It’s not often that law enforcement steps in to deal with delinquent municipal officials. After all, South Africans have come to accept that anything goes at their local government offices: phones aren’t answered, paper isn’t available for printing customer statements, e-mails receive no replies, and electricity and water networks fall apart.
However, a recent arrest and further court action expected next week are part of an apparent crackdown against corruption in which municipal workers have been victims and their bosses the alleged culprits.
The Hawks arrested a former acting municipal manager in a rural part of the country. Johnny Mackay, head of public works in the Northern Cape, appeared on charges stemming from his former employment as the acting municipal manager of Kai !Garib municipality (Kakamas, Kenhardt and Keimoes). He appeared in the Upington magistrate’s court and was released on R5,000 bail.
According to Mojalefa Senokoatsane, spokesperson for the National Prosecuting Authority in the province, Mackay failed to pay municipal employees’ retirement fund contributions. He faces 271 charges of contravening the Pension Funds Act, which requires employers to pay retirement fund contributions on or before the seventh day of the month. The offence carries a R10m fine or a jail sentence of 10 years.
TimesLIVE reported that contributions worth R9m weren’t paid to the Consolidated Retirement Fund for Local Government between September 2021 and March this year, according to Hawks spokesperson Nomthandazo Mnisi.
“We welcome the arrest of the [former] municipal manager of Kai !Garib and we are glad to see that the Hawks are taking these matters seriously,” says Johan Koen, general secretary of the Independent Municipal & Allied Trade Union (Imatu).
Kai !Garib is not the only municipality guilty of not paying worker contributions to third parties, including retirement funds, medical aid schemes and Sars. And those municipalities are concentrated in South Africa’s poorer provinces.
“The problems are mainly in the Northern Cape, North West and Eastern Cape,” says Dumisane Magagula, general secretary of the SA Municipal Workers Union. He says the money deducted from workers’ salaries must, by law, be paid to the third parties.
Imatu, which has about 100,000 members among those working in local municipalities, is on the warpath.
Koen says the union laid criminal complaints against officials in three other municipalities: Kheis! (Groblershoop), which abuts Kai !Garib, Mafube (Frankfort) and Mantsopa (Ladybrand).
“A number of retirement funds have obtained judgments against these defaulting municipalities,” Koen tells the FM. “However, when it comes to executing the judgments, the municipalities do not have assets to attach.”
Koen says Imau laid the complaints against Kai !Garib and the other three municipalities a while ago but nothing transpired until the arrest of Mackay as well as the former CFO of Mantsopa municipality. According to a subpoena seen by the FM, Sello Nyapholi was summoned to appear in the Ficksburg magistrate’s court.
Along with retirement funds and medical aids, Sars also loses out on pay-as-you-earn payroll tax, the skills development levy and contributions to the Unemployment Insurance Fund (UIF).
In a request to Sars to disclose the aggregate values of municipalities’ debt, the revenue agency invoked the usual confidentiality clause: “Sars is prohibited by the Tax Administration Act to discuss confidential taxpayer information. That includes information about investigations. We are therefore not in a position to respond to your mail.” The FM had not asked for any individual taxpayer’s details.
Also not forthcoming with responses to questions, though it promised to do so, was the SA Local Government Association.
The Financial Sector Conduct Authority (FSCA) has also stepped in to guide retirement fund trustees in dealing with delinquent municipalities.
“Imatu has taken note that the FSCA has published a conduct standard ... on August 19, in terms of which it is the responsibility of the boards of trustees of funds to lay criminal charges against defaulting employers, including municipalities, in cases where the nonpayment has exceeded 90 days,” says Koen.
“They will be obliged to lay charges within 14 days of the 90-day period expiring,” he says.
The first 90-day period will expire on December 7, following the issue of the conduct standard by the FSCA. Koen says Imatu “will be monitoring whether boards of trustees of affected funds have complied”.
“We will also continue to lay criminal charges against officials responsible for nonpayment,” he says.
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