MBDA accused of governance and performance failures in scathing municipal report

The Mandela Bay Development Agency has come under fierce scrutiny after senior municipal officials accused its board of flouting governance laws, sidelining the municipality that funds it and meeting less than 30% of its targets.

In a blistering assessment before councillors, officials alleged the agency had become unaccountable, had breached the Municipal Finance Management Act by appointing an acting chief executive without shareholder consultation, and risked becoming another governance failure unless sweeping reforms were urgently implemented.

Tabling the MBDA governance report, acting executive director for economic development, tourism and agriculture Wandisile Makwabe said the agency’s reporting line had, at one stage, been removed from his department by a city manager and placed under the chief operating officer’s office and later under the deputy mayor’s office.

“That left a gap wherein the MBDA did not have a reporting structure in terms of council structures because as a deputy mayor you do not have a portfolio committee that accounts and plays an oversight role,” Makwabe said.

“Ultimately, it led to a breakdown of relations with the city’s agency, funded by one shareholder which is the municipality, and that breakdown of relations culminated in a lot of activities and incidents, inclusive of litigation.

“The agency litigated against the city at some stage because ... the city felt that there was no accountability through that arrangement.

“In other words the council and its administration at the time felt that no reports were going to the city.”

Oversight has since returned to the department.

Makwabe said the relationship had broken down irretrievably, arguing it was untenable for a municipal entity to litigate against the very municipality that funded and oversaw it.

“The board produced a governance report and we then picked up with the political head that there were decisions that had been taken, particularly as it pertains to the appointment of a CEO without the shareholders being consulted,” Makwabe said.

“That is now in breach of the MOI [memorandum of incorporation] and also in breach of the MBDA’s own policy which says that the shareholder will be consulted, so it breached the MFMA.

“While the board has the right and the prerogative to appoint a CEO it must consult the shareholders.”

According to the report, the MBDA board advertised the chief executive post on a fixed-term three-month contract.

Following this, economic development, tourism and agriculture political head Bassie Kamana wrote to MBDA board chair Khulile Nzo on June 24, raising concerns about the recruitment process.

In his letter, Kamana wrote: “My concern is that thus far there has been no participation by the shareholder in the process thereof and there has been no consultation either.

“This apparent deviation from the processes normally followed for the recruitment of the agency’s CEO needs to be urgently remedied.”

Makwabe also raised concerns with the MBDA on several matters, including the Nelson Mandela Bay Stadium, in a letter to mayor Babalwa Lobishe on June 19.

“The specific concern in this regard is that since the council resolved to take its asset back and entered into an interim agreement with the MBDA to manage the stadium while transfer is under way, an appointment of a permanent stadium executive at this state might not be practical until and unless the matter is relooked at,” he said.

Speaking to councillors, Makwabe said they had requested that the processes initiated by the entity, such as the acting chief executive appointment and stadium management, be kept in abeyance because they were in breach of numerous policies.

“We want to ensure that the agency itself does not go back to where it was not accountable, did not consult, did not take directives from the shareholder.”

Makwabe also raised concerns about the agency’s top-heavy executive structure, saying the addition of another layer of senior management had significantly increased overhead costs and placed an unsustainable financial burden on the municipality.

He said the expanded structure should be reversed, warning that the city could not be expected to bankroll rising salary costs that risked breaching National Treasury guidelines and the Municipal Finance Management Act.

Makwabe said the MBDA’s performance was sitting at 30%.

“The agency needs to compose itself and go back to where it’s meant to be accountable, but mainly respect the shareholder from which it receives its funding.”

DA councillor Masixole Zinto said the chair should have led the delegation to the committee.

“An entity of government should have represented itself here,” Zinto said.

“The CEO [Unathi Peter] is here. The CFO [Koliswa Mgijima] is here.

“It can’t be that you get Peter to come and present a project only.

“We want to understand the governance.

“We are giving you our money, the money that belongs to the people of this city.

“Now we need to understand your thinking.”

Zinto also questioned why the agency was seeking to appoint another interim chief executive instead of filling the post permanently.

Former chief executive Anele Qaba was dismissed in March.

He was accused of sharing private company information while on suspension.

“If the CEO has been fired why are we not advertising a permanent post?” Zinto said.

“Who will permit it? What is this? Who can turn around such a ship in five months?

“A ship that is performing at 27%.

“Advertise if you are so confident that you have fired the CEO.”

Kamana said the city needed a functional MBDA that derived its mandate from the committee.

Makwabe said the municipality needed to establish a project management unit to address capacity constraints and improve the implementation of catalytic projects.

Peter told the committee the chief executive recruitment process fell under the board.

“I do think it’s warranted to have board representation in meetings of this nature.”

ANC councillor Bulelani Matenjwa said he was concerned about MBDA operations and spending.

“My understanding is that the board is the guardian of the functionality of the entity,” Matenjwa said.

“They don’t make decisions but we as the municipality decide what we want.

“Once you start having a board that think they own their entity it becomes a problem because they need to understand they represent the municipality’s interests.

“We need to clarify that we are funding them, not the other way around.”

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