Local Government, Environ-mental Affairs and Development Planning
With regard to the dismissal of a certain person, whose name has been furnished to his Department for the purpose of his reply, from the George Municipality in 2020, and noting that this person has recently been appointed as Acting Municipal Manager of the Kannaland Municipality:
- Whether he is aware of the dismissal of this person from the George Municipality; if so, (a) what are the relevant details, (b) can copies of the disciplinary outcomes of this case be provided and (c) what are the details of the (i) charges, (ii) findings and (iii) sanctions imposed on this person;
- what process was followed in the appointment of this person as Acting Municipal Manager;
- whether his dismissal was considered when his appointment was made; if not, why not; if so, what are the relevant details?
1) I am aware of the fact that Mr Keith Jordaan was dismissed at George Municipality in 2019, where he held the position of Chief Financial Officer.
The dismissal of Mr Keith Jordaan resulted from cash investments made with Old Mutual. It was alleged that the Mr Jordaan contravened the Municipal Investment Regulations in that Old Mutual was not a registered Bank and that as such the Municipality could not invest monies with Old Mutual. Furthermore, it was also alleged that the Supply Chain Management Policy was contravened to the extent that by appointing Old Mutual as an Investment Manager for George Municipality without any supply chain processes having been followed. On 5 July 2019, the Presiding Officer of the Disciplinary Hearing made his ruling on the charges and sanctions. Subsequently, the matter was referred for Arbitration and on 29 April 2021 the Arbitrator delivered his findings, ruling that on Charge 1, Mr Jordaan was guilty of gross negligence, equally on Charges 2 and 3, the arbitrator found him guilty of gross negligence. In relation to the 4th Charge, Mr Jordaan was acquitted on such charge and therefore, no ruling was made on this charge. As result of the findings on Charges 1, 2 and 3, the Arbitrator made an award that the dismissal of Mr Keith Jordaan as Chief Financial Officer (CFO) of George Municiplity was both substantively and procedurally fair and ordered that Mr Jordaan’s claim of alleged unfair dismissal is dismissed. The matter is further discussed in greater detail under reply in 6(1)(c)(i), (ii) and (iii) below.
- The outcome of the Disciplinary cannot be provided as this is confidential, however one may access the Arbitration Award delivered on 29 April 2021. The latter is publicly available through subscription with various legal databases.
- The four charges made against Mr Jordaan was as follows:
(i) Charge 1:
Old Mutual was selected as the winning bidder on 26 July 2017 and 21 November 2017 and George Municipality made subsequent cash investments on 31 July and 21 November 2017 with Old Mutual. Mr Jordaan was charged with breaching of the Cash and Investment Policy of George Municipality as Old Mutual did not meet the requirements for a qualifying institution as set out in Part 14 of the policy.
As a result of the above-mentioned, Mr Jordaan was charged with making himself guilty of gross misconduct constituting: Gross negligence; and/or negligent conduct; and/or a material breach of his obligations as a senior manager in terms of items 2(a), and/or 2(b) and/or 2(d) of the Code of Conduct for Municipal Staff Members; and/or a breach of Part 14.10 of the Cash Investment Policy; and/or a breach of Part 1.9.2 of the Supply Chain Management Policy; and/or a breach of section 171(2) of the MFMA.
Charge 2:
On or about 27 July 2017, an investment agreement between Old Mutual and George Municipality was received by the Municipal Manager of George Municipality. Mr Jordaan informed the office of the Municipal Manager that someone from Old Mutual is awaiting the document and on that basis the Municipal Manager signed the agreement on 27 July 2017. The agreement was signed by Mr Dieter Briechle on behalf of Old Mutual and also co-signed by Mr Jordaan. Furthermore amendments to this investment agreement were concluded during September 2017 with which Mr Jordaan was directly involved. It was alleged that Mr Jordaan was instrumental in the concluding of an Investment agreement between the parties which effectively resulted in Old Mutual being appointed as an investment manager. This constituted a breach of the Cash and Investment Policy as well as the prescripts of the Supply Chain Management Policy as it did not adhere to the process for the appointment of an investment manager.
As a result of the above-mentioned, Mr Jordaan was charged with making himself guilty of gross misconduct constituting: Gross negligence; and/or negligent conduct; and/or a material breach of his obligations as a senior manager in terms of items 2(a), and/or 2(b) and/or 2(d) of the Code of Conduct for Municipal Staff Members; and/or a breach of Part 14.9.1 and/or 14.10 of the Cash Investment Policy; and/or a breach of Part 1.9.2 of the Supply Chain Management Policy; and/or a breach of section 171(2) of the MFMA.
Charge 3:
It was alleged that the inclusion of Old Mutual in the bid adjudication process, the selection of Old Mutual as the preferred bidder and the subsequent cash investment on 31 July 2017 constituted a breach of the Cash and Investment Policy in that:
- Old Mutual is not a bank registered in terms of the Banks Act (94 of 1990) as
stipulated in Part 14.6.5(c) of the Policy.
- Old Mutual does not meet the requirements for any other investment as set out in
the other subsections of Part 14.6.5 of the Policy.
- The cash that Old Mutual received from George Municipality was placed in
deposit accounts at Investec and Nedbank. These accounts appear to be under the control and ownership of Old Mutual. The Investec account attracted interest at 7.8%, however only 7.44% was repaid to George Municipality.
- The written quotation offered by Old Mutual of 7.44% did not disclose an
investment fee of 0.4% and was not evaluated as being net of cost or commission.
- The decision to invest an additional R100 million on call with Old Mutual on
31 July 2017 was obtained from an existing call investment with ABSA.
As a result of the above-mentioned, Mr Jordaan was charged with making himself guilty of gross misconduct constituting: Gross negligence; and/or negligent conduct; and/or a material breach of his obligations as a senior manager in terms of items 2(a), and/or 2(b) and/or 2(d) of the Code of Conduct for Municipal Staff Members; and/or a breach of Part 14 of the Cash Investment Policy; and/or a breach of Part 1.9.2 of the Supply Chain Management Policy; and/or a breach of section 171(2) of the MFMA.
Charge 4:
In relation to Charge 4, it was alleged that the benefit or reward that Old Mutual earned from various investments made during the period 2017 to 2018 on behalf of George Municipality, comprising the difference between the interest earned by Old Mutual and the interest paid to George Municipality was not formally disclosed to George Municipality by Mr Jordaan.
Furthermore, the cash that Old Mutual received from George Municipality that was placed in deposit accounts at Investec and Nedbank accounts appear to be under the control and ownership of Old Mutual, as George Municipality did not receive the full benefit of the interest that was earned on these investments. These funds were also not invested on call terms, as originally indicated in the request for quotations. As a result of these facts, it was alleged that Mr Jordaan made himself guilty of gross misconduct constituting: gross negligence; and/or negligent conduct; and/or a material breach of his obligations as a senior manager in terms of items 2(a), and/or 2(b) and/or 2(d) of the Code of Conduct for Municipal Staff Members; and/or a breach of Part 14 of the Cash Investment Policy; and/or a breach of Part 1.9.2 of the Supply Chain Management Policy; and/or a breach of section 171(2) of the MFMA.
(ii) Findings:
Charge 1: In relation to Charge 1, the Presiding Officer found that Mr Jordaan failed to display the level of care that was required from a person in his position and that this failure amounted to gross negligence on his part and Mr Jordaan was therefore found guilty.
Charge 2: In relation to Charge 2, the Presiding Officer held that the alleged misconduct was indicative of gross negligence and Mr Jordaan was found guilty in relation to this Charge.
Charge 3: In relation to the misconduct under Charge 3, the Presiding Officer held that Mr Jordaan was grossly negligent and he was found guilty.
Charge 4: Mr Jordaan was found not guilty.
(iii) Sanctions:
Charge 1: Summary dismissal
Charge 2: Summary dismissal
Charge 3: Summary dismissal
After a conciliation the matter was referred to arbitration. The Arbitrator upheld that the dismissal was substantively and procedurally fair and Mr Jordaan’s claim for unfair dismissal was dismissed.
2. At the time of the appointment of Mr Jordaan as Acting Municipal Manager at Kannaland Municipality, the Municipal Systems Amendment Act, 7 of 2011 (“the Amendment Act”) was constitutionally invalid with effect 9 March 2019. Municipal Managers were therefore not appointed in terms of Section 54A of the Municipal Systems Act, 32 of 2000 (“the Systems Act”), as introduced by the Amendment Act, and were instead appointed in terms of Section 82 of the Municipal Structures Act, 117 of 1998. Section 82 of the Municipal Structures Act provided as follows:
(1) A municipal council must appoint-
(a) a Municipal Manager who is the head of the administration and also the accounting officer for the municipality; and
(b) when necessary, an acting municipal manager.
Kannaland Municipal Council tabled an item at a Special Council Meeting on 21 October 2022 to appoint Mr Keith Jordaan as Acting Municipal Manager. The majority of councillors resolved in favour of the appointment of Mr Jordaan for a period of three months.
3. It is not within my knowledge whether Kannaland Municipal Council considered Mr Jordaan’s dismissal before appointing him as Acting Municipal Manager on 21 October 2022. I did, however, address correspondence to the Municipality dated 11 November 2022, whereby I informed the Municipality that in light of Mr Jordaan’s dismissal at George Municipality he may be prohibited from being re-appointed in a Municipality for a period of 10 years. As the applicable provisions as contained in section 57A was introduced by the Municipal Systems Amendment Act 7 of 2011, which was declared Constitutionally invalid by the Constitutional Court in the case of South African Mine Workers Union v Minister of Cooperative Governance and Traditional Affairs & Others 2017 ZACC and possible implications hereof on Regulation 18 of the Regulations on Appointment and Conditions of Employment of Senior Managers, GN.R 21, published in GG 37245 dated 17 January 2014 (the Appointment Regulations), my Department will be seeking legal advice on the enforcement of Regulation 18 of the Appointment Regulations.
