“We are not bankrupt” - VDM

Concern is growing among residents of the region that the Vhembe District Municipality (VDM) is border-line bankrupt, if not bankrupt already.

VDM spokesperson Mr Matodzi Ralushai assured the Limpopo Mirror on Wednesday, however, that the municipality is not bankrupt. “You are only bankrupt if you’ve used up your entire budget and grant money,” he said. He admitted, however, that they are facing some challenges.

In January this year, strike action was looming at the VDM, with employees downing tools out of protest for not getting paid their salaries on time. At that stage, the provincial leader of the Democratic Alliance (DA), Mr Jacques Smalle, argued that the municipality was already bankrupt as their salary bill was in the region of R20 million a month while they only had R7 million in their bank account.

In response, Ralushai admitted that salary payments for January were delayed but that payments were eventually made. He attributed the late payment to a cash-flow problem the VDM had experienced at the time but added that the VDM was financially stable.

The question at that stage was where the VDM got the money from to pay the salaries. Mid-February, Smalle indicated that the DA would be calling on the MEC for Cooperative Governance in Limpopo, Ms Makoma Makhurupetje, to invoke Section 139 (1) of the Constitution, whereby the provinces would be obliged to intervene if there were financial crises at municipalities. The reason for this, Smalle said, was that the DA had noted the “unacceptable conduct by the municipality to utilise the municipal infrastructure grant (MIG) to pay salaries of the employees instead of applying the funds for the intended purposes.” He stated that, according to the Public Finance Management Act (PFMA) and MIG policy, these grants could not be used to finance operational expenditure other than the prescribed to the percentage permitted for the operation of project costs.

This fuelled speculation once more that the VDM was facing a more serious financial crisis than a mere cash-flow problem. “Last year, the municipality failed to compile the financial report timeously and refused to return R167 million to the national treasury because of underspending. The vexatious disregard of the PMFA regulations resulted in the treasury's withholding a portion of their equitable share, which led to non-payment and/or late payment of creditors,” Smalle said. He said the fact that several key positions at the municipality remained vacant did not help the situation either, referring to the vacant position of the municipal manager, chief financial officer, infrastructure general manager and community service general manager. “It is clear that urgent intervention is needed to accelerate services to the people in Vhembe. The DA has already requested MEC Makhurupetje to establish a forensic investigation into the financial affairs of the municipality,” Smalle said.

After almost three weeks of trying to elicit a response from the VDM regarding Smalle’s allegations, Ralushai responded on Wednesday by vehemently denying that grant money was being used to pay salaries. “The municipality made an arrangement with the bank to pay salaries,” Ralushai said. He said people must remember that grant money was given conditionally and that the process was strictly controlled. He again stated categorically that the VDM did not use any grant money to finance their operational expenditure and that all grant money they received was being used to fund the projects it had been allocated for.

Ralushai admitted that vacancies in key positions at the municipality were also of concern to them. The situation was not improved when their assisting municipal manager resigned at the end of February. According to Ralushai they were, however, addressing the issue. He indicated that they had already asked the provincial government for assistance and that the province had deployed an administrator to act as interim accounting officer. This interim administrator took office on Monday. The positions of chief financial officer, infrastructure general manager and community service general manager remain vacant, however. “The position of municipal manager has been advertised, but a suitable candidate has not been identified,” Ralushai said.

To add insult to injury regarding the VDM’s financial affairs, members of the Sherriff’s office confiscated millions of rands worth of vehicles and office equipment on Friday. This after the Polokwane High Court had ruled in favour of a former contractor, NW Engineering, in a R14 million lawsuit against the VDM. The contractor took the VDM to court after they had terminated their contract with him for the construction of a new reservoir in Louis Trichardt in 2008. The contractor initially won the lawsuit for unfair termination of his contract, but the VDM took it on appeal, which they lost.

Asked how this would impact on the day-to-day running of the VDM, Ralushai said that, following Friday’s seizure of good at their offices, their legal team met with the contractor on Saturday. “The matter was resolved during Saturday’s legal engagement and all goods were returned on Sunday morning,” Ralushai said.

In conclusion, Ralushai was asked if the VDM was able to pay their officials and employees on time at the end of February. He said that all employees had been paid without any problems. “All our service providers were also paid,” he said.

Date:13 March 2015

By: Andries van Zyl

Andries joined the Zoutpansberger and Limpopo Mirror in April 1993 as a darkroom assistant. Within a couple of months he moved over to the production side of the newspaper and eventually doubled as a reporter. In 1995 he left the newspaper group and travelled overseas for a couple of months. In 1996, Andries rejoined the Zoutpansberger as a reporter. In August 2002, he was appointed as News Editor of the Zoutpansberger, a position he holds until today.

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