The City of Tshwane owes the SA Revenue Service (Sars) R4.7bn in outstanding taxes for a contract awarded more than a decade ago.
The contract, which was for the installation of smart meters, was declared invalid and unlawful by the North Gauteng High Court back in 2017, but according to mayor Cilliers Brink during a media briefing on Monday, the city was paying R91m a month in fines for the contract — with Sars demanding more.
Brink said the ANC administration in 2012 entered into an irregular contract with PEU Capital Partners and Total Utility Management Systems, paying billions of rand.
He said this agreement was against the advice of National Treasury — which he said was withheld from the council at the time.
Brink said the city owed Sars R4.7bn for payments made to the PEU Capital Partners and Total Utility Management Systems in the form of interest and penalties on the contract.
Brink said between 2012 and 2015, PEU Capital Partners had obtained access to the municipality’s bank account to pay itself.
“In the past year the city learnt that it owed Sars outstanding VAT payments on this unlawful contract for the period 2012 to 2016, and in the meantime penalties and interests have accrued on this account. At present the city is paying R91m a month on this bill, which is a massive squeeze on our cash flow. Sars is now demanding an even bigger payment,” he said.
Brink added that R2bn of undisclosed payments had already been made on the account, adding it formed part of the city's unauthorised, fruitless and wasteful expenditure detected by the auditor-general in the previous financial year.
“I’ve told the city manager and his team that the city must obtain all documents detailing the nature and the extent of this liability, and exactly when it was agreed that the city would foot it. If need be, we will dispute this liability, even if it means declaring an intergovernmental dispute.
“A forensic investigation is under way to determine how exactly payments were made by city officials, and then hidden from the political leadership of the city. This event more than anything else shows that political leaders have to exercise far more rigorous oversight over the work of the city administration,” Brink said.
The City of Tshwane also doubled down on tariff hikes it had proposed in its draft budget for the 2023/2024 financial year.
Finance MMC Peter Sutton announced a 12% tariff increase on water, electricity, refuse collection and sanitation.
This is a decrease from the 18% increase proposed in the municipality's draft budget tabled during Friday's council meeting.
The municipality also proposed a 9.2% hike for water and sanitation and a 6% increase for refuse collection.
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