evident. In identifying the reasons for the shortcomings, the A-G included a significant section on ‘leadership’, which contained the following paragraph:

“The outcome of the municipal elections created uncertainty amongst executive and senior management regarding their current roles and responsibilities. This resulted in a breakdown of the municipality’s internal control systems, including the implementation of the audit action plan.”

The A-G also blamed this sort of internal political in-fighting for the fact that the positions of the Chief Operating Officer and Chief Financial Officer were vacant at the time of reporting (not that their performance recommended them), filled by an acting COO and CFO – a problem also cited by the A-G in his 2009/2010 report. The Chief Executive Officer position was also vacant for a long period of time.

When Mangaung spent only 15% of its dedicated capital budget for the second quarter of 2011/12, little wonder the Treasury saw it fit to intervene.

Mangaung’s 2010/2011 Annual Report provides more evidence of the effect that this kind of financial mismanagement has on service delivery. The metro spent just 38% of its budget dedicated to capital projects. Its ability to pay service providers within the prescribed 30 days was not met (on average it only paid providers in 37 days). And the metro has a vacancy rate that is alarming – approximately one in three positions are vacant (there is a general skills deficit across South Africa, so one must realise this problem is relative but, even then and adjusting for the fact that no administration ever fills all positions, in Mangaung it is fairly described as acute). As of June 2011, the situation was as follows:

TABLE 4: Vacancies in Mangaung Municipality – June 2011

Conclusion: The Means to a Political End

On Mangaung’s website news page (a site as dysfunctional as the metro itself) it is perhaps no surprise that one of the key messages is an outdated news story about President Zuma travelling the country “Thanking all South Africans and ANC loyal supporters for voting for the ruling party in the past national elections”.

Quite what the metro’s business is promoting the ANC’s political programme is difficult to fathom, it serves in the public interest and should, like every public body, demonstrate neutrality not partisanship. But then perhaps that is the very problem. After all if, as the A-G pointed, those ANC members in control of the metro are prepared to let the municipality breakdown because of elections, rather than put the public interest first, it makes sense it would use the metro website to promote the ANC – Mangaung always was the means to that end.

But actual service delivery, good governance, clean administration, responsible management and the public interest, those are of less concern.

Ironically, the article quotes Zuma as saying: “If civil servants are not ready to serve the nation they should resign, and non performing officials will be removed with immediate effect.”

Both the metro and various municipalities that constitute the province have, however, seen precious little of that commitment over the past 18 years.

Instead, in the run-up to its centenary celebrations, the ANC has taken time out again and again to remind its supporters that because Mangaung is where the ANC was founded, they are “the immediate heirs of a great revolutionary legacy and heritage that the ANC represents”.

Consider for the moment, however, the legacy inherited by those children born in the Free State in 1994, now 18 years of age and able to vote. Their experience of the ANC is not that captured in the romantic rhetoric surrounding the ANC’s centenary celebrations. Indeed, it is a profoundly different one: of a series of local administrations, across eight local and national government elections, that have fundamentally mismanaged the governments they were elected to run and the public monies put in their trust to that end.

If anything, the ANC should mark its December elective conference in Mangaung not with glowing rhetoric about past victories but an apology to the people of the Free State for its present failures. It owes them that much.

Like the silence for a player lost before a football game, it would do well before it harks back to a golden era, to put its eyes to the ground and take a moment to reflect on the way its has so fundamentally broken the contract with the very people it fought to liberate.

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