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The City Council has approved the establishment of a municipal Financial Misconduct Board that will expedite the investigation of allegations of financial misconduct, make recommendations on sanctions, and encourage the monitoring of disciplinary proceedings against alleged transgressors.

Sinaye Nxumalo, the Group Head of Group Risk and Assurance Services (GRAS), says the City’s Financial Misconduct Board is made up of herself as the head of GRAS and an alternate, the head of Group Governance or an alternate, the chair of the Group Audit Committee as the chairperson, an external person with legal expertise, another person with financial expertise, and the head of Group Corporate and Shared Services and an alternate, or a senior manager from the Office of the City Manager and an alternate.

Nxumalo says members of the Financial Misconduct Board are people with the highest level of professional competence, who are required to maintain integrity, ethical conduct, and observe the principles of good governance. Municipal councillors are precluded from being members of the board.

Before the Financial Misconduct Board can investigate a matter, the issue must first be reported to the Council, regardless of the designation of the alleged transgressor. The Financial Misconduct Board is then mandated to conduct a preliminary investigation to determine whether the allegation is founded. It must also make a recommendation to the Council or board of directors as to whether sufficient grounds exist to warrant a full investigation into the allegations.

Nxumalo says the Financial Misconduct Board may elect to appoint an external and independent team to conduct a preliminary investigation depending on the complexity of the allegations. However, this does not remove its accountability as the overarching body on all matters of financial misconduct.

If, during a preliminary investigation, the Financial Misconduct Board determines that the allegations are frivolous, vexatious, speculative, or obviously unfounded, the investigation will be ceased. A thorough investigation must be conducted if it is determined that the allegations are true. The Financial Misconduct Board will then provide recommendations on further steps to be taken regarding disciplinary proceedings or any other relevant steps following an inquiry.

Because of the state’s policy on the separation of powers, allegations of financial misconduct against a councillor do not fall under the scope of the misconduct board. Instead, such matters are managed through the legislature and integrity office.

“Watch this space as the City will soon provide mechanisms and platforms to report allegations of financial misconduct,” she says.

Nxumalo notes that the Financial Misconduct Board was established in terms of the 2014 publication of the Municipal Finance Management Act’s (MFMA) updated regulation on financial misconduct.

The City experienced delays in the establishment of the Financial Misconduct Board and had to write to the National Treasury asking for leeway to condone the delay.

“As we were developing the unauthorised, irregular, fruitless, and wasteful (UIFW) strategy in parallel, we were also working on the disciplinary board’s establishment and terms of reference. What is critical about this decision is that the City needs to strictly comply with regulations on financial misconduct,” Nxumalo explains.

According to the misconduct board’s terms of reference, its main purpose is to assist the Council and the City Manager, the Accounting Officer, to discharge their responsibilities to institute disciplinary proceedings against officials who commit acts of financial misconduct in contravention of the Municipal Finance Management Act No 56 of 2003, Section 62(1)(e) and municipal regulations on Financial Misconduct Procedures and Criminal Proceedings promulgated on 30 May 2014.