“It is shocking to know that there are City officials working with business people to remove their municipal accounts from the City’s database,” said City of Johannesburg Executive Mayor, Herman Mashaba.
“I have written to the CEOs of the South African Institute of Chartered Accountants (SAICA) and the Independent Regulatory Board for Auditors (IRBA) to raise my serious concern with the number of businesses who are failing to pay their municipal accounts and who have disappeared from our database,” said Mashaba.
Mashaba stated that he has requested the intervention of SAICA and IRBA to ensure its members are aware of these challenges and to advance greater ethical practices when it comes to accounting and the auditing of businesses in Johannesburg.
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On 6 February 2018, the City of Johannesburg launched Operation Buya Mthetho. This is a multi-departmental operation aimed at enforcing by-laws and bringing back the rule of law in the City of Johannesburg. It is a joint operation between all key City departments and entities such as the City’s Group Forensic and Investigation Service (GFIS), JMPD, Environmental Health, Social Development, Infrastructure Services, the City’s Legal Department, and Development Planning to name a few.
“The operation targets properties across Johannesburg that are not paying for municipal services. To date, the City has identified over 2 000 accounts that have been deliberately removed from the City’s billing system. Of particular concern to me is the number of well-known businesses and establishments which have been identified as not paying for municipal services. It is estimated that the City is losing between R7 billion and R10 billion in revenue per annum as a result of municipal accounts that have been removed from the billing system,” he said.
Mashaba provided a few examples of how the operation is recovering the City’s lost money:
The City collected R30,5 million from a company whose account was in arrears. The company has also entered into an acknowledgement of debt to settle the outstanding balance of R23 million over a period of six months.
In a separate matter, the City received a payment commitment worth approximately R55 million from two companies whose accounts are in arrears.
A certain company from the west of Johannesburg owes the City just over R48 million, and a higher learning institution from Braamfontein has a debt of R7,6 million. A shopping mall owed the City R5 million but when the account was revisited, charges on the account had been reduced to R2 million.
“There are various cases of this nature that are currently under investigation as officials increase their efforts with Operation Buya Mthetho.
I have also instructed a team from GFIS to investigate these accounts to ensure that this lawlessness is brought to an end,” he said.
According to Mashaba, Operation Buya Mthetho has yielded much success, resulting in the City collecting R341 million in unpaid municipal rates and taxes in just three months.
These businesses will now be billed every month, bringing in recurring income. Mashaba will ensure that the City is able to improve service delivery to the residents of Johannesburg.
The sheer number of businesses who are failing to pay their municipal debts or who have disappeared from the billing system altogether is alarming and requires urgent action.
“Given the extent of this practice, it concerns me that such incidents are not being picked up by accountants and auditors at these companies. Accountants and auditors, in general, need to make a greater effort in ensuring that businesses honour their debts to local government for services that are rendered and pay their rates and taxes timeously,” he added.
“I trust that the IRBA and SAICA will treat this matter seriously. Given their pre-eminent positions in their respective fields, I believe that their intervention could assist in ensuring less incidents of this nature and greater ethical practices when it comes to accounting and auditing practices in Johannesburg and other municipalities facing similar challenges, he concluded.
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