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DA welcomes Treasury intervention

The DA has welcomed the National Treasury's decision to withhold funds from the Nala municipality in the Free State.

The Treasury decided to stop the transfer of funds to the municipality following four years of financial mismanagement, as identified by the Auditor General (AG).

Pravin Gordhan, Minister of Finance. Photo: Matthew Jordaan. Credit: Independent Newspapers

“This is the first time such an intervention has taken place,” said Democratic Alliance spokesman David Ross.

Section 216(2) of the Constitution stated that the National Treasury “may stop the transfer of funds to an organ of state if that organ of state commits a serious or persistent material breach of those measures”.

The AG had identified serious problems in Nala municipality in 2008. These included maladministration, flouting of procurement processes, corruption, and fraud.

The municipality also failed to submit audit reports and financial statements for 2009/10 and 2010/11, or to complete performance management reports as required by the Municipal Finance Management Act (MFMA), Ross said.

None of the AG's recommendations were implemented, and no one was ever held accountable.

“The intervention by National Treasury is the first of its kind and sets a welcome precedent. The DA is satisfied that the Minister of Finance, Pravin Gordhan, has taken a bold step by approving the intervention, which sends a clear message to public entities that corruption and non-compliance will not be tolerated.”

While the intervention was welcomed, the implementation and the corrective measures put in place to rehabilitate the municipality needed to be closely monitored.

Gordhan should be commended for taking decisive action in this case, said Ross.

The next step was to ensure that Nala municipality was rehabilitated effectively and efficiently to ensure that the people of Nala finally got the services they deserved from government, he said. - Sapa

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