IN THE LABOUR COURT OF SOUTH AFRICA, GQEBERHA

Reportable
Case No : PR198 /21

In the matter between:

INXUBA YETHEMBA MUNICIPALITY Applicant

and

XOLELA MSWELI First Respondent

SOUTH AFRICAN LOCAL GOVERNMENT Second Respondent
BARGAINING COUNCIL

COMMISSIONER KELVIN KAYSTER Third Respondent

Heard: 26 June 2024
Supplementary submissions received from the Applicant on 25 July 2024 and
the First Respondent on 5 August 2024. Missing portion of the transcript and
outstanding exhibit furnished to the Court on 6 August 2024.

Delivered: This judgment was handed down electronically by circulation to the
Legal Representatives of the Applicant and the First Respondent by
email, publication on the Labour Court website and release to

SAFLII. The date and time for handing - down is deemed to be 14h30
on 7 April 2025.


JUDGMENT


KROON , AJ

Overview

[1] Public confidence in government institutions depends on the officials who are
duty-bound to serve the people , doing so diligently and with integrity. Public
servants are the stewards of the trust of the populace . Accountability,
whether disciplinary, civil or criminal is one of the measures embraced by the
Constitution of the Republic of South Africa, 1996 (the Constitution) to
combat the culture of impunity which haunts our administration .
Accountability is an antidote to the bovine apathy which casts a shadow over
our State organisations . Without accountability we see, in real time, the
whittling away of the cornerstones of democracy and the inexorable descent
into a regime where maladministration is normalised . When public servants
who are guilty of malfeasance are led to feel safe in the knowledge that their
misconduct will have no real consequences, the negative outworkings are
perva sive. Service delivery is compromised . Those who suffer are the
vulnerable and the powerless. The damage done by sustained
unaccountability runs deep . It may take generations to undo. Often, many
years after the fact , wasteful and expensive litigation must be embarked upon
to right the wrongs which mismanagement and abuse of power have left in
their wake . In a self -review application, the Supreme Court of Appeal in
Govan Mbeki Municipality v New Integrated Credit Solutions (Pty) Ltd1 put it
like this :


1 [2021] 2 All SA 700 (SCA); 2021 (4) SA 436 (SCA)

“[47] ... However, if the maladministration or corruption is discovered
late by conscientious officials seeking to take corrective and
appropriate action, courts might insist in the future that public
authorities seeking time indulgences set out the steps they t ook
in relation to the misconduct by errant officials, that resulted in
the need for corrective action, including, but not limited to
disciplinary actions, and where appropriate, criminal
proceedings . All the more so, if the corruption or
maladministration was hidden from disclosure by inept or corrupt
officials . If a service provider was complicit then questions might
be asked about what steps were taken by the public authority in
relation to such complicity. Beyond the courts, these aspects
might even be catered for by legislation. We must all of us, in
every branch of the State and civil society, make every effort to
protect public monies and ensure that our country’s necessary
developmental goals as envisaged by the Constitution, in the
interest of all o ur people are met ....” (own emphasis)

[2] What the Court was saying, by way of the Laozian2 clarion call in the last
sentence , is that, to set things right , we must begin by holding errant public
officials and their accomplices accountable . This brings me to the matter at
hand. It is a story about a municipal manager who kept his misconduct secret
and, in the words of Navsa ADP3 above, “hidden from disclosure ”. When it
was discovered , he embarked upon an exercise of damage control par
excellence in arbitration proceedings , the arena where he successfully fought
his dismissal. It is those proceedings which form the subject of this
application .

[3] The Applicant (the Municipality) seeks to review , set aside and substitute an
arbitration award (the Award) issued by the Third Respondent (the Arbitrator)
under the auspices of the Second Respondent (the Bargaining Council). The

2 The ancient Chinese philosopher and founder of Taoism, Lao Tzu, is reputed to have said:
“A journey of a thousand miles begins with one step ”
3 As he then was .

application is opposed by the First Respondent (Mr Msweli). The opposition
is coupled with a counter application to make the A ward an order of Court. In
the light of the decision to which I have come, the counter application falls
away for the obvious reason that it is not competent to make an award, which
has been set aside, an order of Court.

[4] Mr Msweli , the erstwhile municipal manager of the Municipality , was
dismissed for misconduct on 9 April 2021 . He was reinstated by the Arbitrator
on 22 September 2021. This on the back of a determination that his dismissal
was substantively unfair. The Arbitrator determined that, although Mr Msweli
was guilty of financial misconduct , financial misconduct which the Arbitrator ,
in his own words , acknowledged was “rather serious”, the sanction of
dismissal was nonetheless too harsh . Aggrieved by th e Award, the
Municipality has approached this Court for relief.

The prosecution of the application

[5] The heads of argument filed on behalf of the Municipality did not contain a ny
reference s to the substantial record . They d id not refer to either the
transcript or the exhibits. Similarly, the heads of argument filed on behalf of
Mr Msweli contained no references to the exhibits and only a few vague
references to the transcript. Both sets of heads of argument were thus of
little assistance to the Court . The filing of what is sometimes termed pro
forma heads of argument has been frowned upon by the Labour Appeal
Court .4 One of the duties of Counsel is, in his5 heads of argument, to capture
and marshal the salient portions of the evidence in a logical (most often
chronological), concise and precise manner so as to assist the Court in
coming to the correct decision . This exercise self-evidently requires detailed
references to the pages of the transcript6. Where reference is made to

4 Cf. Minister of Safety Security v Mashego & Others [2003] 6 BLLR 578 (L AC) at para [10] and Early
Bird Farm (Pty) Ltd v Food and Allied Workers Union and Others (2004) 25 ILJ 2135 (LAC) at paras
[50] to [51]
5 The masculine gender is used in this judgment for the sake of conciseness. References to the
masculine gender include the feminine gender .
6 This means referring to each relevant line on the applicable page .

exhibits , then the page number and paragraph should be identified7. This is
often a labour intensive exercise . Nonetheless, it must be undertaken
because the Court , with its limited resources, should not be burdened with
the task of having to sift and trawl th rough the record with a view to verifying
whether factual assertions made in the heads of argument find support in the
record . Compliance by Coun sel with the duty to set out a logical and
coherent chronology was vita l to the adjudication of this application given the,
at times, haphazard and otherwise confusing manner in which the evidence
was adduced before the Arbitrator. The failure of both representatives to
provide such a chronology placed an unnecessary burden on the Court as it
tried to put together the pieces of the puzzle .

[6] In the light of the form which the heads of argument took, the Court directed
that Counsel file supplementary submissions. Matters were not helped by the
circumstance that , when supplementary heads of argument were eventually
delivered , the page references appear ed to correspond to the pagination in
the disciplinary proceedings rather than that in the Court file . There were als o
references to documentation which did not form part of the record8.

[7] The other issue which hampered the hearing was that the record was
incomplete . A substantial portion of the transcript had been omitted , as had
the pre -arbitration minute. It was agreed , at the hearing , that the outstanding
documentation would be furnished to the Court and the parties were
reminded of this obligation in a directive dated 24 July 2024. On 6 August
2024 the attorney for Mr Msweli , helpfully , furnished a copy of the
outstanding portion of the record , even though his client was not dominus
litus. He also furnished the Court with a copy of the missing pre -arbitration
minute . In his covering email, he observed that the minute was not signed by
the parties and questioned whether there was in fact any minute concluded .
No response was received from the legal representatives of the Municipality .

7 See paragraph 48(2) (b) of the Rules regulating the conduct of the proceedings in the Labour Court
(the Rules ).
8 By way of illustration, Mr Msweli referred in his supplementary submissions to the “judgment ” handed
down pursuant to the disciplinary hearing, a document which was not part of the record .

The query about the status of the pre -arbitration minute , whilst perhaps
understandable ,9 sits uneasily with the content of the transcript from which it
is clear that the parties accepted that there was a binding pre-arbitration
minute . This all notwithstanding, in my view nothing turns on the contents of
the pre-arbitration minute.

The Charges and the Arbitrator’s finding s

[8] Three charges were preferred against Mr Msweli . The Municipality found him
guilty o n the first two and acquitted him on the third . This left , for
consideration by the Arbitrator, charges one and two . Charge one was
comprised of three counts which revolved around (a) the approval , by
Mr Msweli, of a variation order , (b) the appointment , by Mr Msweli, of a
service provider , Kuhlemcebo Engineers (the Service Provider) without
following any Supply Chain Management (SCM ) procedures and (c) the
failure by Mr Msweli to institute legal proceedings to recover monies which
had been erroneously paid for work not done. Charge two concerned an
allegation that Mr Msweli had sought to mislead the Municipal Council (the
Council) by circulating a document which he misrepresented was a report
generated by the Municipal Public Accounts Committee (MPAC) .

[9] As a point of reference and to place the analysis which follows in context, I
quote the charge sheet:

“1. FINANCIAL MISCONDUCT

1.1 You intentionally, alternatively grossly negligently
breached your fiduciary duty to your employer, Inxuba
YeThemba Municipality, and/or failed to perform the
functions of your office with due care, diligence, good faith
and honesty and/or failed to act in the best interests of the

9 The attorney who represented Mr Msweli in this Court was not the same attorney who represented
and appeared in the arbitration proceedings .

Municipality in that, in your capacity as the Municipal
Manager , you:

Count one

1.1.1 By your signature thereto and contrary to section
116(3) of the MFMA, approved a variation order
on municipal contract or tender with the followin g
description -IYM 04/01/2017T, the amount of which
exceeded your financial delegations.

1.1.2 In your conduct as afore -stated you acted contrary
to section 171(1)(c) of the MFMA, caused and/or
failed to prevent unauthorised and/or irregular
and/or fruitless and wasteful expenditure.

Count two

1.1.3 You, in a letter dated 24 July 2018, awarded
and/or a pproved and/or allowed and or permitted
the appointment of Kuhlemceb e (sic) Engineers as
consultants for the Refurbishment and Upgrading
of the Municipal Electrical Infrastructure and
Network Located in Cradock and Middleburg.

1.1.4 You, in a letter dated 17 October 2018, further
instructed the said service provider to proceed
with the pre-engineering and implementation work
as soon as they possibly can.

1.1.5 You further authorised and/or approved and/or
allowed and or permitted payment o f and/or
induced the Municipality to pay a sum of
R688 896.00 to credit Kuhlemcebo Engineers , a

service provider appointed contrary to the
provisions of the supply chain management
(SCM ) processes thereby acting in breach of
section 171(1)(a) and (c) of the MFMA.

1.1.6 The afore -mentioned conduct (appointment
without following SCM processes) amounts to
irregular appointment since it was made without
following the prescribed SCM process and
therefore constitutes breach of sections
62(1)(f)(iv); 111 and 115(1) of the MFMA.

Count three

1.1.7 You terminated a contract between the
Municipality and Loyiso Consultants but omitted
and/or failed and/or neglected to recover monies
paid to the said service provider for which no
services had been rendered. In so doing you
breached the provisions of section 62(1)(a) and
(d) of the MFMA read together with cl ause 3.13 of
your employment contract .”

2. GROSS DISHONESTY

2.1 You intentionally, alternatively grossly negligently breached your
fiduciary duty to your employer, Inxuba YeThemba Municipality,
and/or failed to perform the functions of your office with due care,
diligence, good faith and honesty and/or failed to act in the best
interests of the Municipality in that, in your capacity as the
Municipality Manager, you distributed and/or tabled and/or
submitted a document (ostensibly MPAC report), titled Adoption
of the Municipal Public Accounts Committees (MPAC)
2018/2019 oversight report, to the Municipal Council without the

knowledge and/or approval of the MPAC Chairperson, thereby
creatin g a false impression that it was MPAC report, whilst you
were aware that it was not.

2.2 In your conduct as aforesaid you committed (sic) breach of item:

2.2.1 7(b) of the Code of Conduct for Municipal Staff Members
contained in Schedule 2 of the Local Government
System Act 32 of 2000; and

2.2.2 20 of annexure A to the Local Government: Disciplinary
Regulations for Senior managers, 2010. ”

[10] The Arbitrator determined that Mr Msweli fell to be acquitted o n charge one ,
count three (the alleged failure to comply with his duty to recover monies
erroneously paid by the Municipality) and charge two (the alleged
misrepresentation of the MPAC report). The Arbitrator found Mr Msweli guilty
on charge one , count one (the approva l of the variation order in excess of his
financial delegations) and charge one, count two (the appointment of the
Service Provider without following any SCM procedures). The Arbitrator
however reasoned that the appropriate sanction to be imposed was not that
of dismissal . He accordingly reinstated Mr Msweli , but he did so without any
retrospectivity.

Overview of the grounds of review

Introduction

[11] Shorn of all elaboration, the Municipality assert s that the Arbitrator failed to
apply his mind to the evidence and the legal issues . He accordingly came to
a decision to which no reasonable Arbitrator could have come. In a word, it is
the case of the Municipality that the Award was not justified if proper regard
is had to the evidentiary material before the Arbitrator.


[12] The Municipality challenged the Arbitrator ’s findings that Mr Msweli fell to be
acquitted of the allegations of misconduct relating to the failure to institute
legal proceedings and the misrepresentation concerning the MPAC report .
Counsel for the Municipality , Mr Nzuzo , did not however , in argument, persist
with these grounds of review with any vigour . It became clear during the
hearing that t he gravamen of the complaint of the Municipality was the
determination which the Arbitrator made when it came to the fairness of the
sanction which had been imposed by the Municipality. The application thus
had the character of a so-called “ penalty review ”. I will, nonetheless, briefly
dispose of the grounds attacking the Arbitrator’s acquittal of Mr Msweli on the
two allegations of misconduct , as they were not abandoned.

The alleged failure by Mr Msweli to institute legal proceedings

[13] The Arbitrator found that Mr Msweli was not guilty o n count three of charge
one i.e. the charge alleging that Mr Msweli had not taken steps to institute
legal proceedings against Loyiso Consultants (Loyiso ) to recover monies
which had allegedly been paid for services which had not been rendered.
The Arbitrator found that shortly after legal advice had been furnished to the
Municipality recommending that legal proceedings be instituted, Mr Msweli
was suspended and accordingly could not be blamed for not having instituted
the legal proceedings contemplated by this part of charge one.

[14] It is correct that , after having sought legal advice from the attorneys of the
Municipality regarding whether monies could be recovered, Mr Msweli , on 16
April 2020, received a communication from these attorneys advising the
Municipality that three steps needed to be taken before the launching of legal
proceedings . Firstly, various documentation relating to the tender in question
was required to be collated . Secondly, a supplementary report was to be
obtained setting out the defects in the work purportedly done by the supplier.
Thirdly, a quantification exercise by an expert had to be under taken in order
to calculate the costs of the remedial work. Thereafter , Mr Msweli was
suspended on 28 May 2020 .


[15] The Municipality led no evidence to demonstrate that Mr Msweli had taken a
decision not to institute legal proceedings. If anything, seeking advice from
the legal representatives of the Municipality about whether legal action could
be taken against Loyiso was an indication that Mr Msweli was of the mind to
address the situation . The highwater mark of th is complaint was that , at the
stage that Mr Msweli was suspended, no legal proceedings had yet been
instituted against Loyiso . It does not however follow , as a matter of course,
that because legal proceedings had not been instituted by the time that
Mr Msweli was suspended that he had failed or refused to do so. There was
also no suggestion , at the date on which Mr Msweli was suspended, that the
Municipality had lost its right to institute proceedings or was in any way
prejudiced. It was further conceded that, after the suspension of Mr Msweli,
the Municipality could have instituted the contemplated legal proceedings but
failed to do so. The Arbitrator’s determination on this allegation of misconduct
cannot be faulted .

Misrepresentation of the MPAC Report

[16] The Arbitrator also exonerat ed Mr Msweli when it came to his alleged
misleading of the Council about the MPAC report. In summary, what
happened is that an official (not Mr Msweli) had prepared a document which
Mr Msweli described as a “ line item ” which had been placed on the agenda
for the meeting, the purpose of which was, on the face of the document, to
motivate for the adoption of the report by MPAC , although it was, perhaps
unfortunately, labelled as a “report” . The generation of the line ite m soliciting
the adoption of the MPAC report was, in a sense, premature as, at the time
the meeting was convened, the report had yet to be finalised . It, curiously ,
even referred to what was to be contained in the MPAC report when that
report had not yet been completed .

[17] It was Mr Msweli’s version that he anticipated that the report would have
been ready by the date of the Council meeting and had , on that basis,
circulated the line item. This appears to have caused a degree of
consternation at the meeting because the Mayor, who was newly appointed

and had been in the job for a month, was under the impression that the
document was the actual MPAC report , notwithstanding the circumstance
that, as mentioned above, if regard was had to the substance of the line time
it would have been apparent that it was not. In this context, it was not in
dispute that it was not for Mr Msweli to have tabled the MPAC report. That
was a task for the Chairperson of MPAC. The evidence demonstrated that, if
anything, it was the Mayor, not Mr Msweli , who wrongl y referred to the
document as the MPAC report. The members of MPAC, who were in
attendance at the meeting, unsurprisingly so, pointed out that the line item
was not the report of MPAC.

[18] As to the allegation that Mr Msweli misrepresented that the document was
the MPAC report, the Arbitrator found this contention to be implausible . This
was because , so he said, the members of MPAC were members of Council
and it followed that it could not have been the intention of Mr Msweli to have
deceived persons about the very existence of their own report . Such a
nonsensical plan would have had no hope of success. I agree . I would add
that it is all but inconceivable that Mr Msweli would seek , for no motive or
reason, to place his own job in jeopardy by, as it were, seeking to pull the
wool over the eyes of members of Council in a manoeuvre so clownish that it
was bound to fa il. In such circumstances there can be no scope for imputing
a dishonest intention on the part of Mr Msweli as the Municipality sought to
do. In my view, this charge was more about administrative confusion and
perhaps personalities, even egos, and was in truth no more than a proverbial
storm in a teacup.

Conclusion on the grounds of review pertaining to the Arbitrator’s findings of not
guilty

[19] It follows from what I have stated above that the grounds of review which
were aimed at impugning the Arbitrator’s findings which exonerat ed
Mr Msweli in respect of charge one, count three and charge two cannot be
sustained. That, however , is not the end of the matter. As mentioned, the

mainsta y of the application is an attack on the Arbitrator’s determination as to
what would be a fair sanction given the misconduct committed by Mr Msweli .

Context within which the misconduct was committed

The importance of context

[20] Before dealing with the Arbitrator’s findings when it comes to sanction, it is
essential that the matter be placed in its true and proper context. In
Magnificent Mile Trading 30 (Pty) Limited v Charmaine Celliers NO and
Others ,10 it was observed that:

“As it’s often said , context is everything. ”11

[21] The maxim finds application to the assessment of the gravity of the
misconduct committed by Mr Msweli. The intrinsic gravity or otherwise of
such misconduct aside, an analysis and evaluation of the misconduct can
only be properly performed if due consideration is given to the context within
which the misconduct was committed inclusive of the post occupied by Mr
Msweli within the Municipality and the framework, constitutional, statutory
and contractual, within which he was required to fulfil his obligations as the
municipal manager .

The appointment of a municipal manager

[22] Section 54A(1) of the Local Government: Municipal Systems Act 32 of 2000
(the Systems Act ) requires the C ouncil to appoint :

“(a) a municipal manager as the head of the administration of the
municipal council .” (own emphasis)

10 2020 (4) SA 375 (CC)
11 At paragraph [37]. This maxim is attributed to Lord Steyn – see R v Secretary for the Home
Department, ex parte Daly [2001] UKHL 26; [2001] 3 All ER 433 (HL) at 447 a as approved in
Aktiebolaget Hässle and Another v Triomed (Pty) Ltd [2002] 4 All SA 138 (SCA); 2003 (1) SA 155
(SCA) at para [1] .


[23] Section 54A(2) of the Systems Act provides that :

“(a) A person appointed as municipal manager ... must at least have the
skills, expertise, competencies and qualifications as prescribed .”

[24] A municipal manager is also designated as the accounting officer of the
Municipality for purposes of both the Systems Act12 and the Local
Government: Municipal Finance Management Act 56 of 200313 (the MFMA) .
In Notyawa v Makana Municipality14 it was observed that “ municipal
manager s are vital to the proper administrative functioning of
municipalities ”.15 As the head of the administration and as the accounting
officer, the municipal manager is in charge of service delivery, financial
management, compliance and strategic planning.

Financial management within municipalities

[25] The overarching Section 195 of the Constitution provide s that administration
within government must be accountable, that a high standard of professional
ethics must be promoted and there must be an efficient, economic and
effective use of resources.16 The standard s set out in Section 195 of the
Constitution and the legislation referred to below are mediums designed to
ensure that municipalities fulfil their Constitutional duty17 to deliver services to
the communities they serve in a sustainable manner.

[26] The Legislature has seen fit , through the MFMA and the Regulations
promulgated thereunder as well as Treasury Guidelines , to devot e much time
to putting in place constraints and guardrails so as to ensure that the
interests of municipalities and in particular their assets and resources are

12 Section 55
13 Section 60
14 2020 (2) BCLR 136 (CC)
15 At para [11]
16 Section 195 (1) (a), (b) and (f)
17 Section 152(1)(b) of the Constitution

protected . The MFMA has as its purpose to secure sound and sustainable
management of the fiscal and financial affairs of municipalities by , inter alia ,
setting norms and standards for the management of revenues and
expenditures .18

[27] Section 6 2 of the MFMA requires the accounting officer of a municipality to
be responsible for the management of the financial administration of a
municipality and places an obligation on him , inter alia , to take all reasonable
steps to ensure that the resources of the municipality are utilised properly ; to
mainta in accurate financial records, to prevent unauthorised ; irregular or
fruitless and wasteful expenditure.

[28] Section 78 of the MFMA requires all officials of a municipality exercising
financial management responsibilities to take all reasonable steps to ens ure
that the system of financial management and internal control established for
a municipality are carried out diligently . It is required of the relevant officials
to ensure that the financial and other resources of a municipality are utilised
effectively, efficiently, economically and transparently . Further , unauthorised
and irregular or fruitless and wasteful expenditure and any other losses must
be prevented. Senior managers perform ing obligations within the province of
this Section do so under the supervision and watchful eye of a municipal
manager .19

Procurement

[29] All procurement by Organs of State must be scrutinised through the lens of
Section 217(1) of the Constitution. It provides that:

“When an organ of state ... contracts for goods or services it must do so
in accordance with a system which is fair, equitable, transparent,
competitive and cost -effective .” (own emphasis)

18 Section 2 of the MFMA
19 Section 78 (2) of the MFMA


[30] In terms of Section 111 of the MFMA, municipalities are obliged to develop a
SCM policy which comports with Section 217 of the Constitution and satisfies
the plethora of regulatory conditions contained in Section 112 of the MFMA .
In terms of Section 62(1)(f)(iv) of the MFMA , it is the accounting officer who
must ensure that an SCM policy is implemented in accordance with the
applicable provisions in the MFMA .

[31] Section 118 of the MFMA provides as follows:

“118. No person may –
a) interfere with the supply chain management system of a
municipality or municipal entity; or
b) amend or tamper with any tenders, quotations, contracts or bids
after their submission .”

[32] A municipal manager is required to account for, report on, and accept
responsibility for financial expenditure when goods and services are
procured. More often than not, as in this case , procurement in Local
Government involves the expenditure of large amounts of public funds.
Regrettably, experience has taught us tha t there is a minefield of ills which
plague the awarding of tenders or “ bids”. Municipalities have shown
themselves to be vulnerable targets when it comes to corruption, nepotism,
cronyism and even institutional capture. It is thus imperative that
procurem ent s hould be free from any appearance of improper interference or
influence. National Treasury has, through its circulars, stressed that audit
findings have revealed that municipalities have been guilty of unsound
financial management including the circumvention of official competitive
bidding processes. It has frequently stated that the relevant provincial
treasuries are available to assist municipalities should guidance be required .

[33] In guarding against interference in procurement and SCM processes, it is
critical that a bright line be drawn between the role of the governing and
legislative body (the Council) and t hat of the officials who are in charge of the

administration of the Municipality (the municipal employees led by the
municipal manager ). The Council exercises what is called political oversight
and oversees the administration . It takes overall responsibility for policy
decisions and the approval of the budget. Whilst the Council approves the
budget, it is the officials of a municipality who incur expenditure and who are
responsible for the effective, efficient, economical and transparent use or
management of the municipal resources.

[34] The Code of Conduct for Councillors prohibits their interference in
operational issues .20 In terms of Section 52(b) of the MFMA, the Mayor of a
municipality is expressly prohibited from interfering with the responsibilities of
an accounting officer. In terms of Section 117 of the MFMA, Councillors are
prohibited from participating in procurement processes. Requiri ng that
Councillors and management stay in their respective lanes is essential to
maintaining the integrity of the SCM system of a municipality. Councillors are
political appoint ees. Although many politicians no doubt possess impressive
qualifications , there is no requirement that they have any specialised
knowledge or experience when it comes to SCM or any other aspect of
financial management. By contrast, the employment of officials within a
municipality must be based on merit and they are required to possess the
requisite qualifications and experience attaching to the post they occupy .
Section 119 of the MFMA provides that all officials involved in the
implementation of the SCM Policy must meet prescribed competency levels.
The more senior the employee, the greater the qualifications and experience
required . Once appointed, officials from SCM , unlike Councillors, have
security of employment in that they are protected from unfair dismissal in
terms of, inter alia , the provisions of the Labour Relations Act 66 of 1995 (the
LRA) . There can thus be no excuse for them to become pliable employees
who shirk their responsibilities when it comes to SCM and other aspects of
financial management.


20 See item 1 2 of the Code of Conduct for Councillors Schedule 7 of the Systems Act .

[35] As mentioned, i t is, regrettably , common knowledge that one of the most
ubiquitous sins in Local Government is the improper interference in
procurement processes . The promise of lucrative tenders has, ala the gold
rush prospect ors of days of y ore, spawned a breed of businessmen who
have become known as “tenderpre neurs”.21 Although it is a bleak reality to
digest, it cannot be gainsaid that there exist delinquent politicians and greedy
businessm en who, motivated by self -interest , view tender s with a predatory
eye. Officials , especially SCM officials of a municipality are, on the other
hand, required to be both objective and independent . In a word, “ice cold ”22.
But the Constitution demands more of senior officials than this . They must
have the character to stand up to powerful political and business interests. In
Member of the Executive Council for Health, Province of the Eastern Cape
NO and another v Kirland Investments (Pty) Limited t/a Eye and Laser
Institute both the Supreme Court of Appeal23 and the Constitutional Court24
stressed that those who bear the heavy mantle of making administrative
decisions which bring in their train the expenditure of large amounts of public
funds or other matters of consequence, should demonstrate “moral courage”
and not yield to improper interference or influence . Even b efore the advent of
the Constitution , at common law, it was trite that a functionary tasked with
exercising a discretion must do so independently and not at the behest , or to
satisfy , the wishes of a third party25.

Contractual obligation

[36] Turning to t he contractual obligations resting on and common law duties of a
municipal manager . He owes a fiduciary duty of good faith to and must only
act in the interests of the municipality. The nature of th is duty was explained

21 A term commonly used in South Africa to describe an individual or business that profits from
government tenders, often through political connections and not through merit or fair competition .
22 See Coega Development Corporation (Pty) Limited v Commission f or Conciliation, Mediation and
Arbitration and Others (2016) 37 ILJ 923 (LC); [2016] 2 BLLR 151 (LC) at para [93]
23 2014 (3) SA 219 (SCA); [2013] JOL 30626 (SCA) at paragraphs [1], [7] to [11] which portion was
requoted and confirmed by the Constitutional Court at para [31]
24 Member of the Executive Council for Health, Province of the Eastern Cape NO and another v
Kirland Investments (Pty) Limited t/a Eye and Laser Institute 2014 (3) SA 481 (CC) at paragraphs [31]
and [38]
25 Hofmeyr v Minister of Justice and Another 1992 (3) SA 108 (C) at 117 F-G

by Heher JA in Phillips v Fieldstone Africa (Pty) Limited & Another26 in
comprehensive detail with reference to both local and international
jurisprudence. Importantly, the more senior the position, the greater the
duty.27

Financial misconduct by a municipal manager

[37] Section 171 of the MFMA makes it clear that “ financial misconduct ” is a
trespass which is considered to be more serious than others . It has its own
category. It reads :

“Financial misconduct by municipal officials

171.(1) The accounting officer of a municipality commits an act of
financial misconduct if that accounting officer deliberately or
negligently —
(a) contravenes a provision of this Act;
(b) fails to comply with a duty imposed by a pro vision of this Act
on the accounting officer of a municipality;
(c) makes or permits, or instructs another official of the
municipality to make, an unauthorised, irregular or fruitless
and wasteful expenditure; or ...”

When do municipal managers commit criminal conduct

[38] As to what constitutes an offence by a municipal manager, the Legislature
has provided that:

“Offences


26 [2004] 1 All SA 150 (SCA); 2004 (3) SA 465 (SCA) see generally paras [30] to [34]
27 See also National Union of Metalworkers of South Africa obo Nganezi and Others v Dunlop Mixing
and Technical Services (Pty) Limited and Others 2019 (5) SA 354 (CC) generally at paras [49] to [76]

173. (1) The accounting officer of a municipality is guilty of an offence if
that accounting officer —
(a) deliberately or in a grossly negligent way —
(i) contravenes or fails to comply with a provision of section
61(2)(b), 62(1), 63(2)(a) or (c), 64(2)(a) o r (d) or 65(2)(a),
(b), (c), (d), (f) or (i);
(ii) fails to take reasonable steps to implement the
municipality’s supply chain management policy referred
to in section 111;
(iii) fails to take all reasonable steps to prevent unauthorised,
irregular or fruitless and wasteful expenditure; or
(iv) fails to take all reasonable steps to prevent corruptive
practices —
(aa) in the management of the municipality’s assets or
receipt o f money; or
(bb) in the implementation of the municipality’s supply
chain management policy;
(b) deliberately misleads or withholds information from the
Auditor -General on any bank accounts of the municipality or
on money received or spent by the munici pality; or
(c) deliberately provides false or misleading information in any
document which in terms of a requirement of this Act must
be —
(aa) submitted to the Auditor -General, the National
Treasury or any other organ of state; or
(bb) made public. ...”

[39] When it comes to the sentences which a Criminal Court may impose for
financial misconduct, the MFMA provides:

“Penalties


174. A person is liable on conviction of an offence in terms of section 173
to imprisonment for a period not exceeding five years or to an
appropriate fine determined in terms of applicable legislation.”

When will a municipal official be personally liable for expenditure

[40] There are other serious consequences for officials who are responsible for
unauthorised, irregular or frui tless and wasteful expenditure. I quote further
from the MFMA:

“Unauthorised, irregular or fruitless and wasteful expenditure

32. (1) Without limiting liability in terms of the common law or other
legislation
…
(d) any political office -bearer or official of a municipality who
deliberately or negligently made or authorised a fruitless
and wasteful expenditure is liable for that expenditure.
…
(2) A municipality must recover unauthorised, irregular or fruitless
and wasteful expenditure from the person liable for that
expenditure unless the expenditure —
…
(b) in the case of irregular or fruitless and wasteful
expenditure, is, after investigat ion by a council committee,
certified by the council as irrecoverable and written off by
the council.”

[41] In Mbambisa and Others v Nelson Mandela Bay Metropolitan Municipality28
the Supreme Court of Appeal held that Section 32 of the MFMA was a self -
standing provision that imposed statutory liability on political office -bearers

28 (2025) 46 ILJ 277 (SCA) At the time of the delivery of this judgmen t leave to appeal to the
Constitutional Court was pending .

and municipal officials for unauthorised, irregular, and fruitless and wasteful
expenditure as defined by Section 1 of the MFMA. The Court held that the
recovery of unauthorised, irregular and fruitless and wasteful expenditure is
not optional. It noted that the Legislature viewed the prohibited conduct in
such a serious light that it placed an obligation on the accounting officer to
report to the Sout h African Police Service all cases of alleged irregul ar
expenditure which constitute criminal offence s.

The Charge concerning the appointment of the Service Provider without following
any SCM procedures

Introduction

[42] It was not in dispute that Mr Msweli appointed the Service Provider on a
contract potentially worth millions of Rands without following any SCM
procedures. Mr Msweli maintained that he had acted in terms of Regulation
36 of the Municipal Supply Chain Management Regulations (the
Regulations).29 In summary, i t was Mr Msweli’s case that a deviation was
necessary because the Municipality was pressed for time when it came to the
submission of a business plan required by the Depar tment of Energy (the
Department). He feared that if he had followed the SCM procedures, this
would have delayed matters and the Municipality may, as a result, have
forfeited funding, so he said.

Statutory framework

[43] The Regulation, as relied on by Mr Msweli, provides:

“36 Deviation from, and ratification of minor breaches of,
procurement processes


29 At the arbitration reference was made to Section 36 of the SCM Policy of the Municipality, a
document not contained in the record before the Court. It is however clear from a reading of the
transcript that Section 36 of the SCM Policy mirrored Regulation 36 .

(1) A supply chain management policy may allow the accounting
officer —

(a) to dispense with the official procurement p rocesses
established by the policy and to procure any required goods
or services through any convenient process, which may
include direct negotiations, but only —

(i) in an emergency ;

(ii) if such goods or services are produced or available
from a single provider only;

(iii) for the acquisition of special works of art or historical
objects where specifications are difficult to compile;

(iv) acquisition of animals for zoos; or

(v) in any other exceptional case where it is impractical or
impossible to follow the officia l procurement processes ;
and

(b) to ratify any minor breaches of the procurement processes
by an official or committee acting in terms of delegated
powers or duties which are purely of a technical nature.

(2) The accounting officer must record the reasons for any deviations
in terms of subregulation (1)(a) and(b) and report them to the next
meeting of the council, or board of directors in the case of a
municipal entity, and include as a note to the annual finan cial
statements .” (own emphasis)

[44] The reason for the constraints on deviations is to curb abuse in the form of
either patronage or corruption, to ensure fairness and transparency when it

comes to the appointment of service providers and to ensure value for money
when it comes to the securing of goods and services by the Municipality. In
an article published in De Rebus30 the author31 notes the abuse of Regulation
36 discretionary powers by municipal manager s. He urges stakeholders not
to lose sight of the fact that Organs of State, such as municipalities , should
do everything within the parameters of the law to procure goods or services
on the best available terms to ensure conformity with Section 217(1) of the
Constitution , which looms over every procurement process.

[45] The peremptory obligation to report deviations fosters accountability and
transparency. It is one of the mechanisms for reining in abuse. In Allpay
Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive
Officer of the South African Social Security Agency and Others32 the
Constitutional Court emphasised that the abuse of the deviation procedure
was one of the oldest tricks in the book . It explained that:

“[27] …As Corruption Watch explained, with reference to
international authority and experience, deviations from fair
process may themselves all too often be symptoms of
corruption or malfeasance in the process . In other words, an
unfair process may betoken a deliberately skewed process.
Hence insistence on compliance with process formalities has a
three -fold purpose: (a) it ensures fairness to participants in the
bid process; (b) it enhances the likelihood of e fficiency and
optimality in the outcome; and (c) it serves as a guardian
against a process skewed by corrupt influences .

…

[40] Compliance with the requirements for a valid tender process,
issued in accordance with the constitutional and legislative

30 1 May 2024
31 Sithelo Magagula
32 2014 (4) SA 179 (CC)

procurement framework, is thus legally required. These
requirements are not merely internal prescripts that SASSA may
disregard at whi m. To hold otherwise would undermine the
demands of equal treatment, transparency and efficiency under
the Constitution . Once a particular administrative process is
prescribed by law, it is subject to the norms of procedural
fairness codified in PAJA. Deviations from the procedure will be
assessed in terms of those norms of procedural fairness . That
does not mean that administrators may never depart from the
system put into place or that deviations will necessarily result in
procedural unfairness. But it do es mean that, where
administrators depart from procedures, the basis for doing so will
have to be reasonable and justifiable , and the process of change
must be procedurally fair. ” (own emphasis)

The Arbitrator’s determination

[46] By way of introduction , I quote the Arbitrator’s findings on this charge:

“Allowed/approved/permitted the appointment of Kuhlemcebo
Engineers , and instructing them to proceed with pre -engineering and
implementation work

…

34. The employee was charged for appointing Kuhlemcebo
Engineers without following the prescribed SCM processes. This
charge does not require detailed consideration, because the
employee conceded that he failed to comply with the SCM
processes. He however expl ained that he was pressed for time,
as the municipality stood to lose funding from the Department of
Energy for electricity upgrades. He further argued that the
service provider was appointed on risk, and the former mayor

was aware of his actions, and was expected to inform Council
accordingly.

35. Clause 36(1) of the employer’s SCM policy allows the accounting
officer to dispense with the official procurement processes, but
only in an emergency (amongst a few exceptions). The employer
disputed that it wa s an emergency situation, because the
awarding of funds is gazetted, and happened in any event
despite the submissions prepared by Kuhlemcebo Engineers .

36. As far as I know, risk appointment (contingency basis) are (sic)
not provided for in the municipal financial legislation. The MFMA
places an obligation on an accounting officer to safeguard the
public funds under his/her control, the legislative measures are
intended to prevent any potential of wasteful, fruitless and/or
irregular expenditure. I am not convinced that the appointment of
the service provider posed an emergency to the extent that the
employee could discard all procurement and SCM procedures.
Merely informing the mayor about his actions without the
slightest attempt to comply with legislati ve prescripts, is in my
view a dereliction of his fiduciary duty. I accordingly find that the
employee breached this rule.”

[47] On a broad general level, I do not have an objection to the Arbitrator ’s
reasoning . He did appreciate firstly that there was no basis to justify the
complete failure by Mr Msweli to follow SCM procedures and secondly that
Mr Msweli had not taken even one step towards reporting the purported
deviation. However, in my view, more could and sh ould have been said about
the gravity of the misconduct, having particular regard to the context within
which it was committed as well as the disingenuous manner in which Mr
Msweli mounted his defence and gave his evidence.

[48] What the Arbitrator and the parties overlooked was that the defence which
was put up by Mr Msweli , that he was acting in terms of Regulation 36, was

not a defence put to the Municipality. The defence which was put to the
witnesses of the Municipality was two -fold. Firstly, it was the case of Mr
Msweli that the Service Provider was appointed “ on risk ” and for that reason
it was unnecessary for SCM procedures to be followed. Secondly, Mr Msweli
argued that what should count in his favour is the fact that the payment to the
Service Provider (which he, himself, had authorised) was stopped and
accordingly the Municipality did not suffer any financial l osses.

[49] Before dealing with the failure by Mr Msweli to put his version about invoking
Regulation 36 to the Municipality, I will address the two defences which he
did, in fact, put to the Municipality. Leaving aside, for the moment, whether
appointments, as it were, on risk, are permissible, the more important point is
that there is, unsurprisingly, no provision in the Regulations mandating that
where service provi ders are engaged on risk , the Municipality does not need
to follow the SCM procedures. Accordingly, the outrageous suggestion by
Mr Msweli that there was a pocket of appointments which could be made by
municipalities, namely appointments on risk, which wer e subject neither to
legal scrutiny nor to the reach of Section 217 of the Constitution, falls to be
rejected out of hand. Such a contention is repugnant to the rule of law and
the principle of legality as enshrined in Section 1(c) of the Constitution.
Section 217 of the Constitution applies to all procurement. Ironically, when Mr
Msweli gave evidence, he, albeit unwittingly, acknowledged as much through
his belated reliance on , and recourse to , Regulation 36. If there were no SCM
procedures applicable, there would have been no need for a deviation.

[50] It is beyond the purview of this judgment to express a definitive view on
whether the Arbitrator was correct when he intimated that it was, in the first
place, impermissible per se for the Municipality to have entered into a
contract on risk nor is it nece ssary for me to do so given the more important
issue which is the failure by Mr Msweli to follow any SCM procedures. My
preliminary view however is that I can see no reason why such a genre of
contract should, as a matter of principle, be proscribed. I also could not find
anything in the governing prescripts which prevents contracts on risk. I am
thus not convinced that the Arbitrator was correct in his finding on this -

point.33

[51] Assuming such contracts are permissible, they must be lawful. In my view,
however , the contract which Mr Msweli purported to enter into with the
Service Provider was patently unlawful. As I understand it (the terms of the
agreement are detailed below), in substance , the agreement was that the
Service Provider would draw up a business plan gratis or free (without any
expectation of remuneration) and that if, on the strength of that business
plan, the Municipality received funding, then the Service Provider would
receive work from the Municipality which would be financed from the funding
so receive d. This arrangement has the characteristics of what in legal
parlance is called touting. To put it crudely, the arrangement was that the
Service Provider , motivated by the promise of a large amount of open ended
work being given to it in the future , would compile a business plan free of
charge. In my view, this type of quid pro quo arrangement in terms of which a
service provider effectively “ buys ” further work by performing other work for
free anathema to Section 217 of the Constitution . This is for the obvious
reason that, at the end of the day, the Service Provider will , in terms of the
agreement, be given work worth potentially millions of rands to the exclusion
of its competitors and without having to participate in a procurement process.
Such a state of affairs would not only be unfair and untransparent , but it
would provide fertile ground for abuse by the Service Provider and it would all
but be a certainty that the Municipality would not receive the best value for
money.

[52] One would have thought that the proper and lawful way to do things , if a
contract was going to be concluded on risk , would have been for the
Municipality to have followed a SCM process , expedited if necessary, in
terms of which interested parties were requested to provide quotations to
develop the business plan in question . That way, the contract would address
the situation at hand (the need to urgently draw up a business plan) , rather

33 See generally New Integrated Credit Solutions wherein the Supreme Court of Appeal did not appear
to have any difficulty with a municipality concluding a contract on risk .

than constituting a metaphorical ticket to an undetermined amo unt of work for
an extended period in the future in the absence of any SCM procedures
being followed .34 Thus, although it is not necessary for me to decide for the
purpose of this judgment, it is my strong prima facie view that the
appointment by Mr Msweli of the Service Provider was , on the terms of the
contract itself, unlawful and invalid.

[53] I turn now to Mr Msweli ’s reliance on the fact that the payment to the Service
Provider which he had authorised on the strength of the contentious
agreement was stopped . It was not in dispute that this was done by the Chief
Financial Officer (the CFO ). On the bac k of this development, Mr Msweli
sought to make capital out of the circumstance that the Municipality did not
suffer any financial losses and appeared to contend that he should, for that
reason alone, effectively be immune from criticism or culpability . I find this
argument to be contrived, cynical and self -serving. It is akin to contending
that someone who drives home intoxicated is not culpable if he does not
have an accident or that a security guard who falls asleep on duty is not
culpable if, by good fortune, the premises, which he was supposed to be
guarding, are not burgled. It is analogous to argu ing that a thief , who is
apprehended red -handed in the act of stealing monies , is not culpable
because his attempt at theft failed. Nothin g further needs to be said about
this argument, save to state that the absence of logic in it is surpassed only
by its lack of substance.

[54] As mentioned, Mr Msweli failed to put to the Municipality his version that he
had acted in terms of Regulation 36. Yet it ultimately transpired that reliance
on Regulation 36 was the foundation of his case. It is trite that, based on
notions of fairness and justice, the version of an opposing party is required to
be put to the other side so that party will have an opportunity to deal with it by
way of, inter alia , the leading of evidence. Whilst a version not so put is not
inadmissible per se , it will (save in exception al circumstances which do not

34 Ngaka Modiri Molema District Municipality v Naphtronics (Pty) Ltd and Others (M379/2015) [2018]
ZANWHC 8 (25 May 2018) at para [48]

apply to this matter ) have little or no probative value. This principle has been
endorsed by the Labour Appeal Court35, by the Supreme Court of Appeal36
and the Constitutional Court37. Masilela v Leonard Ding ler (Pty) Ltd38
elucidates the principle clearly with reference to events which occurred at
arbitration proceedings about a labour dispute . In this matter, it was only in
his evidence in chief that Mr Msweli took the arbitration into his confidence
and explained about the allegedly dire situation the Municipality was
allegedly facing , which had compelled him to act in terms of Regulation 36.
The Municipality had no opportunity to deal with any of the principa l factual
assertions underpinning th is defence which was raised ex post facto .

[55] I think that, in this matter, one can however go further. It seems to me that
the facts ineluctably drive one to the conclusion that, not only is this a version
which was not put to the Municipality and, for that reason alone, should not
be accepted , it, additionally , is a version which has all the hallmarks of a
recent fabrication. I say this for three main reasons:

55.1 The first is that Mr Msweli was legally represented and if it was his
case from the outset that he had acted in terms of Regulation 36,
then he would have instructed his legal representative to put this
version to the Municipality.

55.2 The second is that the version Mr Msweli put to t he Municipality is, as
has been pointed out, irreconcilable with the version that he
presented in evidence. The two mutually destructive versions are ,
firstly that there was no obligation to comply with SCM procedures
because the Service Provider was engaged on risk and , secondly,
that although there was such an obligation, a deviation was

35 Absa Brokers (Pty) Ltd v Moshoana N.O. and Others (2005) 26 ILJ 1652 (LAC); [2005] 10 BLLR
939 (LAC) at paras [39] to [42] SA Nylon Printers (Pty) Ltd v David [1998] 2 BLLR 135 (LAC) at 137
and 138
36 SA Veterinary Council v Veterinary Defence Association [2003] 2 All SA 156 (SCA); 2003 (4) SA
546 (SCA) at 557B -C
37 President of the Republic of South Africa and Others v South African Rugby Football Union and
Others 2000 (1) SA 1 (CC) at paras [61] to [63]
38 [2004] 4 BLLR 381 (LC) at para [28]

implemented. In such circumstances, there can be little or no ro om
for an argument that the failure to put the version was somehow an
oversight as opposed to a case where Mr Msweli changed his
version when he gave his evidence in chief.

55.3 Thirdly, as will appear from the analysis set out below, the version
which Mr Msw eli gave regarding having purportedly acted in terms of
Regulation 36 is simply not credible . It is riven with improbabilities,
illogicalities, embellishments and contradictions.

The factual matrix

[56] Before working for the Municipality, Mr Msweli was em ployed both as a
municipal manager as well as an executive director in other municipalities.
He was thus an employee with substantial experience. He commenced his
employment with the Municipality on 15 March 2018.

[57] In his evidence in chief Mr Msweli stated, for the first time, that he was under
pressure to appoint consulting engineers in order to secure funding. He did
so without following any SCM procedures as he was concerned that if he did
not set matters in motion with a degree of urgency, the Municipality may lose
funding.

[58] He thus appointed the Service Provider on 24 July 2018. The Service
Provider was tasked with preparing a business plan f or the Integrated
National Electrification Program (INEP) administered by the Department. The
purpose of the plan was to secure funding for the Municipality for the
following financial year, namely 2019/2020. The financial year for Local
Government and mun icipalities runs from 1 July to 30 June.

[59] Mr Msweli stated that the closing date for the submission of the business
plan was 6 July 2018. He did not however produce any documentation to
support this contention i.e. that the application for funding effecti vely needed
to be made one year in advance such as, for example, an invitation to apply

for funding . This notwithstanding the fact that , when the CFO gave his
evidence , he hotly disputed Mr Msweli’s version when it came to how funding
was secured by the Municipality.

[60] On a careful consideration of the timeline, it is clear that the offer of
appointment by Mr Msweli to the Service Provider was, on his own version,
made more than two weeks post the alleged deadline of 6 July 2018. The
business plan was only finali sed three weeks after the deadline, namely on
28 July 2018. What the objective facts thus demonstrate is that, despite
Mr Msweli’s concerns about being constrained by the 6 July 2018 cut-off,
non-compliance with the alleged deadline had no adverse consequences for
the Municipality .

[61] As mentioned above , it is the case of Mr Msweli that the Service Provider
was appointed on risk in the sense that it would not be paid for the work done
when it came to the compilation of the business plan , but that if funding was
secured , then the Service Provider would be engaged on further projects
which needed to be completed with a view to upgrading the electrical
services provided to communities served by the Municipality. The offer of
appointment, addressed to the Managing Director of the Service Provider, Mr
Nkabinde, read as follows:

“1. This letter serves to inform you that the client, Inxuba Yethemba
Local Municipality (IYM), has resolved to appoint your
Kuhlemcebo Engineers (Pty) Ltd, to develop the business plan to
source funding and manage the Implementation of the project
upon the approval of the required funding as per the Business
Plan for the above -mentioned project.

2. This appointment is for the inception (feasibility study) concept and
visibility (preliminary engineering design) engineering stages and
project registration wit h the Department of Energy through INEP
Grant or any other for the above -mentioned project.


...

6.1 This appointment is for the sourcing of funding for
construction, refurbishment and upgrading the electrical
infrastructure and network in both Cradock a nd Middleburg
for ensuring effective management of these facilities. In
compliance with environmental regulatory framework. The
project/s will be located in the IYM jurisdiction area.

...

7.1 The Consultant is made aware of the fact that this
appointme nt is undertaken on a provisional basis and until
such stage that approval of funding for the project is
obtained .

7.2 Upon the approval of the funding to be sourced, consider
your appointment confirmed for managing the implementation
of this project .

...

7.4 Subject to the Consultant’s performance in terms of this
appointment and the conditions as stipulated in Item 7.1, this
appointment may be considered for the extension of the
remainder of the engineering stages at the sole discretion of
the IYM.

...

8.1 The fees shall not exceed 10% of the total value of the
project.


8.2 One professional fee account per month may be submitted,
separately for each project .” (own emphasis)

[62] A response was required within seven days. In terms of the offer of
employment, Mr Msweli gave the Service Provider 14 days to finalise the
business plan.

[63] As to the value of the project, it was to be determined by the amount of
funding, if any, which was to be received by the Department . An amount of
R26 million was requested, in the business plan, by the Service Provider. It
follows that it would mean that if the application had been fully successful,
the Service Provider would be entitled to ch arge fees of up to ten percent of
that amount , which would have amounted to R2.6 million .

[64] According to Mr Msweli, what then happened is that a meeting was convened
by the Department in September 2018 . He stated, somewhat vaguely, that at
this meeting he was informed that there were “tentative indications ” by the
Department about the approval for funding. He provided no other details
about the meeting . The arbitration was not told where the meeting took place,
who attended it, whether any figures were mentioned and what purpose
could have been served by the Department convening a meeting to merely
inform the Municipality of the “tentative ” approval. There was no
correspondence, agenda or minutes to corroborate the alleged meeting.
Decisively, as with most of Mr Msweli’s evidence in respect of this charge,
the September 2018 meeting was not put to any of the witnesses of the
Municipality. One plausible inference to be drawn is that this assertion was
yet another untruth told in an ill -conceived attempt to explain the fact that the
following month he would transmit a communication to the Service Provider
instructing it to perform work (see below) .

[65] Mr Msweli testified that the next stage in the process (after the September
2018 meeting) , would have been for the Director General to have consider ed
the request for funding . Thereafter, presumably only if the Director General
was satisfied , would he then make a recommendation to Treasury for the

funding to be approved . Mr Msweli did not say as to when this would occur
but he did say that confirmation of funding would only be received the
following year.

[66] On 17 October 2018, Mr Msweli transmitted a letter to Mr Nkabinde of the
Service Provider recording as follows:

“Your letter of appointment for the REFURBISHMENT AND
UPGRADING OF THE MUNICIPAL ELECTRICAL INFRASTRUCTURE
AND NETTWORK (sic) LOCATED IN CRADDOCK AND
MIDDLEBURG DATED 18 July 2018 has the reference.

This letter serves to inform you that you are permitted to res ume with
the pre -engineering and implementation as you possible can,

Background

Commercial Development and other peripheral services have resulted
in large power requirements and as a High Demand Season the NMD
is exceeded which results in heavy penaltie s imposed by Eskom.

Thanking you in advance in anticipation of your prompt response in this
regard .”

[67] This communication, which Mr Msweli contend ed was an instruction to the
Service Provider to perform work in terms of the agreement with the Service
Provi der, is problematic on two levels . Firstly, i t records that the appointment
for the project was initially made on 18 July 2018 . It seems that it was
thereafter, on an unidentified date, held in abeyance until 17 October 2018.
This was before the appointment of the Service Provider on 24 July 2018 to
compile the business plan . It would seem further that it was even before the
decision purportedly taken in terms of Regulation 36. No explanation was
given for this contradictory state of affairs which raises the possibility that the
Service Provider was engaged even before the alleged decision on the

deviation , although this issue was, admittedly so, not traversed by any party
in the arbitration or in the papers before this Court. I thus do not intend to say
anything more about it.

[68] Secondly, as at 17 October 2018, no funding had, on Mr Msweli’s own
version, been confirmed let alone received . In short , Mr Msweli instructed the
Service Provider to perform work where there was no approved budget . This
instruction was clearly unlawful . It laid the basis for unauthorised expenditure .
The instruction was also unlawful because it was in breach of the contract
with the Service Provider which stipulated that it was only once funding had
been received that it would be permissible for the Municipality to engage the
Service Provider on the projects contemplated by the contract .

[69] What thereafter happened is that just under two weeks later, the Service
Provider submitted an invoice for an amount of R 688 896.00 . The payment of
the invoice was authorised by Mr Msweli on 13 November 2018 . The
authorisation was however “cancelled ” by the CFO on the same day , who
was shocked to discover the existence of the extraordinary contract .

[70] Tellingly , when the CFO stopped the payment there was not so much as a
semblance of an objection by Mr Msweli. He did not, by way of illustration ,
confront the CFO and inquire from him as to how he, as junior employee
reporting to him, could effectively “overrule” him. He also did not attempt to
justify his conduct with reference to Regulation 36 . He did not even mention
it. In short, he acted as one would expect an offi cial to act who has been
caught red handed engaging a service provider without having followed any
SCM procedures . Mr Msweli , remarkably so, also testified that he and the
CFO met the Service Provider and explained to it that the contract could not
be honoured because no SCM procedures were follow ed. The Service
Provider, without any ado, accepted that its appointment was unla wful and
indicated that it would not take the matter any further. Thereafter, a new
consultant was appointed and there was no prejudice to the Municipality.

[71] Confirmation of the funding was only received half a year later, on 10 May

2019 , in the form of an official communication from the Director General
which I quote:

“CONFIRMATION OF THE 2019/20 FINANCIAL YEAR ALLOCATION AND
CONDITIONS FOR TRANSFERS.

This letter serves to confirm that Inxuba Yethemba Local Municipality
has been allocated R10,773,000.00 for the implementation of the
electrification projects. The Department of Energy will transfer the
allocated funds into the municipality’s primary bank account as verified
by National Treasury on the 1 5th of July 2019, 15th of November 2019
and on the 15th February 2020.

The first transfer of July 2019 will be made on condition that the
municipality has submitted a signed contract for the implementation of
the electrification projects for the 2019/20 financial year together with a
projects list and project implementation plan. The Municipality should
also submit proof that they have appointed the service provider or in the
process of finalizing the appointment of a service provider in line with
clause 6.3 of the contract between the Department of Energy and the
municipality for the 2019/20 financial year.

The transfer for November 2019 and February 2020 will be made on
condition that the municipality has spent 80% of the previous transfer
and have comp lied with the reporting requirements in terms of Section
12(2) and 12(4) of the 2019 Division of Revenue Act and in terms of
section 71 of the Municipal Finance Management Act (MFMA).

Should the municipality not comply with the above mentioned
conditions for transfer, the municipality will be subjected to the
withholding of funds in terms of section 18, stopping of an allocation in
terms of section 18 and reallocation of funds in terms of section 20 of
the 2019 Division of Revenue Act. ”


[72] Two o bservations c an be made. The first is that the funding was in the nature
of a conditional grant. It may have been withdrawn or stopped . No monies
may have been transferred at all . This would make the contract entered into
with the Service Provider unworkable because that contract was premised on
the provision of unconditional funding . In short, given the nature of the
funding which was to be received, the condition in the contract ab out funding
could not, as a matter of fact and law, have been met.

Analysis of Mr Msweli’s evidence

[73] The CFO, testifying on behalf of the Municipality, explained that a competitive
bidding process should have been followed when it came to the appointment
of the Service Provider. He explained that a tender should have been
published before any appointment could be made so that interested parties
were afforded a n opportunity to compete for the work. The “bids” would then
be evaluated and adjudicated, culminating in an award being made.

[74] As to the regulatory framework , Regulation 19 stipulates that a municipality
may procure goods or services above a transaction value of R200 000.00
(inclusive of VAT) and long term contracts only through a competitive bidding
process39. In terms of Regulation 35 an accounting officer of a municipality
may procure consulting services, taking into account Treasury guidelines. A
contract for the supply of consultancy services (such as those for which the
Service Provider was engaged) must be procured through a competitive
bidding process , if the value of the contract exceeds R200 000 .00 or the
duration of the contract exceeds one year. Regulation 22 requires that
advertisements for competitive bidding be advertised for at least 14 days
before closing d ate, however , the accounting officer is permitted to stipulate a
shorter closing date if the shorter period can be justified on the basis of

39 No requirement for goods or services above an estimated transaction value of R200 000 .00 may
deliberately be split into parts or items of a lesser value merely for the sake of procuring the goods or
services otherwise than through a competitive bidding process. Regulation 12 provides that when
determining transaction values, a requirement for goods or services consisting of different parts or
items must as far as possible be treated and dealt with as a single transaction .

urgency or emergency or any exceptional circumstances , where it is
impractical or impossible to follow the official procurement process.

[75] Mr Msweli conceded, under cross -examination, that he was acutely aware of
the applicable SCM procedure:

“MR NZUZO : Do you mind sharing with us, with the tribunal, what is
that procedure, that process, that needs to be followed in appointing
consultants?

MR MSWELI : You are appointing a consultant, you will have to
advertise, call for proposals for the consultants to be appointed by the
municipality and then upon receiving their responses, you evaluate, you
award, then y ou issue an appointment letter. Summarily that is what
gets to be done.

MR NZUZO : So that is the procedure. Yes, I agree, that is competitive
bidding.

MR MSWELI : Yes.”

[76] Mr Msweli , however, contended that the circumstances which confronted him
were exceptional and warranted a deviation as contemplated by Regulation
36. That was the reason for the complete disregard of the SCM procedures,
so he prote sted. He also repeatedly stated that the issue with his conduct
was not non -compliance ; rather it was partial compliance. Hence his refrain ,
in his evidence, that he had not “ fully” complied with the SCM procedures.

[77] As I have stated above, in my view, the ent ire account about acting in terms
of Regulation 36 was a clumsy , but decepti ve, postscript thought up at the
eleventh hour , purely for reasons of expediency to justify the appointment of
a pre -selected consultant (the Service Provider) over an extended period
without a competitive tender process. For this reason alone, it should be
dismissed outright. This aside , the evidence of Mr Msweli about the alleged

Regulation 36 decision was entirely unsatisfactory in a number of respects ,
which I detail below.

[78] The first thing that is strange about it is that there is no trace of the deviation
decision allegedly made by Mr Msweli , not even some type of internal note or
aide-mémoire . What conventionally happens when it comes to deviations is
that the end user directorate puts in a request and provides a motivation for a
deviation . This is then scrutinised by the SCM unit which either recommends
it or does not give its approval. It then crosses the desk of the CFO who
would give his input and refer it to the municipal manager for final decision .
As stated , in this matter, t here is however no record whatsoev er of the
deviation . On the contrary, when the appointment was discussed with the
CFO and the Service Provider it was conceded that it was unlawful because
no SCM procedures had been followed. It was as if the Regulation 36
deviation did not exist . In fact, Mr Msweli candidly admitted that after the
Municipality and the Service Provider parted ways, there was no difficulty in
appointing another service provider, presumably following the applicab le
SCM procedure.

[79] In the submissions made on behalf of Mr Msweli an attempt was made to
place the blame on his predecessor who , it was submitted , must have been
guilty of poor planning. For that reason , Mr Msweli had been placed under
pressure. This narrative however has little or no foundation in the evidence.
Mr Msweli did not even explain as to how and when he became aware of the
need to apply for funding . It was clear from Mr Mswel i’s evidence that he
simply assumed that the Municipality would forfeit funding, on two occasions ,
testifying that “ surely ” the Municipality would lose funding. He also contended
that the Municipality had, the previous year, forfeited funding worth
R7 million . However, on close r scrutiny, his evidence in this regard was that
the Municipality had forfeited funding because it did not implement its
electricity program and thus supposedly forfeited R7 millio n (presumably as a
result of the operation of provisions contained in the conditional grant) ; not
because it had not timeously applied for fundin g. When the CFO of the
Municipality w as cross -examined, Mr Msweli put to him that the cut-off was

30 July 2018 (a date which conveniently was o nly two days after the
business plan was submitted) , yet when he testified , he was adamant that
the deadline was 6 July 2018 and the Municipality was late with its business
plan. No explanation was given as to why the substantial failure to comply
with the alleged cut-off did not result in the forfeiture of funds.

[80] But even if Mr Msweli was under pressure because of the Municipality’s own
negligence or maladministration and even if the matter was so critically
urgent that there was no time even for an expedited SCM procedure to be
followed , in my view it would not be permissible for the Municipality to rely on
its own negligence or ineptitude as a basis for flouting SCM procedures. That
would be akin to a municipality , which has failed to spend a conditional grant ,
at the eleventh hour , embarking on a spending spree in terms of the irregular
practice of what is commonly known as “ fiscal dumping ” without following
SCM procedures .

[81] In Martin Noel Pietersen v the State40, the Court elucidated as follows:

“52. ... However self-imposed urgency ... does not amount to the sort of
urgency or exceptional case contemplated in Regulation 36 which
justifies bypassing procurement requirements. Regulation 36
contemplates real emergencies and exceptional situations where it is
genuinely impractical or impossible to follow official procurem ent
processes .”

[82] In Joubert Galpin Searle Inc and Others v Road Accident Fund and Others41
the Court explained the position as follows:

“[79] What emerges from the instruments that I have discussed is that
generally speaking when the value of the tender exceeds R500
000 a competitive, open, procurement process must be followed. It

40 Case Number: A309/2017 as handed down on 6 February 2019 in the Western Cape Division of the
High Court
41 [2014] 2 All S A 604 (ECP); 2014 (4) SA 148 (ECP)

is only in exceptional circumstances that deviations from t his norm
will be justified. Those circumstances are urgent cases and cases
of emergency. Poor planning cannot make a case an urgent one
or an emergency .42 In this matter, the RAF has conceded that the
expiry of the tender validity period before the process was
completed was brought about as a result of poor planning: the
time that was required was hopelessly under -estimated. As a
result, the decision to award the tender is reviewable in terms of s
6(2)(a)(i) of the PAJA in that the RAF had no authority to f ollow the
‘closed bid’ process that it claimed to have followed, with the result
that no valid tender decision was taken. The decision is also
reviewable in terms of s 6(2)(b) of the PAJA because ‘a mandatory
and material procedure . . . prescribed by an e mpowering
provision was not complied with’. ” (own emphasis)

[83] It is revealing to quote some passages of the evidence of Mr Msweli.
Reference is made first to one of his responses to a question from his legal
representative:

“MR MSWELI : But further I just need to note, highlight this, Mr Ntshebe,
through you Commissioner, that in terms of clause 2 of that particular
section, it makes provision that I should have submitted a report to
council indicating the reasons for the deviation and I must admit that
owing to the pressure of time and a lot of other things that really
overwhelmed us during the process around this matter , we could not
fully comply with that provision, because that is what should have
happened, but unfortunately we could not do it. ” (own emphasis)

[84] Mr Msweli’s mantra that he had not “ fully” complied with the SCM procedures
is misleading because it, by necessary implication, misrepresents that there

42 CEO, SA Social Security Agency & others v Cash Paymaster Services (Pty) Ltd (note 18); TEB
Properties CC v MEC, Department of Health and Social Development, North West [2012] 1 All SA
479 (SCA) – an example of where improper planning gave rise to false urgency; Phoebe Bolton
‘Grounds for Dispensing with Public Tender Procedures in Government Contracting’ (2006) 9 PER 2

was partial compliance. It cannot be overemphasised that this was not a ca se
of partial compliance. There was not an iota of compliance. Mr Msweli did not
follow any SCM procedures whether expedited or otherwise. When he
contrived to act in terms of Regulation 36, he , on his own version,
inexplicably failed to do the most important thing i.e. to disclose to the
Council the drastic step which he had taken . Although it was not expressly
covered at the arbitration , it is clear that he also did not include a note to the
annual financial statem ents on the deviation as required by Regulation 36(2).

[85] The failure by Mr Msweli to report the deviation and the reasons
underpinning it to Council is as baffling as it is incomprehensible. It would
have taken no more than a few minutes for Mr Msweli to have recorded the
reasons for the deviation. How could it be that Mr Msweli had ti me to compile
a comprehensive offer of appointment spanning some five pages (allowing
the Service Provider seven days within which to respond and 14 days within
which to draw up the plan ); yet he was not able to spare a moment to jot
down the reasons for the deviation so that he could account to the Council.
Mr Msweli appointed the Service Provider on 24 July 2018. He was
suspended on 28 May 2020. He was thus attending Council meetings for a
period of almost two years and during that period he did not bother to report
the deviation to Council.

[86] The fact that the Municipality did not honour the agreement with the Service
Provider did not absolve him (as he appeared to suggest during his
evidence ) of his obligation to report the deviation to Council. The obligation to
report to Council arose as soo n as the Regulation 36 decision was made. It
could not then subsequent ly fall away. The contention that, after the
Municipality decided not to honour the contract, he did not have to disclose
the deviation makes a mockery of the imperatives of transparency and
accountability and the fact that the obligation to report deviations is one of the
mechanisms to curb SCM abuse . One would have thought that if a deviation
was contentious and the contract which it birthed had been aborted , then this
would be all the more reason for a municipal manager to own up to it and to
disclose it to the Council.


[87] It has been held by the Supreme Court of Appeal that the obligation to report
a deviation is of a “ material ” not a “ formal ” nature .43 In CEO of the South
African Social Security Agency N.O and Other v Cash Paymaster Services
(Pty) Ltd44 the Court stated that the rationale for providing reasons was
“obvious ”. The Council and its committees as well as the Auditor General
have investigative powers and self -evidently one of the purposes of reporting
deviation s to the Council would be so that it is in a position to investigate any
suspicious deviations and thereby monitor the performance and co nduct of a
municipal manager . As a result of the fact that Mr Msweli did not report the
deviation, the Council was deprived of the opportunity of investigating and
scrutinising it, so too the Auditor General. In my view, the conduct of
Mr Msweli was disgra ceful. What he as the accounting officer in effect did ,
was to conceal from his boss (the Council) , for a period of almost two years ,
that he had appointed the Service Provider on a contract worth potentially
millions of Rands , without following any SCM pr ocedures.

[88] In a spurious attempt to defend the indefensible, Mr Msweli stated, for the
first time in his evidence in chief, that the Mayor at the time was aware of the
appointment of the Service Provider. Mr Msweli s aid that he repeatedly
informed the Mayor at the meetings which were regularly held between him
and the Mayor of the appointment. This allegation was not put to the
Municipality. As his evidence progressed, his version regarding the Mayor
metamorphosised from the Mayor having merely be en aware of the
appointment, to him and the Mayor working on a report to be subm itted to the
SCM unit, to him having furnished the Mayor with a report. Predictably,
neither the report destined for the SCM nor the report which was transmitted
to the Mayor were made available at the arbitration proceedings.

[89] By way of amplification, Mr Msweli claimed to be having meetings with the
Mayor about the appointment of the Service Provider. Although his evidence

43 TEB Properties CC v MEC, Department of Health and Social Development, North West [2012] 1 All
SA 479 (SCA) at para [31]
44 [2011] 3 All SA 233 (SCA); 2012 (1) SA 216 (SCA)

was at times difficult to understand, he appeared to suggest that these
meetings constituted a “step” in the process and that a second “ step” would
be to approach the SCM unit. To illustrate, I quote the following passage:

“MR NTSHEBE: So now, when I look at subparagraph 2, it says that
the accounting officer must record the reasons for any deviation, in
terms of sub paragraph 1A and B and report them to the next council
meeting, did you do that?
MR MSWELI: Well, Mr Ntshebe, as I have said earlier, I did not
fully comply with that provision, with particular subsection of 36,
however, the executive mayor, was made awar e of that, in terms of the
normal meetings that we would have had and what needed to be
following thereafter was the processing of the Supply Chain
Management report, which ought to have included this particular
appointment .
MR NTSHEBE: So that provision w as not complied with?
MR MSWELI: It was not complied fully, yes.” (own emphasis)

[90] In my view, these meetings with the Mayor, if they did occur, were improper
and irregular. It is not ethical for a politician , albeit the political head of a
municipality, to become involved, in any shape or form, in the administration
pertaining to a procurement process. What cries out for an answer is as to
why, if the Mayor was indeed told about the deviation , he did not advi se the
municipal ma nager in terms of Section 52(b) of the MFMA of his
responsibility in terms of Regulation 36(2).

[91] Whilst under no legal obligation to do so, it is difficult to understand why Mr
Msweli, before concluding such an extraordinary contract worth so much
money with the Service Provider in what he termed exceptional
circumstances, did not , instead confiding in the Mayo r, take the sensible and,
with respect, obvious step of discussing his intentions with the CFO or the
head of the SCM unit. There were other avenues open to him. He could, as it
is often done, have approached Provincial Treasury for guidance. He could
have sought legal advice either internally from the legal division of the

Municipality or from one of the legal practitioners of the panel of the
Municipality .

[92] The other part of this evidence which is objectionable is the contention by
Mr Msweli that Regulatio n 36 could be satisfied if SCM delivered a report
which “ included this particular appointment ”. The clear wording of
Regulation 36 places the obligation to make the report on the municipal
manager not on SCM. This contention is all the more disingen uous because
what Mr Msweli did was to exclude the SCM unit from the decision on the
deviation . It did not then lie in his mouth to seek to place blame on the SCM.

[93] At one stage, Mr Msweli even sought to place the blame on the Mayor.
Reference is made to the following exchange :

“MR MSWELI: …. But the only part that was done, is briefing the
executive mayor, alerting him of what transpired, because every other
report that comes from admi nistration, anyway, goes through the office
of the executive mayor, because he is the one that supposed to be
processing the report through the mayoral committee and to council . So
one part of it was done, but we did not complete the entire process.
MR NTS HEBE: But in that clause there is no where it says the
mayor must be informed .
MR MSWELI: Yes, I know that [intervenes]
MR NTSHEBE: It lays out a process that must be followed, it does
not refer to a mayor .
MR MSWELI: No, I note that, Mr Ntshebe, but however be that as
it may, the application of the Supply Chain processes, I mean policy, is
supposed to be done in tandem with the provision of the MFMA, in
terms of the reporting, because every financial, every period, the re are
financial reports that are supposed to be submitted to the executive
mayor and such reports must include supply chain reports in terms of
the appointments done, expenditure that is done, which must be
encapsulating this particular appointment so tha t is required
[intervenes - speaking simultaneously]

MR NTSHEBE: When you are saying you informed. Oh, okay,
sorry.
MR MSWELI: So that is why I was saying that there is a
provision, the compliance of this particular clause, clause 2 particularly,
was not done fully in respect of such
MR NTSHEBE: But was the report submitted to the mayor ?
MR MSWELI: Yes.
MR NTSHEBE: Was there a r eport ?
MR MSWELI : Yes, there was a report submitted to the executive
mayor, the former executive mayor, that is .” (own emphasis)

[94] To borrow a phrase from the American playwright, Tennessee Williams , this
exchange has the “ odour of mendacity ” 45 about it. Mr Msweli first seeks to
mislead the Arbitrator by making out as though it is sufficient for him to have
reported the deviation to the Mayor. Embarrassingly, he is then caught out by
his own legal representative. In an all but unintelligible res ponse, he then
appears to bring in SCM to obfuscate issues. To crown it all, he concludes by
insisting that he did, at the level of fact , submit a report to the Mayor. I have a
little hesitation in finding that the allegation that he submitted a report to the
Mayor is a falsehood. The central plank of his defence, up until that
statement , had been that he had not had enough time to do a report. He then
does a volte face and says that he did have time to do a report but he
inexplicably submitted the report which is never produced to the Mayor and
not to the Coun cil. It is difficult not to get the impression tha t, stripped of all
embroidery, what Mr Msweli was saying was, in effect, that he had delegated
his obligation to report to Council to a politician, the Mayor, a state of affairs
which is truly shocking. If that was his version, one wonders why, at the
muni cipal meetings which followed, he did not remind the Mayor to notify
Council of the deviation.46

45 A phrase uttered by the character Big Daddy in the play “Cat on a Hot Tin Roof ” (1955)
46 This particular piece of his evidence brought to mind the words of Sir Walter Scott in Marmion
(1808):
“Oh what a tangled web we weave
With first we practice to deceive”.

[95] In conclusion Mr Msweli put forward contradictory versions when it came to
his defence contending, inter alia , that there was no obligation to follow SCM
procedures because the contract was on risk but ultimately se ttling on his ex
post facto version that he had acted in terms of Regulation 36. When it came
to the Regulation 36 defence, he presented jarringly contradictory scenarios .
He stated firstly that, because of time pressures , he had had no opportunity
to report the deviation. He intimated that he felt safe in the knowledge that
the Mayor was aware of the appointment of the Service Provider. He then
stated that he and the Mayor were having meeti ngs discussing the deviation
and preparing a report for SCM . At one stage he stated that he thought the
Mayor would report the deviation . He then went so far as to say that he had
transmitted a report to the Mayor. Lastly, he stated that the obligation to
report the deviation fell on the SCM. All things considered , it is not possible to
say, with any degree of certainty , what the case of Mr Msweli was when it
came to Regulation 36.

The Charge concerning Mr Msweli’s alleged signing of a variation order in excess of
his financial delegations

[96] In one sense, it is not necessary to dwell on this charge in the light of the fact
that it is clear from the findings above that , irrespective of what I find in
respect of this charge, dismissal was clearly the only sanction to be imposed
given the misconduct catalogued above.

[97] The nub of this charge is that Mr Msweli, in his capacity as the municipal
manager , impermissibly approv ed a variation order in excess of his financial
delegations with the result that there was irregular expenditure in an amount
of approximately R150 000.00. Mr Msweli’s defence was, in substance, firstly
that he did not exceed his financial delegations and secondly, even if he did,
it was a bona fide error and he was not negligent.

[98] The Arbitrator reasoned as follows:


“Approval of variation order on municipal contract , the amount of which
exceeded your financial delegations

29. It is common cause that as MM, the employee has the financial
delegation to approve a variation order on a municipal contract to
the value of 20%. Where the parties differ, is whether the 20% i s
based on the project value or the contract value. It is further
common cause that the contract value for this specific project
was R8602455.80, as indicated on page 25 of the employee’s
documents. The project value amounted to R9918000.00, as it
included the consultant’s fee.

30. The MFMA circular no 62 of 2013 regulates the aspect of
variation orders (page 156 of employer’s documents). Page 7 of
the circular (page 162 of employer documents) provides that
from the date of the circular, contracts may be e xpanded or
varied by not more than 20% for construction related goods,
services and/or infrastructure projects and 15% for all other
goods and/or services of the original value of the contract.

31. It accordingly follows that that 20% is based on the con tract
value, and not the project value. Mr Majavu of COGTA, who
testified for the employee, confirmed that this is indeed in line
with his interpretation of the circular. He explained that the 20%
principle was used even before the circular was issued.
However, at that time contingencies were also taken into
consideration. The issuing of the circular provided clarity in
respect of what figures the 20% variation order should be based
on.

32. The employee argued that the amount that was going to be paid
in terms of the variation order was R1254095.63, and not
R1872559.38. It is therefore less than 20% of the contract value.
This argument loses sight of the wording of the circular, which

especially refers to variation orders. It does not provide for
contingenc ies. Furthermore, Mr Majavu confirmed that the
budget maintenance is included in the project costs, and is not
same as the variation order. It follows that the contingencies are
already included in the contract value (as confirmed in table 6 of
page 25 in the employee’s documents), and should not be
deducted twice to bring the variation in line with the 20% financial
delegation.

33. In this instance, 20% of the contact value of R8602455.80
amounts to R1720491.16. The employer approved a variation
order in the amount of R1872559.36. It exceeded the 20%
financial delegation. By his own admission he failed to report to
Council before approving the variation order. I accordingly find
that the employee breached this rule. ”

[99] Again , in my view, the Arbitrator , as per his reasoning above, was on the
right track when it came to this charge. I would however record , at the outset,
that he appeared to suggest at paragraph 33 that it was permissible for a
municipal man ager to exceed his financial delegations and to approve the
variation order providing only that he reported the matter to Council . That part
of the Award is not correct . In terms of the applicable circular47 issued by
Treasury which was common cause , if the re was going to be a variation of a
contract in excess of 20 percent then this triggered the application of Section
116(3) of the MFMA . Essentially what this meant was that the change to the
terms of the contract would no longer be governed by a variation order but
would be regarded as an amendment to the contract itself. The procedure set
out in Section 116 (3) of the MFMA would then have to be followed.

[100] In my view , the feature of the evidence presented in respect of this charge ,
something which could have been emphasised more by the Arbitrator , was
that it was as clear as daylight ex facie the variation order that the amount

47 National Treasury MFMA Cir cular No . 62

which Mr Msweli approved was the amount of R1 872 559.36. Yet Mr Msweli
inexplicably , blindly so, persisted with an argument that the variation order
was only for an amount of R1 254 095.63. For this reason alone, I am not
inclined to accept his evidence that he was acting bona fide or that he was
not negligent.

[101] Mr Msweli presented arguments which were not only unpersuasive but, in my
view, contrived :

101.1 First, he contended that the 20 percent threshold had not been
exceeded because the total amount , to which the 20 percent figure
should be applied , also include d the fees due to the consultant . If the
fees of the consultant were added to the contract amount, then it was
common cause that the figure of 20 percent would not be exceeded.
But this reasoning cannot be correct. The consultant would self-
evidently have had its own contract with the Municipality. This
argument confuses the cost of the contract with the total cost of the
project. The effect of the v ariation order is to authorise a further
payment to the contractor (not the consultant) .

101.2 Second, there was the argument which was advanced by Mr Msweli
that the contingencies provided for in the contract should be added to
the contract price thus augmenting it and only then should the
20 percent calculation be done. This argument too falls to be rejected
out of hand because the contract value already included the
contingenc y component .

[102] Whilst I am not convinced that Mr Msweli breached Section 116 (3) of the
MFMA (as alleged in the charge sheet) it is clear that, without any good
reason, he approved a variation order in excess of his financial delegations.
As a result irregular expenditure of approximately R150 000.00 was incurred.
It is also worth noting that in perpetrating the misconduct which he did in
respect of this charge, Mr Msweli, again acted alone without seeking advice
from anyone else.


Did Mr Msweli commit financial misconduct

Introduction

[103] The MFMA separately defines “ irregula r expenditure ”, “unauthorised
expenditure ” and “ fruitless and wasteful expenditure ”. Each discrete type of
expenditure is a term of art and has been carefully defined in the MFMA48. In
summary, irregular expenditure is expenditure which is unlawful.
Unauthorised expenditure is expenditure for which there is no budget.
Fruitless and wasteful expenditure is expenditure for which no value is
received i.e. expenditure made in vain.

Char ge relating to the appointment of the Service Provider

[104] In this charge it was alleged, in substance, by the Municipality , that Mr
Msweli had authorised a payment which constituted irregular expenditure. It
was further alleged that he had breached Sections 62(1)(f)(iv), 111 and
115(1) of the MFMA. Lastly, it was alleged that he had breached Sections
171(1)(a) and (c) of the MFMA.

[105] Whilst I found that Mr Msweli was not honest when it came to his defence
based on Regulation 36, in my view, in any event , the state of affairs which,
on Mr Msweli’s own version, confronted him, patently did not meet the
requirements of Regulation 36. In Martin Noel Pietersen , the Court, in dealing
with an analogous situation, employed reasoning which, in my view, applies
equally to this matter:

“56. The circumstances surrounding the appointment of the Service
Provider, the manner in which the Service Provider was appointed
and the contents of the SLA represent such a marked departure from
the requirements of the SCM Policy, and the purported justification

48 See Mbambisa at para [44]

for the deviation· is so patently spurious, that the inference is
irresistible that the deviation memorandum was mere ''window
dressing" designed to conceal the irregular appointment of the
Service Provider. No exper ienced municipal manager, as the
appellant claims to have been, could have honestly believed that the
deviation was a valid and lawful exercise of the power under
Regulation 36. The appellant could not seriously have thought that it
was correct and proper to conclude the SLA for open -ended,
undefined services over a period in excess of 10 months on the
strength of a single deviation which was originally motivated by the
speaker's request to conduct an urgent investigation and report
within 10 days. In all t he circumstances the conclusion is inescapable
that the appellant acted in the knowledge that the deviation was
unlawful, and therefore deliberately contravened the requirements of
the SCM Policy .”

[106] The decision of Mr Msweli to invoke Regulation 36 was, ac cordingly,
invalid.49 As a result, all the expenditure which would have been incurred on
the Service Provider would have been incurred in contravention of the SCM
Policy and the Regulations. That, in turn, had the consequence that the
payments which Mr Msweli authorised would have constituted irregular
expenditure, had the CFO not mercifully intervened.

[107] For the sake of completeness, I note further that, on the common cause
facts, it is also arguable that Mr Msweli was culpable for instructing
unauthorised expenditure to be incurred, given the circumstance that funds
necessary to pay the Service Provider had not yet been received (or even
confirmed) at the time that he signed the requisition for payment.

[108] The MFMA provides as follows:

“Appropriation of funds for expenditure

49 See Item (d) of the definition of “ irregular expenditure ”.

15. A municipality may, expect where otherwise provided in this
Act, incur expenditure only –
(a) in terms of an approved budget; and
(b) within the limits of the amounts appropriated for the different
votes in an approved budget.”

[109] Thus, any expenditure incurred otherwise than in terms of an approved
budget, and within the limits of the amounts appropriated for the different
votes in an approved budget, amounts to unauthorised expenditure. In this
matter the instruction to pay the Se rvice Provider was given on 13 November
2018; yet the “budget” by way of the conditional grant, was only confirmed
the following year in May of 2019. In this context, I note that the definition of
irregular expenditure excludes unauthorised expenditure, and it would follow
that it is arguable that Mr Msweli was guilty of issuing an instruction to incur
“unauthorised expenditure ” and not “ irregular expen diture ”.50 Nothing
however turns on this given the fact that both offences are equally serious
and can amount to criminal offences.51 It is further trite that an employer is
not obliged to formulate charges with the same precision which is required in
a criminal court.52 It can hardly avail Mr Msweli to contend that he should not
be found guilty of authorising “irregular expenditure ” because he admits to
being guilty of authorising “ unauthorised expenditure ”.

[110] Section 62(1)(f)(iv) of the MFMA requires that an accounting officer take all
reasonable steps to ensure that a municipality has and implements SCM
procedures in accordance with the requisite prescripts. By taking a deliberate
decision to flout the SCM procedures, Mr Msweli clearly breached this
provision. He also breached Section 115(1) of the MFMA, which is in the
same vein. I am not however persuaded that he breached Section 111 of the
MFMA, as this section does not place an obligation on the accounting officer.


50 Contra Martin Noel Pietersen at para [57].
51 No distinction is drawn between the two types of expenditure for the purpose of Section 173 of the
MFMA. The distinction appears to be relevant to Section 32 of the MFMA.
52 See generally Woolworths and Gauteng Department of Education .

[111] It fol lows from what I have stated above that Mr Msweli has committed
financial misconduct by contravening the MFMA (flouting the applicable SCM
procedures) and by instructing an official to incur either unauthorised or
irregular expenditure and, in this regard, Section 171(1)(a) and (c) of the
MFMA refer.

Charge relating to the variation order

[112] In this charge, it is alleged that Mr Msweli, by approving the variation order,
caused unauthorised and/or irregular and/or fruitless and wasteful
expenditure. It is fur ther alleged that Mr Msweli acted in breach of Section
171(1)(c) of the MFMA.

[113] As an opening observation, and as per the sentiments expressed in Martin
Noel Pietersen , given the discrete types of expenditure and the terms of art
used to describe them, str ictly speaking, they should not have been “ lumped ”
together as part of one count . This observation is, however, more relevant to
criminal proceedings than it is to disciplinary proceedings. In my view, there
is in any event, no evidence to support the allegation of Mr Msweli incurring
either unauthorised or fruitless and wasteful expenditure.

[114] Given that Mr Msweli exceeded his financial del egations, it is however clear
that he was guilty of incurring the irregular expenditure which flowed from the
unlawful decision to approve the variation order.

[115] As with the Service Provider charge, it is clear that in making himself guilty of
this charge , Mr Msweli committed financial misconduct in that he incurred
irregular expenditure which is proscribed by Section 171(1)(c) of the MFMA.

Analysis of th e Arbitrator’s determination on sanction

[116] The culmination of the Arbitrator’s reasoning on sanction is contained at
paragraph 46 of the Award. The Arbitrator reinstated Mr Msweli but, as a

mark of his displeasure at Mr Msweli’s misconduct, refused to make such
reinstatement retrospective , elaborating as follows :

“On the other hand, the acts of financial misconduct that he was guilty
of, cannot go unpunished. The employee was dismissed on 09 April
2021. In my view it would be appropriate to order his reinstatement, but
without any back pa y or benefits .”

[117] The Arbitrator deals with the question of sanction in two paragraphs , namely
paragraphs 44 and 45 of the Award . An analysis of each paragraph reveals
the flawed reasoning which gave rise to the Award . At paragraph 44 of the
Award , the Arbitrator state s:

“The Employer based the sanction of dismiss al on the findings of guilt on
all 4 allegations. I found that the employee was only guilty of approving a
variation order in excess of his financial delegations, and appointing
Kuhlemcebo Engineers without following the prescribed SCM
procedures, which he was forthcoming to admit. These transgressions
are still rather serious, as it constitutes acts of financial misconduct. It
should be highlighted that he occupied a senior position, and can
reasonably be held to a higher standard than a junior employee .”

[118] As to the first two sentences, the Arbitrator appears to deduce that, because
Mr Msweli was only found guilty on two of the four charges , it followed,
axiomatically, that a sanction less than dismissal should be imposed . There
is a failure of logic in such reasoning. It overlooks the fact that any single
offence committed by an employee may , in and of itself, be sufficient to justify
or require the imposition of a sanction of dismissal , irrespective of whether
the employee was acquitted of other charges . A finding of not guilty in
respect of one charge should ordinarily not be allowed to becloud the

analysis and evaluation of misconduct embraced by another discrete and
self-standing charge53.

[119] Each charge, on which an employee has been found guilty, is deserving of a
separate evaluation when it comes to sanction . To give an extreme example,
if an employee is charged with 100 counts of theft and the employer only
proves one count , this would ordinarily still be sufficient for that employe r to
dismiss the employee. The mere fact that an employer may have
“overcharged ” an employee in respect of some other misconduct should not
be allowed to minimise or detract from the gravity of the established
misconduct. An employee must be properly punis hed for the offence s which
he has actually committed.54 In the result, the Arbitrator did not tackle , head
on, as he was obliged to do, two fundamental questions. Was the finding of
guilt in respect of the allegation of the municipal manager exceeding his
delegation sufficient to justify dismissal? Was the allegation that the
municipal manager disregarded the SCM processes sufficient to warrant
dismissal ?

[120] In this paragraph, t he Arbitrator also stated that Mr Msweli was “ in a senior
position ”. This epithet suggests that Mr Msweli was but one of a group of
senior managers in the employ of the Municipality. Mr Msweli was of course
much more than this. As the municipal manager , the Section 56 senior
managers reported directly to him . He was required to supervise the senior
managers and indeed all the employees in the administration and to lead by
example . He was the head of the administration and the accounting officer,
the proverbial captain of the ship and the chief executive officer of the
Municipality. The statement by the Arbi trator that Mr Msweli occupied what
he termed a “ senior position ”, viewed in context , is another manifestation ,
albeit a subtle one, of his failure to properly apply his mind.

53 It may potentially be different if evidence is led at the arbitration that the findings of guilt on each
charge did not individually warrant the sanction of dismissal and the employer conceded that it relied
on the cumulative effect of all the charges in coming to a conclusion that dismissal was the
appropriate sanctio n. No such evidence was led in this matter .
54 Cf. Director of Public Prosecutions, Gauteng v Pistorius [2016] 1 All SA 346 (SCA); 2016 (2) SA 317
(SCA) at para [45]


[121] The Arbitrator then proceeds to describe the misconduct as being “ rather
serious ”. The expression “ rather serious ” denotes a degree of gravity which is
cognisable. The ordinary grammatical meaning of “ rather serious ” implies a
level of importance which is above average or noticeable. It needs only to be
state d that it would have been more accurate to have describe d the
misconduct of Mr Msweli as very serious.

[122] This brings me to paragraph 45 of the Award which reads :

“The employee has served more than half of his fixed term contract. I am
not convinced that the employee was dishonest in his actions. I therefore
believe that there is not a complete breach of the trust relationship to the
extent that it justifie d a dismissal . Discipline should be progressive. I
accordingly find that the sanction was inappropriate. ”

[123] As to the first sentence, i t clearly weighed with the Arbitrator that Mr Msweli
had served more than half his contract of employment. This was a material
misdirection and amounted to a gross irregularity . There can be no rational
basis why this fact should elicit sympathy for Mr Msweli or, worse still,
somehow rise to the level of a mitigating factor. The gravity of misconduct
cannot be ameliorated by the extent of the duration of the remainder of a
contract of employment. In short, this factor was strictly irrelevant to the
enquiry which had to be embarked upon with a view to establishing the
fairness or otherwise of the sanction.

[124] As to the second sentence, the Arbitrator records that he does not believe
that the Municipality has established dishonesty and for this reason he
concludes that there has not been a “complete breach ” of the trust
relationshi p. This deduction is a non sequitur . It is based on the unsound
premise that only misconduct involving an element of dishonesty will destroy
the employment relationship. This is not correct. The Arbitrator failed to
appreciate that gross negligence or gross dereliction of duties or a material
breach of a fiduciary duty will, in appropri ate circumstances, be sufficient to

destroy the trust and confidence which forms the bedrock of the employment
relationship, particularly where an employer is dealing with the most senior
employee in the organisation who does not demonstrate remorse . By way of
illustration , in Delta Motor Corporation v Theunissen55 the Labour Appeal
Court was concerned with a scenario where the password of an employee
had been utilised in a fraudulent transaction. The Court found, in effect, that
even if it was not estab lished that the employee was party to the fraud the
circumstance that he was negligent in not keeping his password secret was,
in and of itself, sufficient to justify dismissal.

[125] I am , in any event, not persuaded that it can be said that there was no
element of dishonesty in the conduct of Mr Msweli . In my view, a proper
analysis of the facts reveals that Mr Msweli embarked upon a strategy of
concealing his misconduct from the Council, the CFO and th e SCM unit. This
is particularly so when it comes to the charge relating to the appointment of
the Service Provider without following any SCM procedures. There was a
strong element of deception which accompanied this misconduct. To put it
differently, Mr Msweli demonstrated what the Labour Appeal Court has
termed “ dishonest intent ”.56 All of this was compounded by the fact that he
put up a concocted defence .

[126] The Arbitrator then proceeds , en passant , to baldly refer to the well-known
principle of progressive discipline . He does not explain why an accounting
officer of a municipality who has committed “ rather serious ” financial
misconduct should be a candidate for progressive discipline. The statement
by the Arbitrator that Mr Msweli had been “forthcoming to admit ”57 about his
misconduct in relation to the Service Provider charge , provides a clue as to
the reasoning of the Arbitrator. It suggests that the Arbitrator found that
Mr Msweli had demonstrated remorse.


55 Case number PA9/98 delivered by Nicholson JA on 12 August 1999 at para [16]
56 Woolworths (Pty) Ltd v Commission for Conciliation Mediation and Arbitration and Others (LAC)
[2011] ZALAC 15; [2011] 10 BLLR 963 (LAC); (2011) 32 ILJ 2455 (LAC) at para [38]
57 Para [44] of the Award

[127] Insofar as the Arbitrator did make such a finding , I am unable to endorse it.
When Mr Msweli cross -examined the witnesses of the Municipality, he did
not admit that he had done anything wrong. It was only during his evidence in
chief that he purported to admit to some misconduct. But his
acknowledgment of wrongdoing fell woefully short of what was required. It is
clear that he failed to appreciate the gravity and nature of his wrongdoing
maintaining, to the end, that he had partially complied with his obligation to
report the purported deviation to the Council. The tru th was he disregarded
the SCM procedure for deviatio n altogether . Implying that there was partial
compliance was a thinly veil ed attempt to downplay or water down his
misconduct . He also , as mentioned, put up a disingenuous defence which I
am constrained to record was a whol ly dishonest one .

New points raised on behalf of Mr Msweli

[128] In his written submissions, Mr Kela, who appeared on behalf of Mr Msweli,
devoted much time to making submissions that there were problems with the
procedure which had been followed by the Municipality which resulted in the
dismissal of Mr Msweli. It was c ontended, for the first time in heads of
argument, that the Municipality did not comply with its obligations in terms of
the Regulations governing Financial Misconduct. He proteste d that there was
no investigation and no disciplinary board convened. It was also contended
that there were unreasonable delays in the prosecution of the disciplinary
hearing and that the Municipality had waived its right to institute disciplinary
action.

[129] Leaving aside the fact that these arguments appear to be directed at the
legality (not the fairness) of the disciplinary proceedings and it being
impermissible for an arbitrator to nullify disciplinary proceedings by way of a
declaratory order58 and there being doubt as to whether an Organ of State,
such as the Municipality, can waive its duty to pursue disciplinary action

58 Tsengwa v Knysna Municipality & Others (2015) 36 ILJ 2392 (LC) at paras [9], [14] and [16]

against an errant public official59, there is not an inch of room , on the papers
before the Court , to raise the issue of procedural fairness.

[130] At the arbitration, Mr Msweli’s legal representat ive recorded at the outset that
he had no issue with the procedural fairness of his dismissal. This, after the
Arbitrator had, correctly so, apprised him of his obligation to raise procedural
issues upfront so that the Municipality could deal with them in its evidence. In
its opening statement the Municipality recorded that the complaint about
procedural fairness, as set out in the referral form, had been “ abandoned ”
and that it would accordin gly not be addressed. In any event, Ms Zonke, the
Mayor at the time of the dismissal of Mr Msweli, gave unchallenged evidence
that there was an investigation and that proper procedures were followed
before the dismissal of Mr Msweli .

[131] Furthermore, t he poin ts so raised are not legal points which do not require
the leading of evidence or can be determined on the record without
disadvantaging the Municipality. Had these points been properly raised, the
Municipality could , for example, have led (further) evidence to explain the
alleged delays and it could have led evidence to contradict the assertion that
there was no investigation or disciplinary board. The Municipality could also
have led evidence on the question of prej udice, if any, suffered by Mr Msweli,
it being trite that, in labour law, fairness, and fairness alone, irrespective of
non-compliance with contractual or statutory prescripts, is what matters. No
purpose will however be served in debating these points whi ch were not
issues placed before the Arbitrator for determination and accordingly over
which he would have had no jurisdiction .60

[132] All things be told, it was only after it dawned on Mr Msweli that the Award
may be set aside, that these points were raised. This strategy reminded me
of what occurred in Nyandeni Local Municipality v MEC for Local

59 Van der Grijp v City of Johannesburg (2007) 28 ILJ 2079 (LC) at para [61]
60 Cf. PL v YL 2013 (6) SA 28 (E) at 41F -H

Government and Traditional Affairs and Another.61 That matter revolved
around the so -called Shifren principle . The question was whether, given th e
peculiar circumstances of that matter, a non -variation clause could be relied
upon. A dismissed municipal manager had sought to undo the decision by
the municipality in question to terminate his employment. He relied on the
fact that the municipality had conducted a disciplinary hearing in breach of
the applicable contract of employment which required that disciplinary
proceedings be conducted by way of pre -dismissal arbitration proceedings as
envisaged by Section 188A of the LRA. That same contract co ntained a non -
variation clause. After he had been dismissed, the municipal manager sought
to belatedly challenge the procedure followed by the municipality claiming
breach of contract and invoking the non -variation clause.

[133] The Court ultimately found that it would be en against public policy to permit
the municipal manager to enforce the non -variation clause and thus set aside
his dismissal given all the water that had flowed under the bridge . What
weighed with the Court was that the municipal manager had not raised any
issues with the process followed until an unfavourable decision had been
received. Furthermore, as in this case, that municipal manager admitted his
misconduct and thus reinstat ing him would have been an exercise in futility at
great expense to the public purse .62 Similarly, the attempts by Mr Msweli, for
the first time , in his legal submissions, to effectively ask that the disciplinary
proceedings be nullified where there is no suggestion that he has a bona fide
defence to the charges , at the very least to the charge concerning the
appointment of the Service Provider, cannot be countenanced.

[134] It has been said by the Apex Court that sooner or later litigation must come to
an end63. In a different context, Pickering J refused to allow a trial on the
merits to be nullified because of a point based on the Compensation for
Occupational Injuries and Diseases Act (COIDA) which had been belatedly
raised. Essentially the learned Judge stated that there comes time when it is

612010 (4) SA 261 (ECM)
62 At paras [103] to [108]
63 Minister of Justice v Ntuli 1997 (6) BCLR 677 (CC) ; 1997 (3) SA 772 (CC) at para [29]

no longer possible to “wipe the slate clean ” and to “turn the clock back”
rendering all that has occurre d before pro non scripto64.

Conclusion

[135] Even at a cursory glance, the reader of the Award could be forgiven for
wondering whether it was not reviewable ex facie the body of the Award
itself. The Arbitrator accepted that Mr Msweli had made himself guilty of
financial misconduct and that such cond uct was “rather serious” and could
not go “unpunished” . The evidence contained in the record puts matters
beyond doubt.

[136] Breaches of the SCM procedure applicable within an Organ of State are
viewed in a very serious light by the Courts, particularly where a municipal
manager, who is tasked with implementing the SCM policy, is the one who is
culpable and the conduct is accompanied by an element of dishonesty . I
have already referred to th e Constitutional Court decision of Allpay which
addressed the purpose of Regulation 36. In Martin Noel Pietersen it was
pointed out in a Court sitting on Appeal from a Magistrate’s Court that :

“125. Irregular procurement practises lie at the heart of the epic levels
of corruption which is corroding the moral fabric of our society,
not to mention the financial health of our public institutions. The
importance of procurement in our constitutional democracy is
evident from the fact that it is dealt with in s 217 of the
Constitution, which requires that organs of state contract for
goods and services in accordance with a system which is fair,
equitable, transparent, competitive and cost -effective. St rict
adherence to procurement laws is vital to ensure proper service
delivery and a healthy public purse .”


64 As recorded in PE v Dr Beyers Naude Local Municipality and Another 2022 (1) SA 560 (ECG) at
para [63]

[137] Further, i n Martin Noel Pietersen , the Court , in the vein of the idiom that the
road to hell is paved with good intentions and expressing the sentiment that it
is not sufficient for errant municipal employees to put up as a defence that
their hearts were in the right place, elaborated as follows:

“126. ... While the appellant's goals might conceivably have been
laudable, the end does not justify the means. Officials cannot be
permitted to subvert the law in order to achieve personal ambitions
or political objectives, however well -intentioned. A strong message
needs to be sent tha t they will be severely punished if they do so.
For this reason a custodial sentence must be imposed in this case,
and a suspended sentence coupled with a fine, as contended for
by appellant's Counsel, would be too lenient.”

[138] A municipal manager must perfo rm his duties within the four corners of the
finely tuned and highly regulated legislative environment within which he is
required to perform his function s.65 Mr Msweli failed dismally in this regard.
He acted as though he was exempt from accountability. The rules did not
apply to him. As the accounting officer it was his responsibility to ensure that
the SCM policy was properly implemented; yet he, being the one who was
required to lead by example and to police the SCM policy, treated it with
disdain. Whe n he was found out, he came up with a fabricated defence. It
cannot be expected of a municipal council to continue working with a
municipal manager who conducts himself in this manner. On the evidence
before the Arbitrator there is no guarantee that he might not “fully ” comply
with SCM procedures again.

[139] If Mr Msweli is reinstated and allowed, once again, to roam free in the
workplace , unscathed , it would be catastrophic for workplace morale and the
corporate culture of the municipality .66 How could the marginalised CFO and
SCM unit members , who looked on as Mr Msweli was properly dismissed for

65 Cf Theewaterskloof Municipality v South African Local Government Bargaining Council (Western
Cape) and Others (2010) 31 ILJ 2475 (LC); [2010] 11 BLLR 1216 (LC)
66 Cf Fort v COEGA Development Corporation (Pty) Ltd and Others [2017] ZALAC 50 at para [97]

flagrantly disregard ing the SCM policy , now be expected to respect his
authority and to seek guidance from him about matters of financial
management and SCM procedure ?

[140] It has often been stated, in a commercial context, that a successful business
enterprise operates on the basis of trust. Dismissal is not an expr ession of
moral outrage or vengeance; it is a sensible operational response to risk
management in a particular enterprise.67 In my view, such reasoning should
apply all the more so, a fortiori, where, as in this case, the employer is an
Organ of State. This is so because the Constitutional Court has held that an
Organ of State has a higher duty to respect the law; “it must do right; and it
must do it properly ”.68 The Constitution is the supreme law of the Republic.
Where an employee , in the sphere of Local Government which is beset by
corruption, makes himself guilty of conduct which breaches the Constitution ,
his conduct is to be viewed in the most serious light . In such circumstances,
a tribunal should not readily and without earnest reflection, second guess a
municipality which adopts strict, even harsh measures , to combat the cancer
of corruption , patronage and maladministration and to maintain , or seek to
rehabilitate, the integrity of its systems of financial management and SCM .

[141] In Moses Kotane Local Municipality v Mokonyama NO and another69 all that
could be demonstrated was that the guilty employee had instructed another
employee to photocopy tender documentation without authorisation . This was
considered a breach of Section 118 of the MFMA. The employee was given a
final written warning by the disciplinary Chairperson . However pursuant to a
self-review application, this Court upset t hat decision, classifying it as a
decision to which no reasonable decisionmaker could have come given the
nature of the offence . The Court ordered that the appropriate sanction was
that of dismissal.


67 Miyambo v CCMA & Others (2010) 31 ILJ 2031 (LAC) at paras [13] and [14]
68 MEC for Health, EC v Kirland Investments 2014 (3) SA 481 (CC) at para [82]
69 (2018) 39 ILJ 1130 (LC); [2018] 6 BLLR 614 (LC) Leave to appeal was dismissed in Moses Kotane
Local Municipality v Mokonyama N.O and Another (JR2324/15) [2019] ZALCJHB 196 (14 August
2019)

[142] It was submitted on behalf Mr Msweli that because the Arbitrator had
imposed a harsh sanction (it effectively amounted to a sanction of
suspension without pay for some five months), that this was, in and of itself,
an answer to the contention by the Municipality that the Arbitrator had erred
in interfering with the sanction which it had imposed. This line of argument
misses the point. Whilst it is true that there is no obligation on an arbitrator to
defer to the employer’s decision on sanction, an arbitrat or, on the other hand,
does not have carte blanche to consider the question of sanction afresh.
Rather, an arbitrator must, independently and objectively , determine whether
the sanction imposed by the employer was fair and not whether the arbitrator
would have imposed the same or different sanction70. For an example where
the Labour Appeal Court held that an arbitrator erred in substituting a
sanction of d ismissal with a sanction of reinstatement without back pay , see
SGB Cape Octorex ( Pty) Ltd v Metal and Engineering Industries Bargaining
Council and Others71.

[143] As to whether it can be said that the trust relationship had broken down ,
there was evidence from Ms Zonke to the effect that there was a unanimous
decision by Council, all political parties being ad idem that the appropriate
sanction to be implemented was that of dismissal . In my view, the gravity of
the offences in question is, in any event, self -demonstrative and the
misconduct is of the ilk which would not require the employer to have led
evidence demonstrating that the employment relationship had broken
down .72

[144] In Martin Noel Pietersen , a sentence of two years imprisonment was imposed
by the Court on a former municipal manager (Mr Pietersen) of the

70 Sidumo & Another v Rustenburg Platinum Mines Ltd & Others 2008 (2) SA 24 (CC) ; (2007) 28 ILJ
2405 (CC); [2007] 1 2 BLLR 1097 (CC) at para [110]
71 (2023) 44 ILJ 179 (LAC); [2023] 2 BLLR 125 (LAC )
72 See Department of Home Affairs and Another v Ndlovu and Others [2014] 9 BLLR 851 (LAC);
(2014) 35 ILJ 3340 (LAC) at para [16]. Theewaterskloof Municipality v South African Local
Government Bargaining Council (Western Cape) and Others supra at paras [30] and [38]; Woolworths
(Pty) Ltd v Mabija and Others [2016] 6 BLLR 568 (LAC); (2016) 37 ILJ 1380 (LAC) at para [21]; Impala
Platinum Ltd v Jansen and others [2017] 4 BLLR 325 (LAC) at para [20]; South African Revenue
Service v Commission for Conciliation, Mediation and Arbitration and Others [2017] 1 BLLR 8 (CC);
(2017) 3 8 ILJ 97 (CC); 2017 (1) SA 549 (CC) at para [4 0]

Oudtshoorn Municipality. In my view, Mr Msweli committed misconduct which
was all but identical to the conduct committed by Mr Pietersen. M r Pietersen
deliberately failed to implement the Oudtshoorn Municipality’s SCM policy.
He did so by abusing Regulation 36, disingenuously claiming that the SCM
procedures could not be followed because of urgency. He also failed to take
all reasonable steps to prevent prohibited expenditure. In my view, the
conduct of Mr Msweli was, if anything, more serious than that of
Mr Pietersen , as the Court , in that matter, appeared to accept that Mr
Pietersen may have been motivated by good intentions whereas it is my
finding that the reliance by Mr Msweli on Regulation 36 was a sham. On the
face of it, Mr Msweli was guilty of criminal conduct in that he deliberately
failed to implement the SCM Policy and failed to take all these reasonable
steps to prevent irregular and/or unauthorised expenditure.73 Indeed, having
proper regard to the evidence placed before the Arbitrator, he can consider
himself fortunate that he has not been criminally charged. Either way, it is
mindboggling to think that an Appeal Court can find that the type of conduct
in question is deserving of a two year custodial sentence , yet an arbitrator
can take the view that the conduct was not sufficiently ser ious to warrant
dismissal.

[145] There is one further aspect which was , it would seem, overlooked by the
Arbitrator, as well as the parties . It is that where a municipal official has been
found guilty of financial misconduct , it is not permissible for the a municipality
to re -employ that person for a period of ten years. Section 57A(3) of the
Systems Act provides that:

“... a staff member dismissed for financial miscondu ct contemplated in
section 171 of the Local Government: Municipal Finance Management
Act, 2003 (Act No. 56 of 2003), corruption or fraud, may not be re -
employed in any municipality for a period of 10 years .” (own emphasis)


73 Section 173(1)(i) and (iii) of the MFMA

[146] Whilst it is not necessary to consider this point in any depth, it seems to me
that there is an argument that the Arbitrator issued an award which was
contrary to Legislation or at least contrary to the spirit of Legislation . The
mischief which the Legislature sought to eradicate in the above section was
the hasty welcoming back of municipal employees (who had been dismissed
for financial misconduct ) into the fold of Local Government . One might say
that it was the intention of the Legislature that employees who are dismissed
from a municipality for financial misconduct should take at least ten years, as
it were, to rehabilitate themselves before they can be re -employed by a
municipality. In this matter, importantly, the Arbitrator did in fact confirm that
Mr Msweli was guilty of financial misconduct , yet he ruled that he could return
to the Municipality notwithstanding the fact that less than a year h ad passed
since his dismissal .

[147] On the face it, it is arguable that the Award is in direct conflict with a statutory
prohibition. The usual consequence of a decision of this nature is that it is a
nullity and of no force of effect.74 Whilst I accept the Arbitrator reinstated
Mr Msweli as opposed to re -employing him, my preliminary view is that a
purposive approach to the interpretation of the above provision may mean
that what the Arbitrator did was to impermissibly sanction an illegality and
that a techn ical distinction between re -employment and reinstatement should
not be relied on to thwart the intention of the Legislature. 75 If I am correct in
this view, then it seems to me that this error would have been , simpliciter ,
sufficient to vitiate the Award. If this reasoning is correct, I would further
venture to suggest that the counter application (the application to make the
award an order of court) may also then have been refused because a Court
will not ordinarily give its blessing or imprimatur to an arbitration award which
embraces an illegality because that would be contrary to public policy .76 Even

74 Cf Schierhout v Minister of Justice 1926 AD 99
75 A counter argument may be that the Arbitrator, in reinstating Mr Msweli, restore d the contract of
employment, as it were, undoing the dismissal. This submission is, however, not easily reconcilable
with the notion that an arbitrator does not set aside or declare invalid a dismissal (cf Tsengwa and
Steenkamp v Edcon Ltd 2016 (3) SA 251 (CC) at para [136] ), but leaves it intact and declares it unfair.
76 Cool Ideas 1186 CC v Hubbard and Another [2014] ZACC 16; 2014 (4) SA 474 (CC); 2014 (8)
BCLR 869 (CC) at paras [9], [53] and [57]

if I am wrong in the above cursory analysis, what Section 57A(3) of the
Systems Act does demonstrate is th at the Legislature views financial
misconduct in a very serious light.

[148] In conclusion, t here is an obligation on an arbitrator to properly consider the
evidence before him.77 Recently in Gauteng Department of Education v
General Public Service Sectoral Bargaining Council and Others78, the Labour
Appeal Court explained the position as follows:

“[19] In this matter, the arbitrato r failed to have regard to all of the
evidence before him, including that which was not disputed, and
carefully weigh it up in the required manner . ...”

[149] The Arbitrator in this matter , whilst correct when it came to his findings on the
innocence of Mr Msweli in respect of the two allegations of misconduct as
described above, abdicated his responsibility to properly evaluate the
evidence when determining whether the sanction imposed by the Municipality
was fair. There were instances where he faile d to mention material facts,
failed to deal with issues which had a material bearing on the dispute and
committed errors in respect of the evaluation of the facts. 79 Although gross
irregularities may be indicators that the decision is unreasonable to the extent
that it cannot stand80, they are not dispositive . It must still be demonstrated,
with reference to the evidentiary material before the Arbitrator, that the gross
irregularities aside, the Arbitrator came to a decision to which no reasonable
decisionmaker could have come. There is no evidentiary material w hich was
placed before the Arbitrator which can be relied upon to salvage the Award.

77 See South African Post Office v Commission for Conciliation, Mediation and Arbitration and Others
[2012] 1 BLLR 30 (LAC); (2011) 32 ILJ 2442 (LAC) at paragraphs [31] and [33]. See also the recent
decision of Gauteng Department of Education (JA141/2022) [2025] ZALAC 2 (22 January 2025)
78 (JA141/2022) [2025] ZALAC 2 (22 January 2025)
79 This is an appropriate place to note that the Arbitrator, Mr Kayster, is a well-respected member of
the labour law fraternity in the Eastern Cape. He has competently issued many arbitration awards
which have been upheld by the Labour Court. In Fortuin I upheld his award. This judgment should not
detract from his standing in the labour law fraternity. Judicial offi cers reach different conclusions and in
terms of the LRA those of the Labour Court prevail .
80 Gold Fields Mining South Africa (Pty) Ltd (Kloof Gold Mine) v Commission for Conciliation Mediation
and Arbitration and Others [2014] 1 BLLR 20 (LAC); (2014) 35 ILJ 943 (LAC) at paragraph [21]


Condonation

[150] The Municipality delivered a replying affidavit which did not take the matter
any further . It was however out of time. In response , there was a notice of
objection from Mr Msweli . In my view, the delivery of this notice was ill -
advised. Mr Msweli could not conceivably have been prejudice d by the
delivery of the replying affidavit and it is difficult not to gain the impression
that Mr Msweli was being unnecessarily obstructive which had the result that
further and unnecessary litigation was generated in that the Municipality then
applied for condonation . The application was opposed. This Court has , with
reference to Uitenhage v Uys ,81 previously urged legal practitioners , before
noting an objection, to earnestly reflect on whether, in so doing , they will be
serving the interests of their client and the proper administration of justice
generally.82 Insofar as it may be necessary to d o so, condonation should be
granted for the late delivery of the replying affidavit.

Costs:

[151] This is not a matter where costs should be awarded. Mr Msweli was armed
with an award in his favour . He can hardly be critici sed for wanting to have
his day in Court and for hanging on to the A ward in terrier -esque fashion .
That is not to say that there do not exist situations where an award is so bad
that it is indefensible rendering any opposition to a review application
unreasonable and thus warrant ing a cost order . Each case has to be
adjudged on its facts and this is not such a case .

Order:

1. Condonation is granted for the late delivery of the replying affidavit .


81 1974 (3) 800 (E) at pages 804 to 806
82 Inxuba Yethemba Municipality v South African Local Government Bargaining Council and Others
(PR41/2020) [2022] ZALCPE 1 (31 January 2022) at paras [55] and [56]

2. The award issued under case number ECD 052101 , dated 22
September 2021 , is reviewed and set aside.

3. The award is substituted with the following:

“The dismissal of the Applicant (Mr Msweli) by the Respondent
(Inxuba Yethemba Municipality) was fair .”

4. The counter -application to make the award an order of court is
dismissed.

5. There is no order as to costs in respect of either application.



P. N. Kroon
Acting Judge of the Labour Court of South Africa


Appearances :

For Applicant : Adv S Nzuzo
Instructed by : NE Mbewana Incorporated Attorneys

For First Respondent: Adv D Kela
Instructed by : Ndumiso Voyi Incorporated Attorneys