The collapse of the Amathole district municipality in the Eastern Cape may be traced back to a council decision taken seven years ago to upgrade the municipality from a grade 6 to a grade 7 - thereby ballooning perks and salaries for officials, which ultimately led to it running out of cash this week.
The municipality, given its population size and small revenue base, does not qualify to be on this grade - just one below a metro.
This week the municipality announced that it does not have enough money to pay salaries for several months.
The current administration has pointed fingers at former municipal manager Chris Magwangqana, accusing him of hoodwinking the council into approving the upgrade.
Speaking to the Sunday Times in East London, current municipal manager Thandekile Mnyimba said that Magwangqana, through a report to the mayoral committee and council in 2013, got the administration to also backdate salary increases to 2010.
He said his predecessor misled the council into taking an unlawful decision. And in fact, "by the time that report was taken to council, the administration was already implementing [the upgrade]", said Mnyimba.
However, Magwangqana denies this, saying councillors had a responsibility to make up their own minds based on the information provided to the council.
"Whoever says I misled the council must be able to quote the item and say this part of that is misleading."
Magwangqana said the current administration must take responsibility for the financial woes because during his tenure, the municipality never found itself in a position where it could not pay salaries.
The current council has rescinded the decision to upgrade the district municipality's status.
The municipality has approached the provincial and national governments to ask for a R180m bailout after it ran out of cash to service its annual R805m salary bill for employees, councillors and traditional leaders. It has a R1.6bn operating budget and a total budget of R2.2bn.
Amathole is responsible for water and sanitation for six largely rural local municipalities, but in the past few years it has battled to deliver water, especially in Mbhashe, Dutywa and Mnquma in Butterworth.
Trade unions and the opposition EFF have called for the province to place the municipality under administration.
The ANC in the region is opposed to placing the municipality under administration, which the province is determined to do.
The upgrade meant the municipality paid its municipal manager an annual salary of R2.4m, not the R1.9m he should have earned under the correct grade.
It also paid car allowances of up to R26,680 and cellphone allowances amounting to R4,450 to its bosses.
The municipality has also flagged the absorption of 900 interns between 2013 and 2018 as a contributing factor to the ballooning salary bill, as well as the municipality's annual R37m rental for its offices in East London.
To motivate against the takeover of the municipality, Mnyimba said that as far back as 2017 the municipality had foreseen the looming financial problems.
After a diagnostic analysis of its finances, a number of problems were flagged and the municipality, together with Eastern Cape and national colleagues, proposed solutions that included reversing the decision on the grading, and cutting down on employees.
Eastern Cape MEC for co-operative governance & traditional affairs Xolile Nqatha said his department will ask the provincial cabinet later this month to place the municipality under administration, using section 139 (5) of the constitution, which will allow the department to assist in turning around the district's financial situation.
South African Municipal Workers Union deputy provincial secretary Lorna Lubedu said workers have asked Mnyimba to meet them at the local labour forum to explain the financial state of the municipality.
"There is no way you can tell workers that they are not going to get their salaries when [their pay was] budgeted for. Even the [annual salary increases] are budgeted for, so it was a surprise to us to learn that we have run out of money in January," said Lubedu.
But Mnyimba has also placed part of the blame on trade unions, saying that soon after the diagnosis of the municipality's problems he proposed a three-year freeze on salary increases. The unions rejected this.
Mnyimba said if the municipality wins a court action to reverse the upgrade, it will take further action against his predecessor to recover monies lost due to his actions.
Towns like Peddie, under the Ngqushwa local municipality, have been hard hit by water cuts due to poor infrastructure.
Speaking to the Sunday Times this week, Amathole House of Traditional Leaders deputy chair chief Phathuxolo Tyhali expressed fears the cash-strapped municipality will let residents down even more now.
"If they can't pay salaries, it must be worse for the service providers who deliver water. Their invoices must be piling up."
Tyhali said Amathole district municipality is already failing to supply water to most of the villages that fall under it.
One such area is Feni village in Peddie, where villagers have been battling for water for five years.
"We struggle when it is not raining," said resident Simphiwe Jongwana.
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