Nelson Mandela Bay mayor Babalwa Lobishe has conceded that the decision to lease the municipality’s R25m transformer to Coega Steels was irregular.
However, the concession did not come without pushback from MPs who pressed her on why she signed a memo or lease before the item was brought to council for a decision.
On Wednesday, Lobishe, acting city manager Lonwabo Ngoqo and chief financial officer Jackson Ngcelwane faced off against a stoic co-operative governance and traditional affairs portfolio committee chair, Zweli Mkhize, in parliament.
Wednesday marked day two of the grilling.
On Tuesday, Lobishe was questioned about missed deadlines, unanswered correspondence, allegations of bribery linked to Expanded Public Works Programme jobs and billions of rand written off as irregular expenditure.
The latest sitting of the meeting centred on allegations made on social media by former GOOD member Siyanda Mayana against Lobishe, concerning her role in the municipality’s decision to lease the key municipal asset.
After a gruelling four-hour session, Mkhize said Lobishe could not sidestep responsibility.
During the meeting, Lobishe was questioned whether, at any point, the budget and treasury department had cautioned that, before leasing the transformer, it needed to go before the council.
Lobishe said she never signed a Coega Steels lease agreement, but a memo that should have been served before the council.
After her comment, Mkhize referred to a bundle of documents displayed on a screen in which Ngcelwane told former acting city manager Ted Pillay and former acting executive director Tholi Biyela that, before the city leased a transformer, the item needed to go to council.
“You need to concede that you were told, but you didn’t take the matter to council,” Mkhize said.
“From where the memo stands, what you did is contrary to the advice in the same memo.
“The question is, are the memorandum of agreement and the lease agreement the same thing?”
On this, Ngoqo said in the context of Coega Steels, it meant the same thing.
“So, you need the council authorisation for the municipality to proceed to sign an agreement and to ensure that the municipality is protected legally and financially and that the municipal account for Coega Steels is up to date,” Mkhize said.
Responding to the question, Lobishe said there was a need for a council resolution, adding that she had advised Pillay, who brought the item to her, to prepare an item for council.
“But because of the urgency, for two weeks, people were already laid off, and that was the main reason.”
On this, Mkhize pressed again: “And you consider that regular or irregular?”
Lobishe said: “Well, it is irregular, but we were to rectify it in council.”
Mkhize said: “So, do you agree that members are saying that your action was irregular, actually? That is the issue we are asking.”
Lobishe said: “By law, it is irregular.”
MK party MP Jeffrey Mtolo said both the chief financial officer and the provincial department of co-operative governance and traditional affairs should have advised Lobishe that her actions were irregular.
“One would expect the province to have actually taken the matter up with the municipality because we are talking about a council asset.
“This is not only about the mayor but about how a council asset was leased to a company because that is against the law.”
Ngcelwane said he first had a verbal discussion with Pillay, and then a written memo came.
“I think it was around August 27 when I was copied in on this instruction.
“I did advise Pillay, verbally, that this is an asset of a municipality, whatever size or value of that asset, you cannot just transfer it to another entity or a private company.
“I understand the reasons. I felt strongly that an item should go to the council.
“I wrote an email on August 27, addressing it directly to him and other colleagues.
“I wanted to make sure that whatever we do, we play it by law.”
Ngcelwane revealed to the committee that no invoices had been received from Coega Steels, yet payments had nonetheless been made.
Lobishe emphasised that she signed the memo because the request from Coega Steels came at a time when 900 jobs had recently been lost due to the Goodyear shutdown.
She told the committee she was trying to save 600 jobs along the value chain that would have been lost had the company closed its doors.
Turning his attention to Ngoqo, who was the acting chief operating officer when the Coega Steels issue was first brought to council, Mkhize asked him if there was anything wrong with the lease signed by the municipality.
Legal services fall under Ngoqo.
Ngoqo responded with: “No”.
Asked if issues or irregularities were picked up, Ngoqo said nothing abnormal.
“You are a lawyer, is there anything that looks abnormal to you?” Mkhize said.
Ngoqo said there were gaps.
“The fact that this agreement was not before the council. That’s the first issue.
“Secondly, it was a one-man show done by the acting city manager.
“It should be clearly indicated who is the lessee and who is the lessor. They are not properly identified.
“It doesn’t have any annexures, agreeing between the parties that indicate the amount being paid.
“No process was followed on the amount that should be paid a month,” Ngoqo said.
Additionally, Ngoqo said that the lease did not address the issue of damages.
On this point, Mkhize brought the discussion on the allegations against the mayor to a close, saying the committee was concerned about the issues and found them problematic.
“Firstly, we believe there are a lot of abnormalities in how it was handled.
“The fact that the mayor signed a mayoral resolution despite memos saying it should be dealt with in council, we find concerning.
“It makes a mayoral decision completely illegal from a point of view of what the legal opinion was.
“There were gaps that the council should have identified, but no opportunity was given to do so.
“The mayor needs to take responsibility for that.”
Mkhize dismissed the urgency argument, saying he would involve the provincial and national department of co-operative governance and traditional affairs to take further action.
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