Local Government, Environ-mental Affairs and Development Planning
With reference to the investigations into the funding of Knysna Tourism, or Knysna & Partners, by attorneys Cliffe Dekker Hofmeyr and De Swardt Vogel Myambo:
(1) (a) What is or was the contact period of the Knysna & Partners contract signed on 11 July 2017, which was the subject of the De Swardt Vogel Myambo report, (b) what payments (dates and amounts) were made to Knysna Tourism and/or Knysna & Partners by the Knysna Municipality in terms of the contract signed on 11 July 2017, (c) why was the contract concluded despite the legal advice of Cliffe Dekker Hofmeyr, which was dated 23 May 2017, that the contract was illegal and (d) why was a payment made to Knysna & Partners, which requested on 1 July 2017, in the amount R1 million, when the contract was only signed on 11 July 2017;
(2) whether De Swardt Vogel Myambo was given an additional 30 days, as requested in their report, to complete the investigation into the payments to Knysna & Partners; if not, why not; if so;
(3) whether the investigation has been concluded; if so, (a) what were the findings and (b) recommendations;
(4) whether any steps have been taken by the Knysna Municipality to recover any irregular, unauthorised and/or fruitless and wasteful expenditure from Knysna & Partners; if not, why not; if so, what are the relevant details;
(5) (a) when did he first become aware of the legal opinions on the funding of Knysna & Partners and/or Knysna Tourism and (b) what steps or actions did he or his Department take?
4.1 The Municipality reported that: -
(a) The contract period was for 12 months, from 1 July 2017 to 30 June 2018; and
(b) The total value of the contract was R4 Million, which was paid quarterly.
(c) The Municipality reported that the legal opinion from Cliffe Dekker Hofmeyr dealt with utilising Section 67 of the Municipal Finance Management, 56 of 2003, as a funding model to fund tourism and marketing related services. However, the agreement concluded between the Municipality and Knysna & Partners on 11 July 2017 was not entered into in terms of the provisions of Section 67 of the MFMA but was a deviation as provided for in Regulation 36 of the National Treasury Supply Chain Management Regulations. Regulation 36 authorises a Municipal Manager to deviate from a Supply Chain Management Process if the criteria set out in Regulation 36(1)(a) is met.
(d) The Municipality reported that the payment was only made to Knysna & Partners in August 2017.
2. The Municipality reported that Council resolved that no further investigation was necessary as Council has all records of payments to Knysna & Partners and that the CDH opinion already regarded payments made in terms of the provisions of Section 67 of the MFMA to be irregular.
3. The Municipality reported to my Department that no further investigation took place.
4. The Municipality reported that Knysna & Partners delivered tourism related services on behalf of Knysna Municipality. In order to deliver those services, funds were transferred to Knysna & Partners as a Grant-In-Aid. The Municipality holds the view that it is an accepted practice currently implemented by most, if not all municipalities within the Republic of South Africa, to utilise the services of tourism organisations, to perform tourism and destination marketing services. For this reason, the Municipality is of the view that it cannot concede that such funding amounts to irregular, fruitless and wasteful expenditure. In their view value for money was received.
5. (a) I became aware of the Legal Opinion by Cliffe Dekker Hofmeyr by way of
the findings of the report compiled De Swardt Vogel Myambo Attorneys, in
September 2018.
(b) As the Municipality has already taken remedial steps it was not deemed necessary for my Office to, at that stage, take any further steps or actions. However, I was part of discussions with the Municipality led by the Minister of Finance at the time dispensing Supply Chain Management advice on proceeding with the matter.
