Newcastle: From poster boy to problem child

The KwaZulu-Natal town has a history blighted by allegations of political killings, the misappropriation of municipal funds and high levels of debt. But it’s time to move forward.

Something has gone wrong in Newcastle, a neatly set out KwaZulu-Natal town equidistant from Johannesburg and Durban. What was once a relative industrial powerhouse is now economically precarious, the municipality is teetering on the brink of collapse and the blood of politicians stains the pavements.

Newcastle’s litter and pothole-free streets belie its deadly politics, where at least three prominent ANC members have been killed since 2016. 

Last month, the town’s 38-year-old mayor, medical doctor Ntuthuko Mahlaba, was acquitted of the 2016 assassination of colleague Wandile Ngobeni. Three months earlier, Mahlaba’s comrade Martin Sithole (and a witness in the case against him) was shot and killed a block away from Newcastle’s city hall.

Mahlaba’s case is representative of vicious ANC factional battles over municipal spoils. His detractors pitch him as a villain while his supporters ardently proclaim him as a corruption-busting saviour.

Mayor deems allegation a set-up

Mahlaba, who was placed on special leave by the ANC for three months this year as a result of the case, plans to sue the state for his arrest. He says the case was a set-up to disgrace him, to ensure he wasn’t elected mayor and, importantly, keep money flowing to corrupt comrades.

“Newcastle is taking serious financial strain because of problems that date back a long time.”

Mahlaba’s enemies say he has been in a position of influence for much of that time, but he disagrees.

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“Unless we deal with corruption and fraud, our people will continue to kill each other,” he says.

Newcastle has debts amounting to about R1.3 billion, said top Treasury officials who asked to remain anonymous. The municipality’s income is less than its expenses and now the mayor has tasked officials, helped by provincial specialists, to urgently rein in spending. 

As of June, the municipality had outstanding loans amounting to R426 million, which cost R76 million a year to service, the officials say.

Ousting of a man with know-how

Rewind to 2009 when the municipality had cash reserves of R248 million. At the time, Newcastle’s chief financial officer was Eduard le Roux, who had held the position for nine years. 

He was ousted and reportedly successfully overturned his unfair dismissal, but never went back to work. Instead, the man with 25 years of experience in municipal finance now works for the National Treasury, helping to fix financially delinquent municipalities around the country.

For most of his tenure, Rehman was a media darling who was wont to boast about his money-saving innovations and beautiful wardrobe. He posted on Twitter that he had bought a pair of Hermes-Paris shoes in Rome (their price tag is currently about $1 000, almost R15 000).

Le Roux’s departure allegedly coincided with the arrival of suave former mayor Afzul Rehman, a young councillor heaped with praise for cutting costs and keeping the streets clean.

Dazzled by the mayor

Rehman won the KwaZulu-Natal Mayor of the Year award three times and for a time, many locals were dazzled by the “handsome smoothie” who turned council meetings paperless, cut councillor lunch allowances and pledged huge savings for capital expenditure.

Ten years later, Rehman sold his multimillion-rand home in Newcastle and moved to Dubai, where he now owns a car dealership, far from the woes of his old hometown where some now spit at the mention of his name.

17 October 2014: Former mayor Afzul Rehman dazzled residents with his cost-saving measures, but is now accused of nepotism and rigging the Mayor of the Year awards. (Photograph by Gallo Images/City Press/Khaya Ngwenya)
17 October 2014: Former mayor Afzul Rehman dazzled residents with his cost-saving measures, but is now accused of nepotism and rigging the Mayor of the Year awards. (Photograph by Gallo Images/City Press/Khaya Ngwenya)

Community newspaper the Newcastle Advertiser ran an exposé alleging that Rehman had redirected work to his comrades and his brother, Riaz, who received a R2 million cellphone contract. 

The paper also alleged that the best mayor award was a sham determined by SMS votes cast by municipal staff sitting in an office artificially boosting votes for Rehman.

The paper said it had a report based on a damning forensic investigation conducted by the KZN’s treasury department that recommended criminal action against politicians. 

Things don’t look good for Rehman and recently suspended municipal manager Kebone Masange, but most officials, politicians and some local businessmen are not covered in glory.

Rehman vigorously contests the allegations against him.

Long-time Newcastle opposition councillor Koos Vorster, formerly a member of the DA and now an Inkatha Freedom Party supporter, has plotted the municipality’s spending from 2005 to 2019. 

He says that when the ANC took over in 2009, the town had R248 million in cash reserves. But the party approved a host of capital investment projects it couldn’t afford, using a combination of loans and grants from central government. 

Vorster says Newcastle now owes R1.4 billion and is owed R1.3 billion by residents for unpaid services such as electricity, water and refuse removal. 

East versus West

Newcastle politicians refer to different parts of the town as “East” and “West”, the former covering the area where most residents live, including the township of Madadeni. The West is the former centre of town.

According to the municipality, about 365 000 people live in Newcastle. About 56 000 of them live in the West and pay 95% of the town’s rates. The balance reside in the East and pay 5% of the rates.

Vorster says that, for a decade, the ANC avoided the tough call of demanding payment for services and instead dipped into different budgets to fund its excesses, raiding electricity deposits and staff leave provisions.

“They used other people’s money and they were warned not to do this,” says Vorster.

‘Dubai’ building saga

Funding capital investment projects wasn’t feasible when the municipality wasn’t able to balance its books, which meant the R400 million spent on the swish, seven-storey municipal building that locals refer to as “Dubai” was totally unaffordable.

Vorster says the building might have stimulated the local economy, but “a lot wasn’t budgeted for and we never got a report for the overspends and who got what”.

Rehman is livid at the allegations that he was corrupt and a spendthrift. Speaking from Dubai, he said he became a councillor at the age of 21 in 1996 and resigned in January 2018 as speaker of the Amajuba district municipality, which has offices in Madadeni.

“My conscience is clear … I served to the best of my ability, and I changed the landscape and delivery of services for the better.”

He said it was a “blatant untruth” that he ran the municipality into the ground or that he ousted Le Roux. He said Le Roux didn’t have a “developmental” mindset. Rehman is angry that he went from “being loved by so many to being the person who caused all the damage”.

13 September 2019: The Newcastle Town Hall in front of the new aluminum and glass structure known as ‘Dubai’
13 September 2019: The Newcastle Town Hall in front of the new aluminum and glass structure known as ‘Dubai’

“Can it be true that everyone got it wrong … Could I have lied and cheated my way to win multiple awards?” he asked.

He acknowledged that he knew “the storm was coming” in 2016, but he justified the municipality’s intense spending on capital investment projects to improve residents’ quality of life.

“When I left, after spending R2 billion, we may have taken about R400 million worth of loans and depleted the reserves. Taking the big picture into account, the addition of R2 billion assets far outweighs the fraction of loans and usage of the surplus.”

The plan was for “Dubai” to have been funded by the R25 million the municipality was spending on rent. Officials in Newcastle claim that after the building was complete, Masange signed a lease on another building and has since been suspended because of the municipality’s R50 million exposure through the deal. The “Dubai” building is now largely occupied by municipal staff.

Rehman says the National Treasury refused to loan them the money for the new building, which was a “disaster” that forced the municipality to use its surplus. He said this caused the crisis and he was the scapegoat, especially because he had moved his family to Dubai so that his children could learn Arabic.

Johan Pieters, a local entrepreneur and chairperson of the Business Growth Coalition’s Newcastle Chapter, says corruption aside, residents were used to a “110% standard of service delivery, but now it is 85%”.

Newcastle has a future

He strongly advocates supporting Mahlaba’s leadership. “I am an optimist,” he says. “If we work together, we can succeed.” 

Pieters acknowledges that residents are often divided – the town has seven business chambers – but says “this town has a future … You can’t change the past. We can change the future. I am not talking about justice. I am talking about moving on.” 

Mdu Mnisi, the businessman at the forefront of the recent shutdown in Newcastle during which the entrances to the town were blockaded with burning tyres, says residents are demanding answers.

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“There is no investigation into the irregular, fruitless and wasteful expenditure … Who foots the bill for this? Council employees earn big salaries and drive big cars, but pensioners can’t afford to pay for basic municipal services.”

Mnisi said Mahlaba’s attitude is sometimes “arrogant” and his organisation, the Newcastle Residents Forum, is calling for the municipality to be put under administration. But they will work with the mayor if he is prepared to open the municipal books.

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