The Buffalo City Metro Development Agency forked out R4.95m in an out-of-court settlement to get rid of CEO Bulumko Nelana after the Makhanda high court repeatedly ruled against his dismissal and ordered he be reinstated.
The court previously referred to the development agency’s treatment of Nelana as brazen abuse.
Nelana took the agency to court after he was suspended in late 2022 and fired in 2023.
The multimillion-rand settlement to the former CEO has only recently come to light in the agency’s annual report for the 2023/2024 financial year.
The DA has now demanded a full report on the legal advice that led to the settlement.
“The agency and Mr Bulumko Nelana reached an out-of-court settlement amounting to R4.95m, which resulted in his contract being terminated as at February 2023,” the report said.
“A permanent CEO was appointed on January 1 2024.”
On Monday Nelana declined to comment on the settlement and his axing from the agency.
“Unfortunately, I am unable to assist you further because I signed a confidentiality agreement,” he said.
The agency, which controls a multimillion-rand budget for capital projects in the city, is an entity of the Buffalo City Metro.
City spokesperson Bongani Fuzile referred questions to the agency.
Metro Development agency spokesperson Nomkhitha Zokufa promised to respond to questions but had not done so by the time of writing on Monday.
The agency appointed Ayanda Gqoboka as Nelana’s successor in January 2024, ending more than a year of uncertainty.
Nelana was placed on precautionary suspension, with full pay, in late October 2022 by the agency’s new interim board pending a probe into his contract extension.
However, Nelana scored a court victory in early 2023.
On January 24 2023, the Makhanda high court ruled his suspension was invalid. The next day he was fired.
The court subsequently found his sacking was illegal and ordered that he be reinstated.
The court called the agency’s actions brazen abuse and calculated haste to undermine the court’s order.
Judge John Smith ordered Nelana’s reinstatement until July 20 2023 amid further court processes.
The agency argued it had a contractual right to terminate his contract, but the court ruled this was an “abuse of a contractual provision designed to undermine a court order”.
Following the settlement revelation, the agency has come under fire, with the DA describing the settlement as a gross indictment of metro governance.
The party’s chief whip, Anathi Majeke, said the payout represented a staggering instance of fruitless and wasteful expenditure.
“This financial blow falls squarely at the feet of the executive mayor,” Majeke said.
“There has been a continual and conspicuous failure by the mayor [Princess Faku] to provide effective oversight over the development agency board.
“Despite the agency’s history of instability, the mayor has repeatedly failed to report substantively to the council regarding the entity’s operations.
“By failing to intervene or provide transparency to the council when governance red flags were raised, the executive has effectively allowed this crisis to escalate, resulting in a multi-million-rand loss to the ratepayer.”
The DA said there should consequence management for the officials responsible.
“This underscores the urgent need to relook the need for the development agency or to reintegrate its functions into the metro to ensure proper council oversight and prevent the further haemorrhage of public funds.”
Clearly, it is thievery and cadre deployment.
ANC cadres serve in the development agency. Looting is what is happening.
— UDM councillor Anele Skoti
UDM councillor Anele Skoti said: “We are not satisfied with the matter. We can’t say justice has been served.
“Clearly, it is thievery and cadre deployment.
“ANC cadres serve in the development agency. Looting is what is happening.
“They are stealing the taxpayers’ money.
“We are convinced it’s the last days of looting.
“The ANC is not transparent. We’re in the dark about it [the settlement] and that clearly shows a lack of transparency.
“Accountability is important. There must be transparency and spending must be explained.
“This must be investigated.”
The development agency’s annual report also listed other officials who had taken legal action against the agency.
“The chief investment officer, as well as the executive director [corporate services] and executive director [property planning and development] also had settlements or have arbitration pending,” Majeke said.
“This supports our view that the agency, as it exists, may not be fit for purpose.”
The report shed some light on cases, without mentioning further payouts for settlements reached.
It said another official, Thembeka Tongo, launched an application with the CCMA after her dismissal.
The report said the dismissal was as a result of non-confirmation of employment after a probation period.
“Settlement was reached during September 2023.”
The development agency’s executive manager for property planning, Thulisiwe Hangana, also launched an application with the CCMA after her dismissal, according to the report.
“The dismissal was as a result of non-confirmation of employment after a probation period.
“The settlement agreement was withdrawn by Hangana’s representatives based on her non-agreement to the terms of the agreement.
“Hangana is now preparing for arbitration to proceed on a date to be scheduled by the SA Local Government Bargaining Council.”
Asked to comment on the issues raised by opposition parties, council speaker Humphrey Maxhgwana said he had referred questions to chief whip Ntombizandile Mhlola, who had not responded by the time of publication.
BCMDA projects include the stalled Water World Fun Park and the Court Crescent — now Baby Lee Jegels — recreational park, also known as the “stoep”.
There was controversy over the cost of the “stoep”, which reportedly cost more than R100m, while the Water World Fun Park remains non-operational despite absorbing more than R120m in funds.
Daily Dispatch
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