Member of the Executive Council for Local Government, Environmental Affairs and Development Planning, Western Cape Province and Others v Central Karoo District Municipality and Others

The Member of the Executive Council (MEC) for Local Government, Environmental Affairs and Development Planning in the Western Cape appointed investigators under section 106 of the Municipal Systems Act 32 of 2000 to investigate allegations of maladministration, fraud, corruption, and other serious malpractices at the Central Karoo District Municipality. The investigation arose after the Executive Mayor, Gayton McKenzie (Second Respondent), initiated a fundraising gala dinner at the Sandton Hotel in Johannesburg on 21 May 2022 to fund his '100 days action plan' of service delivery projects. The Municipality's Special Council on 19 May 2022 resolved to support the fundraising initiative, requiring the Executive Mayor to account for all funds to the Mayoral Committee and District Coordinating Forum. Funds raised were deposited into the trust account of E Botha and Y Erasmus Inc (Third Respondent), a firm of attorneys. The investigators reported that the Third and Fourth Respondents failed or refused to hand over certain information relating to the investigation on grounds of confidentiality, potential breach of POPIA, and attorney-client privilege. The Fifth and Sixth Respondents also failed to cooperate. The applicants sought a court order compelling full cooperation from all respondents.

• Whether the fundraising initiative and expenditure of funds by the Executive Mayor constituted maladministration in the Municipality for purposes of an investigation under section 106 of the Local Government: Municipal Systems Act 32 of 2000
• Whether the Second Respondent acted in his personal capacity or as Executive Mayor when conducting the fundraising and implementing projects
• Whether the respondents were obliged to cooperate with investigators appointed under section 106(1)(b) of the Systems Act
• Whether the Third and Fourth Respondents could resist disclosure of trust account information on grounds of confidentiality, POPIA, or attorney-client privilege

An order was made in terms of a draft attached to the judgment, substantially granting the relief sought by the applicants. The order directed the respondents to comply with the investigation, compelled the Third and Fourth Respondents to furnish specified information including trust account bank statements, agreements, invoices, and related documentation, and compelled the Fifth and Sixth Respondents to provide information relating to the fundraising event and service provider appointments. The order included a qualification protecting unrelated trust creditors of the Third and Fourth Respondents. Costs were awarded against the respondents on Scale B, including costs of two counsel.

Where a municipality passes a resolution providing that its Executive Mayor shall account for funds raised to municipal structures, the fundraising initiative is conducted on behalf of the municipality, and the conduct of the Mayor in raising and expending those funds to discharge the municipality's obligations on municipal land and in furtherance of his duties as Mayor falls within the mandate of investigators appointed under section 106 of the Municipal Systems Act to investigate maladministration, fraud and corruption occurring 'in the Municipality'. A respondent cannot avoid the investigation by asserting that the funds were raised and administered outside municipal structures when they were used for municipal purposes.

The court observed that when a public office bearer distributes largesse, it has the potential to create client/patron relationships and that clientelism in the public sector has the potential to foster corruption and ought to be discouraged. The court also noted that the investigation, while necessary for the implementation of the Minister's obligations under the Systems Act, does not preclude an investigation by the Public Protector or the SAPS. The court further observed that the Code of Conduct for Councillors in Schedule 1 of the Municipal Systems Act provides extensive duties and restrictions for Mayors, including that they shall not use their position to enrich themselves or improperly benefit any other person.

This case clarifies the scope of section 106 investigations under the Municipal Systems Act, establishing that the conduct of an Executive Mayor in fundraising and expending funds for municipal service delivery purposes falls within the ambit of 'maladministration in the Municipality' even where the funds did not pass through the municipality's official coffers. It reinforces the principle that municipal office bearers cannot circumvent accountability and oversight mechanisms by creating parallel financial processes outside formal municipal structures. The case also addresses the obligation of third parties, including attorneys, to cooperate with statutory investigators, and limits the extent to which confidentiality and POPIA can be invoked to resist disclosure.