SUMMARY
| The National Treasury (the “First Appellant”) mandated a team of investigators to conduct an in-depth investigation relating to allegations of financial irregularities in respect of the hiring of motor vehicles by the executive mayor of the OR Tambo District Municipality (the “Second Appellant”). Pumlanni Kubukeli (the “Respondent”) is employed by the Second Appellant as the executive major’s bodyguard. The issue in this appeal pertains to whether just administrative action was taken insofar as the Respondent was denied a right to make representations to the First Appellant prior to the First Appellant presenting its report and recommendations to the Second Appellant. BACKGROUND On 18 January 2013 the Daily Despatch newspaper carried an article containing allegations of financial irregularities in respect of the hiring of luxury motor vehicles from Avis by the executive mayor of the Second Appellant 2 (two) of which were involved in accidents, resulting in liability for the Second Appellant. In light of the above, council for the Second Appellant requested the First Appellant to conduct a forensic investigation into these allegations. The First Appellant mandated a team of investigators (the “Treasury Team”) to conduct the investigation. The executive mayor was notified of the investigation and requested to make himself and the staff in his office available for interviews by the Treasury Team. A political advisor responded on the executive major’s behalf stating that insufficient notice had been provided to the executive major. The Treasury Team nevertheless continued with the investigation. It compiled a report containing recommendations to the Second Appellant, such recommendations dealt mainly with improvements to the financial management and internal control of the Second Appellant. The recommendations, however, included that disciplinary proceedings be instituted against the Respondent and that losses suffered by the Second Appellant be recovered from him. The Respondent maintained that he received no notice of the request for an interview and only became aware of the investigation when the Treasury Team presented its report to the council. The First and Second Appellant accepted this assertion for purposes of argument. On 12 June 2013, the Respondent launched an application in the Eastern Cape Local Division of the High Court, Mthatha (the “court a quo”), in which he sought an order that the investigation of the Treasury Team and its report be declared unlawful and unconstitutional and further to be set aside. HIGH COURT The court a quo granted the relief claimed and reasoned that the investigation and the report of the First Appellant constituted administrative action within the meaning of the Promotion of Administrative Justice Act 3 of 2000 (“PAJA”), and thus had to be set aside on review on the ground that the Respondent had been denied the right to make representations in the circumstances where the Treasury Team’s report had adversely affected the Respondent’s rights, namely his right to reputation and employment. The court a quo granted leave to appeal to the Supreme Court of Appeal (the “SCA”). THE SCA The SCA held that the court a quo misconceived the nature of the enquiry and erred in granting the relief claimed by the Respondent, on the basis of procedural unfairness in terms of PAJA. The enquiry was whether under the rule of law the conducting of the investigation and the making of recommendations to the Second Appellant without the participation of the Respondent were rationally related to the purpose for which these powers were given to the First Appellant. Minister of Home Affairs & others v Scalabrini Centre & others 2013 (6) SA 421 (SCA) held that there is no general duty on decision-makers to consult interested parties for a decision to be rational under the rule of law, however there are certain instances where rational decision-making requires interested parties to be consulted. The SCA considered the case of Albutt v Centre for the Study of Violence and Reconciliation & others 2010 (3) SA 293 (CC), where the issue in this case was whether the President’s decision to exclude the victims of politically motivated crimes from participating in the special dispensation processes, was irrational. The test to be applied was whether the President’s decision to undertake the process without affording the victims an opportunity to be heard, was rationally related to the achievement of the objectives of the process. If not, the decision could not be considered constitutional. In this regard, the objectives of the process were for purposes of national reconciliation, thus it was found that the participation of the victims was a crucial and fundamental part of achieving such objectives. Further, the SCA considered the Du Preez & another v Truth and Reconciliation Commission [1997] ZASCA 2; 1997 (3) SA 204 (A). The Truth and Reconciliation Commission (the “TRC”) was established by the Promotion of National Unity and Reconciliation Act 34 of 1995, which provided that if during any investigation by or any hearing before the TRC, any person is implicated in a manner which may be to his or her detriment or the TRC contemplates making a decision which may be to the detriment of a person who has been implicated, such a person shall be afforded an opportunity to submit representations or to give evidence at the hearing before the TRC. This matter dealt with a fundamentally different issue, namely the content of an established right to be heard. The question considered by the SCA was whether the conducting of the investigation and the making of recommendations to the Second Appellant by the First Appellant (which investigation was exercised through the Treasury Team) without the participation of the Respondent, was rationally related to the purpose for which the powers in section 5 [particularly section 5(2)(d)] of the Municipal Finance Management Act (“MFMA”) was given. In terms of section 216 of the Constitution, national legislation must establish a national treasury. In this regard, section 5 of the Public Finance Management Act established the National Treasury. Section 2 of the MFMA stipulates that the object of the MFMA is to “secure sound and suitable management of the fiscal and financial affairs of the municipalities and municipal entities”. The powers of the National Treasury, in terms of section 5 of the MFMA, include the power to investigate any system of financial management and internal control in any municipality and to provide recommendations on improving same. Thus, the National Treasury’s purpose for which the power was given was not to investigate the conduct of any particular person and make final findings, unlike the decisions in Scalabrini and Albutt, but rather to assist the Firs Appellant to achieve its purpose. In this matter, the interviews held with the Treasury Team and individuals was to assist the First Appellant in achieving its purpose. |
HELD
The SCA held that the investigation, report and recommendations of the National Treasury, without the participation of the Respondent, were determined on reason and were not found to be arbitrary or irrational. Accordingly, the appeal had to succeed.
VALUE
The purpose for which the National Treasury conducts any investigations and make improvement recommendations to municipalities, ought to be rationally related to the purpose for which the power in section 5(2)(d) of the MFMA was given
Written by Katya Oberzhitsky and Jonathan Salant
