Gqeberha court stops ‘mind-boggling' reinstatement of municipal manager guilty of financial misconduct

Daily Maverick

23-04-2025

The Gqeberha Labour Appeal Court has ruled that it is illegal for an arbitrator to order that a municipal manager, found guilty of financial misconduct, be reinstated in local government.
A judge from the Labour Court in Gqeberha has stopped an award, made by an arbitrator in the Local Government Bargaining Council, saying it would be illegal to reinstate a municipal manager who was found guilty of financial misconduct.
Judge Peter Kroon made the ruling in the case of the Inxuba Yethemba Municipality – based in Cradock but responsible for the towns of Cradock and Middelburg – against its former municipal manager Xolela Msweli.
'Public confidence in government institutions depends on the officials who are duty-bound to serve the people, doing so diligently and with integrity. Public servants are the stewards of the trust of the populace. Accountability, whether disciplinary, civil or criminal, is one of the measures embraced by the Constitution… to combat the culture of impunity which haunts our administration,' Kroon said.
He added that the Municipal Systems Act provides that a person, found guilty of financial misconduct, be barred from employment in local government for 10 years.
'The mischief which the Legislature sought to eradicate in the above section was the hasty welcoming back of municipal employees (who had been dismissed for financial misconduct) into the fold of Local Government. One might say that it was the intention of the Legislature that employees who are dismissed from a municipality for financial misconduct should take at least 10 years, as it were, to rehabilitate themselves before they can be re-employed by a municipality,' Kroon added.
'In this matter, the Arbitrator did in fact confirm that Mr Msweli was guilty of financial misconduct, yet he ruled that he could return to the municipality notwithstanding the fact that less than a year had passed since his dismissal,' Kroon said, explaining why he had overturned the award made by the arbitrator.
'On the face of it, it is arguable that the award is in direct conflict with a statutory prohibition,' he added.
'Accountability is an antidote to the bovine apathy which casts a shadow over our state organisations. Without accountability we see, in real time, the whittling away of the cornerstones of democracy and the inexorable descent into a regime where maladministration is normalised.
'When public servants who are guilty of malfeasance are led to feel safe in the knowledge that their misconduct will have no real consequences, the negative outworkings are pervasive. Service delivery is compromised. Those who suffer are the vulnerable and the powerless. The damage done by sustained unaccountability runs deep. It may take generations to undo. Often, many years after the fact, wasteful and expensive litigation must be embarked upon to right the wrongs which mismanagement and abuse of power have left in their wake,' he added.
Msweli was dismissed by the Inxuba Yethemba Municipality in April 2021. But in September that year he was reinstated by an arbitrator at the bargaining council who ruled that his dismissal was substantively unfair.
The arbitrator determined that, although Msweli was guilty of financial misconduct, the sanction of dismissal was nevertheless too harsh and he should be reinstated, but with no back-pay.
The municipality, however, decided to take this ruling on review to the Labour Court.
Kroon said the ruling that Msweli be reinstated could not stand.
'The overarching section 195 of the Constitution provides that administration within government must be accountable, that a high standard of professional ethics must be promoted and there must be an efficient, economic and effective use of resources,' he said, adding that these provisions are designed 'to ensure that municipalities fulfil their constitutional duty to deliver services to the communities they serve in a sustainable manner'.
'Municipalities have shown themselves to be vulnerable targets when it comes to corruption, nepotism, cronyism and even institutional capture. It is thus imperative that procurement should be free from any appearance of improper interference or influence,' Kroon added. 'National Treasury has, through its circulars, stressed that audit findings have revealed that municipalities have been guilty of unsound financial management, including the circumvention of official competitive bidding processes. It has frequently stated that the relevant provincial treasuries are available to assist municipalities should guidance be required.'
He said it was not disputed that Msweli had appointed a service provider on a contract worth millions of rands without following any supply chain management procedures. Msweli argued that he was allowed to procure services under emergency provisions because they were pressed for time and faced losing potential funding.
Msweli said he had reported the emergency deviation to the mayor and the mayor should have told the town council.
The arbitrator found that supply chain management regulations were not followed in the appointment of the service provider and that Msweli did not take 'one step' to report what he had done.
'However, in my view, more could and should have been said about the gravity of the misconduct, having particular regard to the context within which it was committed as well as the disingenuous manner in which Mr Msweli mounted his defence and gave his evidence,' Kroon said.
The judge said the nature of the agreement with the service provider was patently unlawful. In essence the municipality agreed that the company would draw up a business plan for them for free and then would get to do the work as the municipality receives the funding.
'This arrangement has the characteristics of what in legal parlance is called touting. To put it crudely, the arrangement was that the Service Provider, motivated by the promise of a large amount of open-ended work being given to it in the future, would compile a business plan free of charge. In my view, this type of quid pro quo arrangement in terms of which a service provider effectively 'buys' further work by performing other work for free [violates the Constitution],' Kroon added.
'This is for the obvious reason that, at the end of the day, the Service Provider will, in terms of the agreement, be given work worth potentially millions of rands to the exclusion of its competitors and without having to participate in a procurement process. Such a state of affairs would not only be unfair and untransparent, but it would provide fertile ground for abuse by the Service Provider and it would all but be a certainty that the Municipality would not receive the best value for money.'
Kroon added that Msweli could not rely on the fact that the municipality's chief financial officer had stopped payment to this company.
'Msweli sought to make capital out of the circumstance that the Municipality did not suffer any financial losses and appeared to contend that he should, for that reason alone, effectively be immune from criticism or culpability. I find this argument to be contrived, cynical and self-serving. It is akin to contending that someone who drives home intoxicated is not culpable if he does not have an accident or that a security guard who falls asleep on duty is not culpable if, by good fortune, the premises, which he was supposed to be guarding, are not burgled,' Kroon said. 'Nothing further needs to be said about this argument, save to state that the absence of logic in it is surpassed only by its lack of substance.'
He continued that it was also significant to him that when the CFO stopped the payment there was 'not so much as a semblance of an objection by Mr Msweli'.
'He did not, by way of illustration, confront the CFO and inquire from him as to how he, as a junior employee reporting to him, could effectively overrule him. He also did not attempt to justify his conduct… In short, he acted as one would expect an official to act who has been caught red- handed engaging a service provider without having followed any [supply chain management] procedures,' Kroon continued.
'He can consider himself fortunate that he has not been criminally charged. Either way, it is mind-boggling to think that an Appeal Court [in another case] can find that the type of conduct in question is deserving of a two- year custodial sentence, yet an arbitrator can take the view that the conduct was not sufficiently serious to warrant dismissal.' DM