Nelson Mandela Bay mayor accused of ‘financial misconduct' over funding rollover for flood disaster projects

Daily Maverick

3 days ago

The ANC-led coalition government in Nelson Mandela Bay on Thursday rammed through the approval of a 'top up' from city coffers to fund flood disaster projects that were intended to be financed by a R53-million conditional grant.
While the Nelson Mandela Bay metro remains at high risk of losing R53-million in flood disaster funding for Kariega, Executive Mayor Babalwa Lobishe on Wednesday urged council to approve that a top-up amount be paid from city coffers to fund the shortfall in the projects.
According to council documents, the metro has spent R1.6-million of the proposed R52.3-million so far — and the mayor wants R7-million from the Roads and Stormwater budget to be reprioritised for flood projects as a 'top up'.
Democratic Alliance councillor Rano Kayser pointed out to the mayor that the rollover for the funding had not yet been approved by the National Treasury.
He cited a Treasury circular stating that rollovers would not be granted in cases where key positions such as city manager and chief financial officer (CFO) have been vacant for more than six months — or where CFOs have been serving in acting roles beyond that period.
Kayser said the city failed to spend the money in time. 'The Acting City Manager gave us the assurance that the money will be spent,' Kayser said. 'He even boldly said he visited Kariega, but after all these visits he still failed to spend the R53-million.'
In June 2024, Kariega was hit by devastating flash-flooding after a cloud burst dumped 230mm of rain in the area in less than two hours. In October, heavy rains in the metro again damaged parts of Kariega and Gqeberha.
But as it was a conditional grant, there was a limited time during which the money could be spent.
The metro did not spend the money in time and now has to apply for a rollover of funds.
In a letter addressed to Lobishe, Kayser pointed out that the metro must apply for a rollover of the funds by 31 August and a decision in this regard will only be made by 22 October.
He said despite no application for a rollover being made by the metro, Lobishe has now asked the metro to approve a 'top-up' budget to be paid from the metro's budget.
This, Kayser pointed out in his letter, was 'financial misconduct. This item illustrates the failure and incompetence of the administration. The item is misleading to the council.'
He stressed in council that no rollover of the funding had been approved. On its social media pages, the metro claimed the council approved the rollover of funding, but added that this must still be approved by National Treasury.
'I wrote to the executive mayor tabling the allegations of misconduct,' Kayser added. 'She has 7 days to bring the item to council. It has all the elements of misconduct.'
He said the metro, through its failure to spend the money, had lost R53-million. 'It may be in the bank account, but it cannot be used. For every project relating to the floods the money has been lost.'
The ACDP's Lance Grootboom agreed. 'This is conditional funding. You must apply to the National Treasury for a rollover first,' he said. He pointed out that Treasury was clear in a circular that no rollover requests will be considered where a municipality has a vacant CFO post or had a CFO in an acting position for more than six months. Added to the risk, Grootboom pointed out, is that the metro's city manager has been on suspension (since 2023).
'It is basically an illegal request,' he said. 'You want the metro to top up the money, but you will only get an answer [later].' He later said the issue would have to be addressed by the Standing Committee on Public Accounts.
The metro has a pattern of underspending grant funding from National Treasury and has in the past three years lost millions.
The MMC for Budget and Treasury Khanya Ngqisha said the opposition was telling the metro not to spend the money.
'We have an accounting officer. He doesn't take decisions without advice.
The problem is that some of the political parties listen to wrong advice from junior officials.' He admitted that no money was spent yet. 'If there is anything wrong, the Auditor-General will deal with it.'
Acting City Manager Ted Pillay said Lobishe's request should be amended to indicate a budget adjustment instead of a rollover.
This was then approved by the council. However, Lobishe then later, after voting, said she didn't want the changes proposed by Pillay. 'He had no right to correct my item. I didn't fix it myself.'
A second decision, this time based on the original, unamended item, was then passed — despite objections from opposition councillors, who argued this violated council procedures. They said the proper route was for the Speaker to take the item on review. DM