Rhodes University says the turnover of staff in the municipality's Finance directorate means a long-running discrepancy over one of its electricity accounts remains unresolved.
Rhodes University says the turnover of staff in the municipality's Finance directorate means a long-running discrepancy over one of its electricity accounts remains unresolved.
This appears to be at the root of a war of words that erupted on Tuesday 29 October following an online story published by Grocott's Mail ('Mayor slams Rhodes 'loan-shark' claim').
In it Mayor Zamuxolo Peter vehemently contradicted the University's version of its role in securing wage and salary payments for municipal employees last week, as reported in the Daily Dispatch on Friday 25 October.
"Rhodes is not a bank or a loan shark to say that they gave us an advance. It's what they owe us anyway as the municipality," the Mayor told Grocott's Mail on Tuesday 29 October. "We are grateful to them for paying [but]that is what we expect from all our [debtors]." The municipality has issued a statement about what they call "sensational reporting in the Daily Dispatch". You can read the full statement below this article.
There had been no bail-out, the Mayor said.
"Rhodes like other people who owe us, was paying their outstanding debt. It was just fortunate that they paid that day," Peter said.
He said Rhodes had owed Makana Municipality R8 million in rates. He said the University had signed an agreement with Makana's finance department to settle their debt.
In a statement issued on Wednesday Rhodes University clarified their version of the nature of their Friday payment to the municipality.
Discrepancy
Staff turnover in the municipality's Finance directorate meant that a discrepancy in the University's municipal electricity account discovered in September 2012 remained unresolved, Dr Iain L'Ange, Executive Director: Infrastructure, Operations & Finance at Rhodes University, wrote in the emailed statement. Makana Municipality had asked the University to make a payment against the disputed amount.
Instead the University made an advance payment of R3 million for municipal services to be provided.
The University's latest statement is published in full below this article.
Earlier on Tuesday Makana spokesperson Mncedisi Boma denied rumours that the municipality was bankrupt.
Speaking to Grocott's Mail, Boma also said rumours that the provincial government would intervene were not true.
"It has not reached a stage of intervention," Boma said. "We can safely say that the municipality is not bankrupt."
Drama erupted outside the city hall on Friday 25 October, where unpaid workers gathered as rumours rapidly spread that the municipality had no money in the bank.
They were addressed by the Mayor, who assured them they would be paid.
No technical glitch
Meanwhile, First National Bank has strongly denied that Makana Municipality's failure to pay staff and service-providers this month had anything to do with the bank's systems.
On Friday acting municipal manager Thembinkosi Myalato told Grocott's Mail there had been a technical glitch with the bank that had delayed payments.
In an email received by Grocott's Mail on Tuesday 29 October, however, Anrie Spangenberg, Regional Director, FNB Public Sector Banking, said, "FNB can confirm that it didn’t receive any notification regarding a potential systems glitch in the Makana area. Our banking systems continue to run efficiently."
Boma also contradicted Myalato's attribution of the payment problems to First National Bank.
"We don't have a problem with our bank," Boma told Grocott's Mail on Tuesday.
Yesterday the Mayor was locked in discussions with municipal manager Pravine Naidoo and acting chief financial officer Marius Crouse.
Cash flow problems
On Monday Mayor Zamuxolo Peter confirmed there were serious cash-flow problems in the municipality.
"The point is that it is clear there is a serious challenge financially that has to be looked at. I will meet with the municipal manager and the acting CFO to discuss in detail the financial status of the municipality," said the Mayor during his address to Council on Monday afternoon.
A special council meeting scheduled to start at 10am on Monday 28 October was adjourned after Peter and Naidoo had to address disgruntled municipal workers.
At the rescheduled meeting the Mayor said they had managed to extract payment from some creditors. This had made it possible to pay some staff, the Mayor said.
On Friday the Mayor promised that while directors and managers might have to wait for their salaries, other Makana employees would be paid.
Africa Boso, spokesperson for the auditor general's office said that his office does not comment on such matters.
Municipal employees returned to work on Wednesday 30 October.
Cleansing section workers were collecting refuse in the CBD streets this morning and other employees were seen at their stations in municipal offices and workshops.
Employees have been meeting with the municipality's management during the past two days, seeking clarity about the late payment of this month's salaries and wages.
Union leaders said they would work together with the management to investigate the state of finances in Makana. Samwu leader Luyolo Nogxabela said they had been promised a report on the state of Makana's finances by 15 November.
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Response by Rhodes University to the issue of the advance payment to Makana Municipality
In September 2012 the University discovered a discrepancy in its municipal electricity account. The Deputy Vice Chancellor (Academic & Student Affairs) and the Executive Director: Infrastructure, Operations & Finance immediately met with the Executive Mayor of the Makana Municipality to discuss the discrepancy. The Municipality undertook to investigate the discrepancy and to revert to the University. Due to the turnover of staff within the Finance Directorate of the Municipality, the discrepancy remains unresolved.
Early on Friday 25 October 2013 Rhodes University was approached by Makana Municipality indicating it was experiencing a cash-flow problem due to the delay of an anticipated payment, and would therefore not be able to meet its staff salary and wage obligations due for payment that day. The Municipality requested the University to consider making a payment against the disputed electricity account. Given that the discrepancy is still the subject of discussion and verification, the University was unwilling to make any payment to the Municipality on this basis. The University however agreed to make a once off advance payment of R3 million to the Municipality for municipal services to be provided. The Municipality accepted this proposal which was recorded in a signed Memorandum of Understanding.
We also wish to point out that the University’s next municipal services payment was due on Monday 28 October. In terms of the MoU, this payment of R2.5 million was not processed as it was paid in advance the previousFriday. The remaining R500,000 will be deducted from next month’s municipal services invoice.
Dr Iain L'Ange, Executive Director: Infrastructure, Operations & Finance at Rhodes University
Wednesday 30 October 2013
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MAKANA MEDIA RELEASE: SENSATIONAL REPORTING IN THE DAILY DISPATCH
The sensational reporting by the Daily Dispatch on the cash flow challenges experienced by the Makana Municipality of late, is regrettable. The article in the Daily Dispatch dated 29th October 2013 titled “Rhodes pays R3 million to help Makana pay its workforce” is premised on patently false information and assumption instead of facts. The presumptuousness and false conclusions arrived at in this poorly written article, can only lead one to believe that the journalist in question has an agenda of his own to pursue instead of practicing his profession in accordance with the Press Code.
This poorly researched article is superficial and is calculated to misinform the public. The facts are as follows:
- Rhodes University as one of the Makana Municipality’s debtors (in respect of municipal services) owe the Makana Municipality R8 million rands;
- There are various institutional debtors (for example hospitals, schools, government departments, and private businesses) who are indebted to the Municipality;
- The Municipality is currently experiencing a cash-flow challenge due to many consumers (both institutional and private residents) not paying their municipal accounts on time;
- Over the past years, some large businesses and government departments have queried the municipal billing methodology;
- Rhodes University, is one such institution that have queried the municipal billing system and also the veracity of the R8 million owing to the Municipality;
- Both Rhodes and our Budget & Treasury Officials are currently meeting to resolve the matter;
- Due to the non-payment and late payment of municipal service charges by both residential and institutional customers of the Municipality, a cash flow challenge emanated;
- It was then urgently agreed upon by the Municipal Manager and the Acting CFO that most of our bulk consumers should pay at least 50% of the amounts owing on their municipal accounts and resolve their queries with our Budget & Treasury Officials in terms of them paying the balance off in terms of arrangements to repay;
- Rhodes University, as a major institution in Grahamstown and the Makana Municipality’s largest client, was contacted and requested to make an advance payment;
- The Makana Municipality DID NOT approach Rhodes University for a “bail-out” as incorrectly reported;
- The “Top-Ten” debtors of the Municipality were contacted in this regard;
- In terms of implementing our Credit Control Policy, Makana Municipality appreciates the quick response of Rhodes University in this matter;
- The Makana Municipality has and is currently putting systems into place to ensure that our billing system is credible and that our Credit Control Policy is vigorously implemented.
Mr. MNCEDISI BOMA
MUNICIPAL SPOKESPERSON
Wednesday 30 October 2013
