At a special council meeting of Umdoni on August 23, a resolution was taken to write off more than R266-m in unauthorised, irregular, fruitless and wasteful (UIFW) expenditure.
Not too long ago, almost R434-m was written off relating to the same expenditure. This amounts to almost R700-m being written off with not a single person being held accountable. This lack of consequence management smacks of protection of cadres. This also raises questions relating to the effectiveness, capacity and objectivity of Umdoni’s municipal public accounts committee (MPAC) which is tasked with investigating UIFW expenditure. Concerns raised by DA and other MPAC members were not adequately addressed.
For almost two years, DA councillors have stated that a large amount of irregular expenditure could be prevented by cancelling irregular contracts. There are a number of court judgements to support the cancellation of irregular contracts. This has fallen on deaf ears and the ANC has continually used its numbers to push resolutions contrary to good governance. In terms of section 172(2)(ii) of the Municipal Finance Management Act, the accounting officer (MM) of a municipality is guilty of an offence if he/she fails to take all reasonable steps to prevent irregular or fruitless and wasteful expenditure. The DA councillors are looking into this provision to check if any consequence management could be instituted.
Another item on the agenda dealt with the write-off and impairment of unverified assets and the write-off of over R8-m in VAT receivable from SARS. Municipal officials could not verify 2109 municipal assets! How exactly are the officials entrusted with the safeguarding of our assets doing/not doing their jobs and once again the majority of councillors refused to include any consequence management in the current set of resolutions. The write-off of R8-m in VAT receivable is due to the municipality not being able to provide SARS with the relevant invoices for the 2016 and 2017 years, resulting in the prescription of these amounts. It is shocking that the DA recommendation for the municipality to request possible condonation from SARS was rejected.
The request to have a verbal report on the Umdoni Fire Services placed on the agenda was not granted. This was an urgent matter after an incident where a teenager lost her life. The municipal manager stated that she was working on a response to the letter sent to the mayor by the DA after the fire in Erskine Street.
COUNCILLOR SHARA SINGH
DA Caucus Leader – Umdoni
Umdoni’s Response:
The municipality notes with concern the actions by certain councillors who communicate municipal issues on media platforms, to discredit the municipality by sharing inaccurate information, thus undermining council resolutions. It must be stated that the MPAC and council in line with their regulated roles have duly exercised its role in dealing with the said issues thus sternly resolving on these matters.
The amounts written off are historical balances carried forward since amalgamation with the erstwhile Vulmehlo Local Municipality in 2016. The new council at that stage had not finalised the amounts for write off, hence the large amounts written off in the 2023 and 2022 financial years. These are in the main opening balances from 2016 carried forward to 2022 and 2023 respectively. “The amount of R700-m written off was interrogated by the MPAC and approved by council as irrecoverable. And in a case where amounts are recoverable, cases have been opened with the Saps and are being pursued by the relevant authority. These cannot be discussed further until its conclusion.”
Council has over the years considered UIFW expenditure for write or recovery from the person/s who contravened the supply chain management regulations.
The same applies to the unverified assets as they are assets of the erstwhile Vulmehlo Local Municipality and consolidated into Umdoni. Some of these assets relate to the amalgamation.
Furthermore, the 2021 riots have contributed to this predicament as some assets were removed from the municipal offices located in remote areas and remain unaccounted for. The municipality continues to locate these assets.
The municipality has put in preventative controls to prevent UIFW expenditure and has seen a reduction in the last two financial years.
The reversal of the VAT receivable is due to the fact that these amounts have prescribed as they have exceeded the 5-year validity period. In terms of Section 16(3) of the VAT Act No.89 of 1991, VAT requires deduction of input VAT in respect of supplies made in that period. Provision (i) to this section provides that any amount of input tax which was deductible and has not so been deducted may be deducted in a following period but limited to a tax period 5 years after which the tax invoice for the supply should have been issued.
The goal is to have a well-functioning government institution that duly delivers services for the benefit of the Umdoni communities. We will continue to ensure accountability takes place in order to achieve this goal.
SPHELELE CELE
Umdoni communications manager
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