Picture – Knysna’s current Municipal Manager Dr Vatala – are his days numbered?
It seems that Knysna Municipality is holding its collective breath at the moment as all wait to see if Dr Sitembele Wiseman Vatala becomes the third Municipal Manager in succession to leave the local authority under a cloud.
This after Knysna Municipality landed in such a cash-strapped position that there is a question as to whether February’s salary bill can be met.
At the Council Meeting on 30 January, the blame for this situation was put squarely on Vatala’s shoulders by a majority of councillors, who eventually voted for a motion that he be given seven days to give written reasons why he should not be suspended for, in basic terms, mismanagement of the Municipality’s finances. This motion, proposed by DA’s Peter Myers, was carried eleven votes to nine.
It seems that this huge cash-flow problem is a result of the expenditure of approximately R66 million over budget, and under-performance in revenue collection of R16 million. Furthermore, approximately R26 million of the Municipality’s own funds has been used for advanced funding of projects set to be paid for through National and Provincial Government grants.
This left the Municipality as at 31 December 2019, with a cash deficit of almost R10 million.
“How could this happen?” asked Councillor Peter Myers, “How did we get into this situation, from a perfect budget passed midway through last year, to the dire situation we are in now?”
He believes that the Municipal Manager had ignored the warning signs.
“In terms of the Municipal Systems Act, the Accounting Officer – that is the Municipal Manager – is ultimately responsible for the management of the Municipality’s income and expenditure,” he said.
Whilst there were no accusations of theft or corruption made at the lengthy and rather feisty council meeting, it was more than evident that the knives were out and it was Vatala’s head that was on the block.
The Chief Financial Officer Mbulelo Memani was also at the meeting, and presented, on behalf of the Municipal Manager, a Draft Cash Management Plan, explaining how they had got into trouble and including several remedial actions to try and right the severely listing ship. They were:-
• To immediately arrange an overdraft facility with the bank. This is necessary for only short-term bridging finance, and may not exceed the capital projects earmarked to be financed from borrowing.
• The capital projects earmarked to be financed from loans must all be reconsidered and only those projects which are absolutely essential must continue. The other projects should be delayed, or cancelled.
• The projects which they would continue must then also be financed from loans.
• The calculated capital needed for these projects must be immediately borrowed, and not involve waiting until the projects are completed.
• All future capital projects to be financed from loans, until the municipality has recovered from the cash flow deficit and has rebuilt a healthy Capital Replacement Reserve.
• A moratorium should be placed on the filling of all budgeted vacancies, except where it is again absolutely critical for essential service delivery. This must prevail until a proper work-study is conducted, in order to ensure that the organogram is aligned to the Integrated Development Plan (IDP) which is efficient, affordable and sustainable.
However, Councillor Myers said he did not want Vatala steering the ship any longer, reasoning that the person who had allowed the Municipality to get into such a precarious financial position should surely not be the one in charge of the recovery plan.
Vatala was particularly aggrieved by the suggestion that he was to blame, calling the proposal for his suspension an illegal move. But not even his vocal threat to personally sue any councillor who did not vote in his favour was enough to deter the majority.
Since the motion was passed, the Municipal Manager has been issued with a written notification, the deadline for his reply being Monday 10 February. What response, if any, he has given will only come to light at the Special Council Meeting set for Thursday 13 February.