UNCOOPERATIVE GOVERNANCE: NMB coalition pushes to write off R23bn irregular spending, bypassing legal requisites

Nelson Mandela Bay’s Municipal Public Accounts Committee has voted to recommend the write-off of R23bn in irregular expenditure accumulated between 2009 and 2021, despite concerns that the required investigation has not been completed.

The Democratic Alliance (DA) in Nelson Mandela Bay has requested urgent intervention from the National Treasury and Auditor-General after the metro’s Municipal Public Accounts Committee (MPAC) voted to write off R23-billion in irregular expenditure without investigating potential recoveries or enforcing accountability.

This follows growing pressure from the National Treasury for the City to curb its escalating unauthorised, irregular, fruitless, and wasteful expenditure (UIFWE), which has already led to grant funding being withheld.

The proposed write-off triggered a heated debate among MPAC members, with DA and ACDP councillors arguing that the process was unlawful.

The recommendation was carried after ANC and EFF councillors, who hold a majority on the committee, voted in favour. The matter must still go to the council for final approval.

Section 32 of the Municipal Finance Management Act (MFMA) requires a municipality to recover unauthorised, irregular, fruitless and wasteful expenditure from the person liable for it, unless a council committee has investigated the expenditure, found it to be irrecoverable and recommended that it be written off.

The section further states that the writing off of the UIFWE as irrecoverable is no excuse in criminal or disciplinary proceedings against a person charged with an offence or breach of the MFMA relating to such expenditure.

The metro's R23-billion irregular expenditure bill accumulated between 2009 and 2021, prompting the then acting city manager, Mandla George, to appoint the law firm Joubert Galpin Searle to advise the municipality on how to deal with the outstanding expenditure.

A legal opinion from the firm holds that all UIFWE items must be investigated individually and, where possible, processes to recover the funds and consequence management must be implemented.

“It is thus clear that the recovery of UIFWE from municipal officials and political office-bearers occurs in terms of section 32 of the MFMA. It goes without saying that a recovery of UIFWE is only possible if the UIFWE is recoverable. If UIFWE is written off as irrecoverable by the council, the municipality remains obligated to pursue consequence management in the form of criminal or disciplinary proceedings against both municipal officials and political office-bearers in terms of section 32(5) of the MFMA,” the opinion stated.

The legal opinion further stated that, even where expenditure is declared irrecoverable, the municipality must consider whether any resulting loss or damage can be recovered from municipal officials or political office-bearers under section 176(2) of the MFMA.

“This avenue may be available to the municipality if municipal officials or political office-bearers have deliberately or negligently failed to discharge their recovery obligations in terms of section 32 of the MFMA because of which the UIFWE has become irrecoverable.