Dyantyi on possible occurrences of maladministration, fraud, corruption or
other serious malpractice in the City of Cape Town
28 November 2007
I have decided to institute an investigation in terms of Section 106(1) (b)
of the Municipal Systems Act into possible fraud, maladministration, and
serious malpractice in the City of Cape Town.
The city submitted information to me about the George Fivaz and Associates
(GFA) matter after I requested this information on 26 October and 14 November
2007. I am extremely concerned about what I have read. It indicates that the
city manager has identified discrepancies in the invoices submitted by George
Fivaz and Associates. This includes an invoice for a GFA consultation meeting
with a "Botha" that took place on 21 May 2007, which was before a quote was
submitted for the work to be carried out. More worrying is that the GFA
quotations identify the client as a "party" and not as the city.
The city is entitled to address issues around possible breaches of the code
of conduct of councillors. However, the documentation suggests that the
investigation was for intelligence purposes, rather than for assessing
compliance with the code of conduct.
In light of these serious concerns, I am duty-bound to investigate the
possible breaches in governance and procurement procedures in the city. Mayor
Zille has initiated her own investigation, but it focuses mainly on whether the
investigation authorised by the speaker is warranted. The more fundamental
question is, was the investigation lawful?
The Section 106 investigation will take the form of a commission, which will
be appointed by the premier in terms of the Western Cape Provincial Commissions
Act. I will designate three commissioners with local government, legal, and
forensic expertise and will announce their names within a week.
The Commission's Report will be finalised by 31 January 2008. An important
input into this investigation will be the mayor's report, which is due to be
finalised by 31 December 2007. This process is independent of probes by any
other organs of state.
Background document to press statement
I have decided to implement an investigation as contemplated in Section
106(1)(b) of the Local Government: Municipal Systems Act, 32 of 2000 (MSA),
into possible occurrences of maladministration, fraud, corruption or other
serious malpractice in the City of Cape Town relating to the decision by the
speaker of the city to ostensibly institute an investigation in respect of the
code of conduct for councillors into the activities of Councillor Baddish
Chabaan, the procurement of the service provider George Fivaz and Associates
(GFA), the implementation and methods followed in the investigation, supply
chain and financial management issues related to the procurement of the service
provider and the submission of invoices and payment by the city to GFA as well
as all matters related therewith.
The decision to implement the investigation is based on information received
from the city manager in reply to two notices that I have sent to him in
respect of Section 106(1) (a) of the MSA.
The first notice requested the city manager to provide information within
seven days on the following questions:
* whether an investigation was conducted in terms of the code of conduct for
councillors regarding threats made by councillors, and if so, what was the
outcome of such investigation and did the investigation authorised by the
speaker conform to the requirements of the code
* whether electronic surveillance and recorded conversations took place within
the parameters of relevant legislation
* whether the authorisation for payment to the investigator by the speaker
conformed to section 11 (read with section 65) of the Local Government:
Municipal Finance Management Act, 2003 (the MFMA)
* whether the process of procuring the services of George Fivaz and Associates
complied with council's procurement policy and procedure and the MFMA
* whether payment was made to George Fivaz and Associates prior to following
the above policy, procedures and the MFMA?
The city manager responded through a letter dated 29 October 2007. He
referred questions one and two in the notice of the MEC for the attention of
the speaker of the city of Cape Town. The speaker responded to these questions
through a letter dated 1 November 2007. In this letter the speaker stated his
view that the investigation instituted by him conformed to all legislative
requirements and that an external service provider was procured to perform the
investigation.
In respect of the remaining questions the city manager stated that the
procurement of George Fivaz and Associates as well as all payments made to them
conformed to the requirements of the Municipal Finance Management Act (MFMA) as
well as council policies and procedures.
I followed up my initial notice with a second notice to the city manager in
which I requested him to provide me with the following information:
* copies of quotations received from the service providers
* correspondence engaging George Fivaz and Associates
* any written agreement between the City of Cape Town and George Fivaz and
Associates
* invoices
* proof of payment
* any other related documents.
The city manager responded through a letter dated 21 November 2007. Some of
the matters raised by the city manager in this letter include:
* a commitment by the city manager that his office will fully co-operate if
the MEC should take action in terms of section 106 of the MSA. (It must be
noted that the MEC is already taking action in terms of section 106 of the MSA,
it can be concluded that the city manager refers to the use of section
106(1)(b) of the MSA.)
* an assurance that the city manager is committed to resolve and address any
corrupt or fraudulent activities or any mal-administration that might have been
committed
* that the services of GFA have been ended
* that discrepancies have been identified in respect of invoices submitted by
GFA to the City
* that no written letter of appointment or any other written agreement between
the city and GFA exist
* that the city manager is in the process of gathering information, independent
from the investigation announced by the Executive Mayor of the City of Cape
Town and that this process should be completed by 30 November 2007
* that remedial steps, if any, will be taken by the city manager based on the
above process
* that the MEC is requested to place his current course of action on hold until
the above process is completed.
The terms of reference of the commission will be as follows:
* to establish the legality and lawfulness of the investigation ostensibly
authorised by the Speaker of the City of Cape Town in terms of Item 13 of the
Code of Conduct for Councillors
* to establish whether the City of Cape Town or its political and
administrative office bearers reported their suspicion of criminal activity by
Chabaan to the South African Police Service, if yes when, if not, why not
* to establish whether the city paid for work done by GFA before they were
appointed by the city and whether such payment constitutes an irregular
expenditure
* to establish whether the city received value for the expenditure that it
incurred in respect of the contract with GF and Associates
* to establish whether any other service providers were engaged by the city for
any matter related to the investigation ostensibly authorised by the Speaker of
the City of Cape Town in terms of Item 13 of the Code of Conduct for
Councillors, if there were, what are the results of the work done by the
service provider/s
* to establish whether the contract between the City of Cape Town and GFA makes
provision for the gathering of intelligence and electronic surveillance of
councillors and other persons and if yes, whether this is legal and
lawful
* to establish whether any provision of the MFMA and the regulations issued in
terms of it were transgressed
* to establish whether any policies of the council and/or its political and
administrative structures were transgressed
* to establish whether it is ethical and legal in a democratic society based on
the supremacy of the Constitution and the rule of law for the city to conduct
covert surveillance of councillors and record the conversations of councillors
without their knowledge
* to establish whether the city paid for work done in the interest of a
political party or parties as apposed to the interest of the city
* to establish whether any laws were transgressed by the city and/or its agents
in the procurement and implementation of the contracts with GFA
* any other matter brought to the attention of the commission.
The commission will commence with its activities as soon as possible and
will be expected to report to me by 31 January 2008.
Enquiries:
Vusi Tshose
Media Liaison Officer
Tel: 021 483 4466
Fax: 021 483 4953
Cell: 083 581 5265
E-mail:vtshose@pgwc.gov.za
Issued by: Ministry of Local Government and Housing, Western Cape Provincial
Government
28 November 2007
Source: Western Cape Provincial Government (http://www.capegateway.gov.za)
