The National Treasury v Kubukeli

The Daily Dispatch published an article on 18 January 2013 alleging financial irregularities involving the executive mayor of the OR Tambo District Municipality (second appellant), specifically regarding hiring of luxury vehicles costing approximately R500,000 over two months, two of which were involved in accidents costing R224,827.70. On 30 April 2013, the municipal council requested the National Treasury (first appellant) to conduct a forensic investigation. The National Treasury mandated a team to investigate from 6 May to 7 June 2013. Interviews were scheduled for 15-17 May 2013, with notice given to officials including the respondent, Mr Kubukeli (the executive mayor's bodyguard). The executive mayor's political advisor refused to participate, stating the notice was inadequate and requesting rescheduling to 1 July 2013. The Treasury team proceeded without the executive mayor and certain officials, completing a report dated 31 May 2013 which made prima facie findings against Mr Kubukeli, including that vehicle hiring costs escalated significantly when he was the driver, that he should be held liable for damages due to gross negligence, and that he failed to account for R8,000 in fuel advances. Mr Kubukeli maintained he received no notice of the request for an interview and only became aware of the investigation when the report was presented to council.

• Whether the investigation and report by the National Treasury constituted administrative action under PAJA
• Whether Mr Kubukeli was entitled to be heard before the National Treasury conducted its investigation and made recommendations
• Whether rational decision-making under the rule of law required consultation with Mr Kubukeli in the circumstances
• Whether the investigation and recommendations without Mr Kubukeli's participation were arbitrary and inconsistent with the rule of law as enshrined in section 1(c) of the Constitution

1. The appeal is upheld. 2. There is no order as to costs of the appeal. 3. The order of the court a quo is set aside and replaced with: 'The application is dismissed.'

The ratio decidendi is that an investigation and recommendations by the National Treasury under section 5(2)(d) of the MFMA into systems of financial management and internal control of a municipality, without participation of an individual official, is rationally related to the purpose of securing sound fiscal management and does not violate the rule of law under section 1(c) of the Constitution. The purpose of such investigative power is not to investigate particular individuals or make final binding findings against them, but to assess systems and recommend improvements. Where prima facie findings are made against an individual in such a report but those findings are not binding and any implementation of recommendations would occur through processes affording full participation rights, the decision to proceed without the individual's participation is founded on reason and not arbitrary. There is no general duty on decision-makers to consult interested parties for a decision to be rational under the rule of law; consultation is only required where it is fundamental to achieving the objectives of the decision.

The court observed that it was inappropriate to set aside an investigation that had already been completed and resulted in a report. The court noted that some 'loose language' may have been used in the report regarding Mr Kubukeli, but this must be read in context as prima facie findings. The court also made observations about the Biowatch costs principle, noting that Mr Kubukeli sought to assert what he bona fide perceived to be a constitutional right against organs of State, and his litigation was neither frivolous nor vexatious, warranting application of the principle that each party should bear its own costs. The court distinguished the cases of Du Preez v TRC and Re Pergamon Press, noting these dealt with the content of an established right to be heard rather than the existence of such a right.

This case is significant in South African constitutional and administrative law for clarifying the test for rationality under the rule of law and when consultation with affected parties is required for rational decision-making. It distinguishes between investigative powers aimed at systemic improvements versus adjudicative powers determining individual rights. The judgment clarifies that the National Treasury's investigative and recommendatory functions under section 5(2)(d) of the MFMA do not trigger a right to be heard at the investigation stage, as the purpose is to assess systems rather than make binding findings against individuals. It confirms that rationality requires decisions be founded on reason and not arbitrary, but that there is no general duty to consult for rationality purposes. The case also demonstrates the limited application of Albutt and Scalabrini principles - that consultation is only required for rationality where it is fundamental to achieving the objectives of the decision. The judgment reinforces that prima facie findings in investigative reports, subject to further processes affording full participation rights, do not violate the rule of law. It also applies the Biowatch costs principle in constitutional litigation involving organs of State.