Latest news with #financialmismanagement
News24
14 hours ago
- News24
Makhanda: The collapse of an iconic South African town
Makhanda's deteriorating municipal systems, including water supply, electricity, and road maintenance, have worsened. The municipality has faced consistent disclaimers of opinion from the Auditor General, highlighting severe financial mismanagement and unresolved corruption allegations. Once a significant economic contributor, the National Arts Festival has seen declining attendance, shows, and financial returns due to municipal neglect and infrastructure challenges. It was six days into the 51st annual National Arts Festival (NAF) in July this year, and yet there were no lights to welcome visitors entering the small city of Makhanda (formerly Grahamstown) after sunset, according to GroundUp. Only the occasional shop front cast patches of light along High Street between Rhodes University's Drostdy Arch and the landmark Anglican Cathedral. It was not a temporary power outage, but a situation that would persist for the rest of the 11-day festival. Municipal reports indicate this was mostly due to cable theft. Historically, the main thoroughfares would be filled with buskers, traders, and festival-goers, but the dark streets were now almost deserted. A decade ago the festival attracted 225 000 people to watch more than 600 theatre shows. It's now a fraction of that. (The municipality's population is about 100 000.) Usually the Makana Local Municipality makes an effort to temporarily patch up its failures over the festival period. Not this year. Financial mismanagement The municipality has received disclaimers of opinion from the Auditor General (AG) since the 2018/19 financial year. Prior to that, it had received qualified audits. A disclaimer of opinion is the worst finding the AG makes. It occurs when the municipality's finances are so mismanaged that the AG cannot provide documents to support its financial statements and therefore the AG cannot form an opinion. After a crumbling reticulation system left residents and festival visitors without water for days on end in 2016, erstwhile festival CEO Tony Lankester publicly stated that the biggest threat to the festival's continuation was not the paucity of arts funding, but the municipality itself. Under a majority ANC council for at least 25 years, the city has steadily and visibly deteriorated. (This reporter lived there in the 1990s and has visited the town at least once a year for more than 20 years.) Streets across the city are awash with potable water leaks and sewage overflows. Potholes are so prevalent that even some main streets are now little more than corrugated gravel. Water rationing and outages continue. Electricity outages are common. Municipal buildings are derelict from a lack of maintenance. The festival has now shrunk to 242 shows, according to NAF spokesperson Sascha Polkey. Polkey did not supply visitor numbers, but patrons were visibly thin on the ground this year. In 2013, the festival brought R349 million to the province (about R460 million today), including R90 million to the city's coffers (about R159 million in today's terms). Last year it brought in R132 million for the province, including R58 million for the city, according to a report by the South African Cultural Observatory. Off grid Residents have been experiencing water outages since at least 2012. Yet the municipality is still not able to ensure a continuous water supply to the whole town. This is despite supply dams being full. The lack of a continuous and reliable water supply has forced large revenue-contributing institutions to seek independent supplies. This in the context of a municipality with a collection rate of less than 60%, according to opposition councillors. Rhodes University, which has about 9 000 students at its Makhanda campus and is the single largest ratepayer, is moving to make itself independent of the municipality's erratic water supply. 'A significant challenge facing the university is the unreliable water supply from the Makana municipality,' said deputy vice-chancellor Professor Mabokang Monnapula-Mapesela at an alumni event on 3 July. 'The university is progressing plans to establish its own water treatment facility to process water from its borehole system,' she said, calling on alumni to assist in funding the initiative. The university communication office said it is also 'exploring renewable energy solutions'. Makhanda is home to three prestigious private schools. All have sought ways to provide a reliable water supply for their learners, staff and grounds. Managers at the Diocesan School for Girls and Kingswood College said most of the water they now use comes from their own borehole and harvested rainwater. Only St Andrew's College still predominantly uses municipal water, relying on its own supplies during water outages. Dry taps in the suburb of Tyantji may have contributed to 75-year-old resident Thandisizwe Nondlwana dying when his house burned down last month. Neighbours said they couldn't douse the flames as their taps were dry. Firefighters arrived too late. A senior firefighter told GroundUp, on condition he was not named, that the roads are so bad that it is difficult to get to an emergency in time. Teetering systems Makhanda uses about 18Ml (million litres) per day, municipal manager Phumelelo Kate said in May last year. The water is supplied from the Waainek Water Treatment Works (WTW) on the west side of the city, and the James Kleynhans WTW on the east. Retired water engineer Peter Sturrock estimates that the reticulation system has so many leaks that 28Ml needs to be pumped into the system per day for continuous, city-wide supply. As DA councillor Luvuyo Sizani put it: if you see the streets are wet, you know the water in that area is on; if the streets are dry, so are the taps. An upgrade to the James Kleynhans Water Treatment Works, which abstracts water from the Glen Melville Dam on the Orange/Fish scheme, was announced as the solution to the city's water troubles in 2015. It was meant to double the treatment works' capacity from 10Ml to 20Ml per day by 2017. It is yet to be completed. The costs have ballooned from an initial R160 million to more than R700 million to date, according to Makana Citizens Front councillor Phillip Machanik. Sturrock said the most it has ever supplied was 16Ml per day when three pumps were working full time. But the pumps burned out, and there is now only one operational pump at the James Kleynhans WTW. Two rising mains – a pipeline through which water is pumped uphill – are required to deliver the 20Ml per day target. A second was built as part of the upgrade. But the original, which takes water up to the Botha's Hill reservoir above the city, needs to be fixed. 'Time and money ran out before that was done,' said Sturrock. Although Amatola Water is in charge of the James Kleynhans upgrade, the municipality is supposed to exercise oversight and be responsible for operation and maintenance. The municipality reported to council that there is only one general worker at the treatment works when there are supposed to be six. Drought and maintenance failures In December, at the height of summer, the Howieson's Poort dam, supplying the west side of town, came close to running dry. The system is designed so that when this happens, the dam can be topped up from the larger Settlers Dam, which lies in a different catchment and is fed by the Kariega River. But, said Sturrock, when it was attempted, with just a few days of water left in Howieson's Poort, valves along the pipeline burst. It had not been checked. The pipe and pump had not been used or maintained for years. Disaster was averted when good rains filled Howieson's Poort again. However, the pipeline and valves have not been fixed, so the same problem would occur if there is another dry spell of three or four months without rain. Missing pump The 8Ml per day Waainek Water Treatment Works (WTW), which abstracts water from Howieson's Poort Dam, is working at full capacity. But municipal reports before council show it only has one operational pump, running day and night with no backup. Sturrock says there should be three: two pumps working on rotation, and a third for when one of the pumps needs servicing or repairs. There is a second pump, but as reported at the municipality's infrastructural development portfolio committee meeting of 10 July, it is 'on limp mode' and requires repair. A pump worth R2.7 million was ordered from Manco Business Enterprise in East London in July 2022, and paid for, but it has never been delivered. The engineering and infrastructure director Asanda Gidana was dismissed in November 2023. One of the two charges was for unlawfully facilitating its pre-payment. Gidana disputed her dismissal at the Bargaining Council, which ruled in her favour on both counts, and ordered she be paid six-months salary, amounting to R635 000, as she did not want her job back at the municipality. It appears Gidana was an innocent scapegoat, as the chief financial officer, the municipal manager and other municipal employees recommended and signed that the payment should be made. The commissioner making the award, Mandlenkosi Mini, remarked: With neither the pump nor its installation and connection delivered, nor any money recovered, Makana Citizens Front councillor and party leader Lungile Mxube laid a charge of fraud and corruption against the mayor, municipal manager, chief financial officer and council speaker at the Makhanda police station on 20 June. The municipality did not respond to questions on this and other issues.
The Guardian
18-07-2025
- Business
- The Guardian
Ofwat to be abolished as ministers explore creating new water regulator
England and Wales' embattled water regulator will be abolished under recommendations from a government-commissioned review due on Monday, the Guardian understands. Ministers will next week announce a consultation into creating a new regulator, to coincide with the results of a review into the water industry directed by former Bank of England deputy governor Sir Jon Cunliffe. This consultation is likely to conclude in the abolishment of Ofwat, the embattled watchdog that polices how much water companies can charge for their services in England and Wales, sources said. Ofwat has faced intense criticism over its failure to prevent sewage spills, hefty payment of dividends and ballooning debts across England and Wales's water companies. The review will recommend creation of new regulatory system. Cunliffe's review was set up by the government amid growing public anger about record sewage spills and rising bills, as well as the fraying finances of some of the biggest companies. It was announced as the largest review of the sector since its privatisation under Margaret Thatcher. At the launch of the review last year, environment secretary Steve Reed said it would 'shape new legislation to reform the water sector so it properly serves the interests of customers and the environment.' Critics of Ofwat have said the regulator presided over a culture of underinvestment in water infrastructure and financial mismanagement by water companies since its creation in 1989. The most troubling case for the government is the UK's largest water company, Thames Water, which is loaded with £20bn in debt and struggling to stave off financial collapse. Thames Water is in talks with Ofwat over a takeover by creditors who hold much of its debt, and is trying to secure leniency from fines and penalties. Should those negotiations fail, it is likely to fall into temporary state ownership via the special administration regime. Cunliffe warned in his interim review that the current regulatory system, including Ofwat, had 'largely lost public trust'. Industry leaders have also long bemoaned a lack of coherence in water regulation, with different regulators and agencies doubling up on areas of investigation. This has made it hard to have timely decisions, allowing probes to drag on rather than prevent or address environmental harm and pollution. Cunliffe had also suggested 'fundamental, structural options for integrating regulatory remits and functions'. Currently, there are three regulators for water – Ofwat, the Environment Agency and the Drinking Water Inspectorate. Sign up to First Edition Our morning email breaks down the key stories of the day, telling you what's happening and why it matters after newsletter promotion Water campaigner and former Undertones frontman Feargal Sharkey said: 'The bonfire of the quangos in the industry needs to go further, we need remedial and radical action and we demand it now. 'A regulator that has never been prepared to acknowledge its role at the epicentre of greed corruption and incompetence is just as guilty as any water company of polluting rivers and exploiting customers.' A government spokesperson said: 'We do not comment on speculation'. Insiders at Ofwat have expressed concern that scrapping the regulator without a clear plan for the future could add to uncertainty at a sensitive time for investment. However, sources said they supported combining some different investigatory and punishment powers within one regulator – even if it cost them their jobs. One insider said 'simply scrapping Ofwat would not be a quick fix'. 'If this were an easy way to avoid putting Thames Water into special administration, I think the government would have done it already,' they added. A senior Whitehall source said they feared the politicisation of regulatory changes could make it harder to attract investment for the water industry in the short and medium term. 'Investors need to know what they are buying,' they said. 'That includes regulation.' On Friday it was revealed serious pollution incidents by water companies were up 60% last year compared with the year before. The total number of serious pollution incidents in 2024 was 75, up from 47 in 2023, Environment Agency figures showed. Of these, 81% (61) were caused by three companies: Thames Water (33), Southern Water (15) and Yorkshire Water (13). Thames Water's serious incidents more than doubled from 14 to 33. Ofwat declined to comment.
The Australian
16-07-2025
- Business
- The Australian
Chaos and confusion at First Guardian investment fund
The directors of First Guardian Master Fund are facing serious allegations of financial mismanagement as investors fret about their futures. Nothing has been proven in court, and neither David Anderson or Simon Selimaj have responded to The Australian's requests for comment. Find out more about The Front podcast here. You can read about this story and more on The Australian's website or on The Australian's app. This episode of The Front is presented and produced by Kristen Amiet, and edited by Jasper Leak, who also composed our music. Our regular host is Claire Harvey and our team includes Lia Tsamoglou, Tiffany Dimmack, Joshua Burton and Stephanie Coombes.
Yahoo
15-07-2025
- Business
- Yahoo
State auditor releases full report on Mesalands Community College
Jul. 14—A state auditor's report into Mesalands Community College in Tucumcari dating back several years found the school's spending at one point put it in danger of shutting down. The report found the college submitted inaccurate fiscal reports and increased salaries for certain high-level staff members, among other examples of financial mismanagement. It also scrutinized the school's contracting process on at least two occasions and that the president had hired family members. The New Mexico Office of the State Auditor intervened in 2023 and plans to assist the college until 2028. The auditor predicts that by next year, the college could be financially stable. However, the auditor's office said the situation at Mesalands could have been caught earlier and pointed the finger at the state's Higher Education Department (NMHED) for not recognizing the issues at the school sooner. "While inaccurate reporting was provided to NMHED over many years, NMHED did not take action or begin to request the necessary corrective measures from the college until November 2022," State Auditor Joseph Maestas said in an interview last week. "This delay in oversight allowed the college to continue operating without the required financial transparency and independent oversight for a significant period." In a letter obtained by the Journal sent to NMHED Secretary Stephanie Rodriguez, Maestas said the "audit determined that the statutory authority of NMHED was significantly undermined" and also that he "strongly urge(s) the implementation of robust review and verification protocols to independently confirm the accuracy of financial reports submitted by higher education institutions across the state." "Who's to blame here? I think it's a draw, and that's the way that this is posed, but our letter to NMHED is we're telling them, 'Hey, this happened on your watch, and you guys really need to double-check the breath and the substance of your oversight of higher education institutions across the state,'" Maestas said. He also thinks it's possible the agency dropped the ball in Silver City, failing to provide adequate oversight to Western New Mexico University, where its former president, Joseph Shepard, was hit with an investigation in 2024 by the auditor's office — and a subsequent lawsuit from the state's ethics commission — for "lavish" spending. NMHED acknowledged the letter Monday and said that it "provided governance and financial oversight for the college to address the concerns." "The New Mexico Higher Education Department fully supports the concerns outlined in the audit and in the letter from the Office of the State Auditor, as we have been collaborating on this effort for some time now," NMHED spokesperson Auriella Ortiz said in a statement. The repot found that the college awarded a contract to a company owned by someone employed by the school, and another contract was awarded to a company owned by the spouse of someone who was a high level employee of the college's, both raising concerns about conflict of interest. Additionally, the report said that then-President Gregg Busch hired his wife and son to positions at the university — raising the question of nepotism — and that he also took multiple trips of "questionable value" to the college. The report also states that at one point, the school's financial health reached the point of "insolvency," and conversations took place about Eastern New Mexico University taking over the community college, which Eastern New Mexico confirmed on Monday. The state auditor said that the sale likely would have happened and would've "sent a chill" in the community had his office and NMHED not gotten involved. "Mesalands offers a very unique kind of careers, I think nursing and renewable energy, they have that niche," Maestas said. "I think that would be thrown into this period of great uncertainty, and it could have had negative economic consequences on the city." The college, which serves just under 1,000 students in the city of roughly 5,000, increased its reserve fund to around $2.1 million by the end of 2024 fiscal year, a sizable improvement, according to David Peña, director of policy for the auditor's office. The college's leadership also feels it's turning a corner. "I feel like we're in a really great position right now where we can actually start expanding the programs that we can offer our community," Mesalands President Allen Moss said in a phone interview on Monday. Moss joined the college in 2022, leaving his job as superintendent of a rural southern Missouri school district to become the director of Mesalands' small business development center and was eventually promoted to interim, then full-time president of the school. While he said he was not surprised by the auditors' report findings and appreciates the office's assistance to the college, he takes issue with the report's tone. "It's difficult not to take those things personally because even though a lot of my staff and I weren't a part of that, you're still talking about the college," Moss said.
CTV News
27-06-2025
- Business
- CTV News
Ontario taking over 4 school boards, including TDSB, following spending probes
Education Minister Paul Calandra speaks during Question Period at Queen's Park in Toronto on Tuesday, May 13, 2025. THE CANADIAN PRESS/Cole Burston Ontario's education minister is taking control of four school boards, including the Toronto District School Board (TDSB) and Toronto Catholic District School Board (TCDSB), to address what the ministry called ongoing cases of financial mismanagement. Paul Calandra made the announcement on Friday and said that the boards, which also include the Ottawa-Carleton District School Board (OCDSB) and Dufferin-Peel Catholic School Board (DPCDSB), 'failed' in their responsibility to parents and students by 'losing sight' of their core mission: 'ensuring student success.' 'We're strengthening oversight and accountability so that parents can have the confidence that every dollar is spent responsibly to directly benefit students. I have made it clear that if a school board veers off its mandate, I will take action to restore focus, rebuild trust and put students first,' Calandra said in a news release. He said supervisors will be assigned to each board to address the alleged misspending, growing deficits and depleting reserves. According to the government, the TDSB has rejected 46 per cent of proposed cost-savings brought forward by management and also relies 'heavily on unsustainable proceeds' from asset sales to balance its books. Meanwhile, the TCDSB tripled its in-year deficit compared to last year and is at risk of default in 'the coming years,' the ministry said. The province also said that the OCDSB has 'completely depleted its reserves' and the DPCDSB is at risk of financial default by August 31, 2025. Investigations into spending at the school boards in Toronto and Ottawa were launched by Ontario's education ministry in April. The financial probe at the Peel board started in June. Previously, the government appointed a supervisor to the Thames Valley District School Board for alleged misspending, which included a staff retreat to Toronto that cost about $40,000. It also ordered the Brant Haldimand Norfolk Catholic District School Board to repay the cost of a trip to Italy, where four trustees spent $100,000 on art for schools. Last month, Calandra threatened to take over the finances of the Toronto District School Board if it didn't get its spending in order. Officials with the city's largest school board said at the time that the province was 'deflecting' its responsibility in launching the financial probe, as it said its schools were being underfunded. TDSB trustees have since passed a budget that would eliminate its $34.4 million deficit over the next two years. The TDSB has not yet commented on the change. The province previously announced a record $30.3 billion in funding for schools next year, but teachers' unions argued at the time that the funding doesn't go far enough. With files from The Canadian Press
