NOMVULA’S money woes

Let­ters from Trea­sury show that a unit within the de­part­ment has an over­draft of R3.5 bil­lion and that R654 mil­lion can­not be ac­counted for in its fi­nan­cials

CityPress - - News - SIPHO MASONDO sipho.masondo@city­press.co.za

Wa­ter and San­i­ta­tion Min­is­ter Nomvula Mokonyane and Trea­sury are at each other’s throats over the de­part­ment’s de­te­ri­o­rat­ing fi­nances. Con­fi­den­tial let­ters from Trea­sury to Mokonyane’s most se­nior ex­ec­u­tives, ob­tained by City Press, re­veal that: The Wa­ter Trad­ing En­tity (WTE), a unit within the de­part­ment tasked with man­ag­ing wa­ter sales and rights, has racked up a R3.5 bil­lion over­draft. In Fe­bru­ary, City Press re­ported that the de­part­ment was broke and couldn’t pay con­trac­tors;

The de­part­ment ap­pears to have cooked its books to try to ex­plain an amount of R654 mil­lion that it can’t ac­count for in its fi­nan­cials;

The WTE’s neg­a­tive bal­ance could jeop­ar­dise the abil­ity of the Trans-Cale­don Tun­nel Author­ity (TCTA) to ser­vice its Le­sotho High­lands Wa­ter Project debt;

Trea­sury will no longer pay the WTE’s in­voices un­til the de­part­ment set­tles its R3.5 bil­lion over­draft; and

Mokonyane and her of­fi­cials have plans to re­move the WTE from the de­part­ment and set it up as a stand­alone state-owned en­ter­prise.

In a let­ter to Mokonyane’s di­rec­tor-gen­eral, Dan Mashitisho, two weeks ago, Trea­sury’s out­go­ing di­rec­tor-gen­eral Lungisa Fuzile said: “I wish to re­it­er­ate to you, as the WTE’s ac­count­ing of­fi­cer, that in terms of Trea­sury reg­u­la­tions, trad­ing en­ti­ties are not al­lowed to bor­row for bridg­ing pur­poses and are also not al­lowed to run into over­draft. To pro­tect the TCTA’s gov­ern­ment guar­an­teed debt, the TCTA pay­ments will be ring-fenced and only those pay­ments will be pro­cessed un­til such time that the Na­tional Trea­sury and the WTE agree on re­pay­ment terms to bring the ac­count back to a pos­i­tive bal­ance.”

In a sep­a­rate let­ter on De­cem­ber 2, Trea­sury’s as­set and li­a­bil­ity man­age­ment deputy di­rec­tor-gen­eral An­thony Julies asked Mokonyane’s chief fi­nan­cial of­fi­cer Si­fiso Mkhize to ex­plain the R654 mil­lion TCTA “fa­cil­ity man­age­ment” fee: “A ma­jor op­er­at­ing ex­pen­di­ture in the fi­nan­cial state­ments re­lates to a TCTA ‘fa­cil­ity and man­age­ment fee’ of R654 mil­lion. Na­tional Trea­sury is not aware of any such fees that are charged by the TCTA as the TCTA’s cost re­cov­ery is re­flected in TCTA’s tar­iff, which is payable by the WTE. “Na­tional Trea­sury fur­ther en­quired with TCTA re­gard­ing these fees and TCTA was it­self un­able to rec­on­cile the costs re­flected in the op­er­at­ing ex­pen­di­ture.” Julies also en­cour­aged Mkhize to make a busi­ness ar­gu­ment to Trea­sury to jus­tify the es­tab­lish­ment of the WTE as a paras­tatal. How­ever, the de­part­ment’s spokesper­son, Sput­nik Ratau, de­nied the books were cooked. “As­per­sions of ‘cook­ing the books’ are in­cor­rect. The TCTA is an en­tity of the de­part­ment, with the min­is­ter of wa­ter and san­i­ta­tion re­spon­si­ble as the ex­ec­u­tive author­ity. Man­age­ment fees would in­clude ad­min­is­tra­tion and op­er­at­ing costs for build­ing leases, salaries of staff, tele­phone, trav­el­ling costs, sta­tionery, ar­rang­ing and mon­i­tor­ing main­te­nance, man­ag­ing bor­rowed funds and more. “TCTA, as an in­de­pen­dent en­tity, can pro­vide proof and a break­down of how fa­cil­i­ties and man­age­ment fees are cal­cu­lated,” Ratau said. Af­ter deny­ing in Fe­bru­ary that the WTE had an over­draft at all, Ratau said: “It is also con­firmed that the WTE is in a very strong fi­nan­cial po­si­tion with as­sets ex­ceed­ing li­a­bil­i­ties by R72 bil­lion. It should be noted that the over­draft for WTE is the re­sult of non­pay­ment of debt by mu­nic­i­pal­i­ties and wa­ter boards ... Var­i­ous debt re­cov­ery strate­gies are be­ing im­ple­mented, which in­clude ob­tain­ing de­fault judg­ments, as well as work­ing with Na­tional Trea­sury on man­ag­ing the over­due debt.” He also de­nied the de­part­ment had plans to merge the TCTA and the WTE to cre­ate a paras­tatal. “A due dili­gence ex­er­cise is cur­rently be­ing con­ducted on the pos­si­bil­i­ties of es­tab­lish­ing an in­de­pen­dent in­fra­struc­ture agency. [It] has not yet been com­pleted.” How­ever, a se­nior Trea­sury ex­ec­u­tive said: “They wanted to make a state-owned en­ter­prise. In a state-owned en­ter­prise, a min­is­ter ap­points a board and can ask it to do what­ever she wants it to do. They can di­vert ten­ders to wher­ever she wants them to go.” A se­nior bu­reau­crat in Mokonyane’s of­fice con­firmed the plans to merge the TCTA and WTE into a state-owned en­ter­prise.

Nomvula Mokonyane

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