Using a section 106 inquiry to investigate theft?
In Member of the Executive Council Responsible for Local Government v Matzikama Local Municipality and Others, the main issue before the Supreme Court of Appeal (SCA) was whether these powers extend to the investigation of criminal matters such as theft. The SCA differed with the High Court by holding that the MEC may indeed use the powers under section 106 to investigate criminal matters beyond fraud and corruption.
Background
In September 2019, allegations of abuses of power and theft in Matzikama Local Municipality were reported to the MEC for Local Government in the Western Cape. The allegations included the appointment of staff without requisite qualifications, the theft of municipal funds and irregular payments to a former ward councillor. On 21 September 2020, after giving the Municipality an opportunity to make representations, the MEC appointed two people to investigate these allegations. This investigation was constituted in terms of section 106(1) of the Municipal Systems Act and section 5 of the Western Cape Monitoring and Support of Municipalities Act of 2014. The Municipality approached the High Court for an interdict to stop the MEC from proceeding with this investigation.
On the other hand, the MEC launched a counter-application asking the Court to instruct the Municipality to cooperate with the investigators. The High Court was satisfied that there were reasonable grounds for the MEC to invoke section 106 powers. The Court thus dismissed the Municipality’s application except insofar as it concerned the theft allegations. Relying on the 2008 judgment in City of Cape Town v Premier, Western Cape, and Others, the Court ruled that the MEC had no power under section 106 to investigate criminal matters such as theft. The investigation of such matters, the Court argued, falls under the jurisdiction of the South African Police Services (SAPS). The MEC challenged this ruling on appeal to the SCA.
Judgment
The SCA interpreted the powers of the MEC under section 106(1). The Court stated that the MEC’s belief that maladministration, fraud, corruption or any other serious malpractices has occurred or is occurring must be based on reasonable grounds. The onus is on the MEC to objectively justify that conditions for section 106(1) are present. The Court established that section 106 is a monitoring tool at the disposal of the provincial executive to strengthen the performance of municipalities, and to hold municipalities accountable for their administration. It allows the MEC to investigate allegations of a serious nature affecting the governance and administration of a municipality. The ultimate aim is to obtain facts relating to problems with a view to remedy them.
The Court also found that the reference specifically to crimes of fraud and corruption in section 106 “does not state expressly that only these crimes, and no others, may be investigated in terms of the section”. Other conducts whether of a criminal nature or not may, such as theft of municipal money, “without doubt” constitute “serious malpractice”.
The Court ruled that the restricted approach adopted by the High Court was not the intention of Parliament when it enacted the law. The Court criticised this approach on several grounds. First, the Court found that the approach was “arbitrary and could lead to arbitrary results”. The Court reasoned that there was no reasonable basis why investigators would investigate fraud or corruption and not theft. Second, the Court established that the restricted approach would undermine the purpose of a section 106 inquiry, namely to identify and solve municipal problems. This is against the background that the provision is “not only for monitoring and strengthening of local government but also for accountability”.
Third, the Court stated that considering the fact that many cases involving maladministration have been criminalised in local government, the restricted approach “would block s 106 investigations into the very matters that it was meant for”. Lastly, the Court dismissed the concern raised in City of Cape Town v Premier, Western Cape, and Others that extending section 106 investigations to criminal matters would result in the blurring of lines between SAPS and the executive. The Court contended that a criminal investigation and a section 106 investigation have different objectives. The former serves to detect and punish crime while the latter is aimed at identifying and remedying problems as well as to hold municipal officials accountable.
In conclusion, the Court found that the City of Cape Town v Premier, Western Cape, and Others case was wrongly decided and ruled that section 106(1) can be used to investigate not only crimes of fraud and corruption but also theft, among others.
Commentary
This judgment clarifies the powers of the MEC under section 106. It buried the misconception that section 106 can not be used to investigate criminal matters such as theft. The judgment has also clarified the purposes of investigations conducted by SAPS and by the MEC under section 106. A criminal investigation by SAPS is meant to bring criminals to book while a section 106 investigation is aimed at identifying and solving problems as well as to hold municipal officials accountable. However, state institutions which share the responsibility of ensuring that there is accountability in local government and abuses of power are contained and punished, such as the MEC for local government, SAPS and NPA, should work together. It will serve time and resources, if SAPS can for instance, rely on the findings of a section 106 investigation for its criminal investigations instead of starting afresh.