KURUMAN – The legal and administrative fallout surrounding the Ga-Segonyana Local Municipality in Kuruman’s invalid Value-Added Tax (VAT) recovery contract has expanded across provincial and municipal governance, following confirmation that third respondent MNK Tax Advisory Services (Pty) Ltd is appealing the earlier High Court in Kimberley ruling.

In formal responses to media enquiries from NoordkaapBulletin, Executive Mayor Neo George Masegela, Speaker Keamogetse Madikiza, and the Office of the Premier, Dr Zamani Saul, have outlined their respective positions regarding financial recovery, administrative consequence management, and intergovernmental oversight.

Masegela confirmed that his office received the High Court judgement and was formally notified by MNK Tax Advisory Services’ attorneys of their intention to appeal the order.

When questioned on how the Mayoral Committee intends to enforce the court ruling, which orders MNK to repay 6% of all collected commissions back to municipal coffers, the Mayor’s office stated that “pending the outcome of the appeal, the Municipality is not in a position to respond”.

Regarding political and administrative oversight of Municipal Manager Martin Tsatsimpe following adverse judicial findings, the Mayor’s office noted the order, stating that whilst the municipality “will continue to administer the judicial administrative oversight over the accounting officer”, it remains unable to fully address specific actions whilst the appeal is pending.

On supply chain management (SCM) protocols, the Mayor’s office maintained that the municipality “believes that it has at all relevant times complied with the relevant provisions of section 217 of the Constitution” and that contract extensions were conducted lawfully.

However, Masegela conceded that “in light of the court order, the municipality will review the relevant provisions of its supply chain and amend where deemed necessary”.

Speaker outlines disciplinary framework

Madikiza confirmed that the municipal council has formally noted the ruling and is studying it alongside its legal team.

Addressing questions on whether an urgent special council meeting will be called or if the municipal manager will face precautionary suspension and an independent disciplinary enquiry, she outlined the legal framework governing senior municipal officials.

She says any disciplinary proceedings against Tsatsimpe will be conducted strictly under the Disciplinary Regulations for Senior Managers, issued under the Local Government Municipal Systems Act.

Regarding council action to monitor the court-ordered financial recovery from MNK, she echoed Masegela, stating that because MNK has notified the municipality of its appeal, council cannot comment further pending the outcome of the legal process.

Provincial oversight and monitoring

The Office of the Premier, through spokesperson Naledi Gaosekwe, issued a detailed response clarifying the Provincial Government’s stance and monitoring duties.

“The Premier’s office notes that municipalities constitute a distinct sphere of government exercising independent legislative and executive authority, and provincial oversight does not replace the statutory duties of local council structures.”

However, under Section 5(4) of the Municipal Finance Management Act (MFMA), the Provincial Treasury will monitor the municipality’s financial response to the judgement through statutory reporting processes.

“This monitoring includes requesting information, assessing financial implications, and tracking steps reported by the municipality regarding compliance with the court order, fund recovery, and internal control improvements.”

The Premier’s office says that Provincial Treasury, in conjunction with Coghsta and Salga, will provide targeted capacity building to municipal bodies, including Municipal Public Accounts Committees (MPACs) and Financial Misconduct Disciplinary Boards (FMDBs), to strengthen local capacity for consequence management and financial investigations.

The Provincial Government has not made a determination to institute a separate independent investigation, as the Provincial Treasury will work directly with the municipality whilst enforcing preventative measures such as SCM retraining.

The Premier’s office added that making findings on the adequacy of consequence management would be premature until responsible municipal structures complete and report on their internal processes.

Court ruling and key findings

These responses stem from an 8 September judgement delivered by Judge President LP Tlaletsi and Acting Judge W Coetzee in the High Court.

The High Court set aside the decision to award Tender 06/2023-24 to MNK at a 10% commission rate as well as an interim month-to-month agreement, declaring both constitutionally invalid. Under Section 172 of the Constitution, the court ordered MNK to repay 6% of all amounts received since 18 December 2023, allowing MNK to retain only 4%, matching the lower rate tendered by competing bidder Maximum Profit Recovery (Pty) Ltd.

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The court found that Tsatsimpe rejected the Bid Adjudication Committee’s (BAC) initial recommendation to award the contract to Maximum Profit at 4%. Following repeated referrals back to the committee insisting on unrequired reference letters, the BAC arbitrarily deducted R6.15 million from Maximum Profit’s verified past recoveries, docking its score from 50 to 20 points to force its disqualification.

The judges concluded that Tsatsimpe “simply failed to properly and purposively consider Maximum Profit’s documents”.

Additionally, the bench dismissed the municipality’s reliance on Regulation 36 of the MFMA, holding that any alleged emergency justifying month-to-month contract extensions was entirely “self-created” through administrative delay and inefficiency.

To ensure compliance oversight, the court directed the Court Registrar to forward copies of the judgement directly to the Executive Mayor and the Premier of the Northern Cape.