The municipality spent a staggering R 161 329.82 to send a delegation to Durban.
Part of this four-day trip was spent at the Durban July, which is an event commonly attended by the rich and famous.
According to the documentation that the Herald has seen, the trip to Durban, is described as a networking opportunity to enhance Local Economic Development, market JB Marks and establish partnerships.
The amount spent on the trip is more than the R 120 000 which is allocated to a ward for a year.
According to the documentation, the money for the trip was taken from income that is being held in trust by one of the municipality’s lawyers. The money held in trust comes from a rental agreement where a piece of the Eleazer farm owned by the municipality was rented out to be utilized for mining. According to the documentation, the agreement between the municipality and the company is for R1 million per year, escalating at 8% per year since July 2017.
The company who obtained the mining rights was placed under business administration in November 2017, but through a business rescue practitioner made a few payments on the arrears rental to the municipality.
According to Dr. Len Mortimer from the School of Public Leadership at Stellenbosch University, it should be of great concern to ratepayers that revenue seems to be off-balance sheet. “It would seem that there is a lack of transparency in how assets and liabilities of the municipality are managed. In terms of the MFMA the accounting officer is responsible for all revenue and expenditure and that proper systems and controls are in place to prevent irregular, fruitless and wasteful expenditure. If a “budget” is outside the ambit of this control, I would regard such an arrangement as problematic.
The revenue of R1 million a year should in my view have been received through the primary bank account and used as revenue to subsidise the rates account,” he said.
According to him, the management of these funds by the attorney in trust could be justified, because of the debt collection but the release of the funds should flow to the municipalities’ main banking account.
“Thereafter all expenditure incurred still need to comply with the broad legal framework for SCM, more specifically the MFMA and its regulations, if not it will result in irregular expenditure. The income generated from the mining rights should still be accounted for in the income statements and balance sheet of the municipality as well as how it was expended in terms of the prescribed law dictating competitive processes as per S217 of the Constitution,” said Mortimer
According to Lebu Ralekgetho, the municipal manager, a full report on the matter will be tabled at the next ordinary council meeting.
According to him the trip to the Durban July, was part of an extended trip to KZN. This he said was done, in line with the city’s strategy of positioning itself as a mecca for sports, arts, and culture and to establish JB Marks as the first-choice destination for sports camps of international and national teams, and arts and cultural events.
“Major annual sporting events are potential benchmarks, but also effectively used for networking with the relevant role players and decision-makers who frequent such events, and also to learn from, in order to be able to replicate the core value propositions that such events offer to a local economy.
“Council has, over the last three to four years, used many opportunities to network and to build relationships in a very competitive market with excellent guidance, advice, and cooperation from a consultant and experienced campaigners and stakeholders in this industry, such as the university and others, creating networking opportunities both locally and internationally,” said Ralekgetho.
He cited events hosted by the municipality such as the Athletics Grand-Prix Championships and the Cross Country Athletics Grand Prix as successful results from these types of interactions.
“The event attracted roughly a thousand participants and more than 2 500 visitors to the city. By our estimations the event was able to generate income in the sum of over a million rand, per capita, totaling, enhancing our LED institution,” he said.
Ralekgetho explained that the funds were ring-fenced for local economic development to ensure that funds which are earmarked for service delivery aren’t used for the purposes of marketing the city and securing events.
According to him, the funds are being held in trust as the municipality’s lawyer is in the process of collecting the outstanding amounts due to the council by the mining right holder.
“The attorney reports to council on a monthly basis on the progress of the matter. Their trust funds are also subject to trust audits on a quarterly basis as part of governing laws applicable to trust accounts. All municipal finances are also audited on an annual basis as legislated,” he said.
