Member of Executive Council Responsible for Local Government, Western Cape v Matzikama Local Municipality and Others

In September 2019, eight complaints concerning misconduct in the administration of Matzikama Local Municipality were brought to the attention of the MEC for Local Government in the Western Cape. These complaints included irregular appointments, alleged theft of municipal funds amounting to R320,000, and irregular payments. After considering the complaints and affording the municipality an opportunity to make representations as required by s 106(1)(a) of the Local Government: Municipal Systems Act 32 of 2000 and s 5 of the Western Cape Monitoring and Support of Municipalities Act 4 of 2014, the MEC decided on 21 September 2020 that six allegations, including the theft allegation, should be investigated by appointed investigators. The municipality launched an urgent application to interdict the implementation of the MEC's decision and to review and set aside the decision. The high court dismissed the municipality's application except in respect of the theft allegation, which it set aside, relying on the judgment in City of Cape Town v Premier, Western Cape (2008). The high court held that the MEC had no power in terms of s 106(1) to refer the allegation of theft for investigation, especially since it had already been referred to the police for criminal investigation.

• Whether s 106(1) of the Local Government: Municipal Systems Act 32 of 2000 empowers an MEC to appoint an investigation into criminal conduct other than fraud or corruption
• Whether the term 'serious malpractice' in s 106(1) encompasses crimes other than fraud and corruption, specifically theft
• Whether the judgment in City of Cape Town v Premier, Western Cape (2008) correctly interpreted the scope of s 106(1)
• Whether the high court's costs order was appropriate in the circumstances

The appeal was upheld. Paragraphs 3, 5 and 6 of the high court's order were set aside and replaced with: (3.1) The applicant's application is dismissed with costs, including the costs of two counsel; (3.2) The respondent is directed to pay the applicant's costs in respect of the applications to amend the notice of motion and to strike out. This had the effect of allowing the MEC's investigation into all six allegations, including the theft allegation, to proceed.

Section 106(1) of the Local Government: Municipal Systems Act 32 of 2000 empowers an MEC to appoint investigators to investigate allegations of criminal conduct in a municipality beyond only fraud and corruption. The terms 'maladministration' and 'serious malpractice' in s 106(1) are broad enough to encompass both criminal and non-criminal conduct, including crimes such as theft. There is no tacit exclusion of crimes other than fraud and corruption from the scope of s 106(1). To interpret the section as limiting investigations to only fraud and corruption would: (1) be arbitrary with no principled basis; (2) undermine the purpose of s 106 as a monitoring and accountability mechanism; (3) potentially render s 106 investigations ineffective given the extensive criminalisation of municipal maladministration in legislation; and (4) rest on unfounded concerns about blurring executive and police functions, as s 106 investigations serve different purposes from criminal investigations. A s 106 investigation is an administrative mechanism concerned with monitoring municipal performance, remedying systemic problems and ensuring accountability, not with criminal prosecution.

The court observed that specific objectively justiciable jurisdictional facts must be present before the power to appoint investigators is triggered, and that administrative justice principles - whether under the Promotion of Administrative Justice Act 3 of 2000 or the principle of legality - are designed to prevent abuse of discretion by MECs. MECs may not exercise their powers for an improper purpose or ulterior motive, in bad faith, or unreasonably. The court noted that the case of City of Cape Town itself was a good example of these safeguards operating in practice. The court also commented that s 195 of the Constitution lays a compelling basis for a duty on responsible functionaries to investigate and correct unlawfulness when enlightened of potential irregularities, founded in the emphasis on accountability, transparency and high professional ethics standards. The court observed that the Local Government: Municipal Finances Management Act 56 of 2003 and other local government statutes create a broad range of criminal offences related to maladministration, with the effect that a large swathe of maladministration has been criminalised.

This case is significant in South African local government law as it clarifies the scope of provincial executive powers to investigate municipal maladministration under s 106(1) of the Local Government: Municipal Systems Act 32 of 2000. It establishes that MECs have broad powers to investigate criminal conduct in municipalities beyond just fraud and corruption, including theft and other serious crimes. The judgment overrules the restrictive interpretation in City of Cape Town v Premier, Western Cape (2008) and strengthens the constitutional framework for provincial monitoring and support of local government as contemplated in s 155(6) of the Constitution. The decision reinforces the principles of accountability and transparency in public administration under s 195 of the Constitution, particularly in the local government sphere. It also clarifies that s 106 investigations serve a different purpose from police investigations - they are administrative mechanisms for monitoring, remedying problems and ensuring accountability, rather than criminal prosecutions.