Inquiry ‘set to unravel water arrears mystery’
FOUR years after the Department of Water and Sanitation hired a company to recover R4-billion owed to it by municipalities, companies and water boards, its outstanding debt has more than doubled.
As of December, unpaid bills by various water users had increased to more than R9-billion.
Despite this dismal recovery performance, the company, New Integrated Credit Solutions, has been paid R322-million.
Sources close to Minister Nomvula Mokonyane’s office said the contract would form part of an investigation launched by the minister last year into complaints regarding procurement processes and allegations of maladministration in the department.
Money recovered by the company is supposed to be paid to the department’s water sales wing, the Water Trading Entity. But the entity says it is broke.
Documents signed by the department’s director-general in December 2015, seen by the Sunday Times, show that the entity had committed to a number of water service projects.
But last month its chief financial officer, Mpho Mofokeng, made a presentation to finance officials in which he said it could not continue with various key water projects because of the “severe strain” it is facing “regarding collecting outstanding debts from municipalities and water boards”.
The projects affected include the Giewap Distribution Mopani emergency works, Nondoni Nsami water pipeline, Nooitgedacht water scheme, the Umkhanyakude project and drought relief projects.
“There is proof showing it took on water projects because it was going to get money from New Integrated Credit Solutions,” said one source within the department. “It has dropped those water projects this financial year because their coffers are empty.”
Department spokesman Sputnik Ratau said the company had collected over R2.7-billion, but could not say what this money had been used for.
One source said: “It makes no sense to say the [company] has collected all this money yet the Water Trading Entity is still owed R9-billion, has no money and can’t fulfil its obligations to water projects.
“This is a matter that is the subject of the investigation by Advocate [Terry] Motau and the minister is expecting an update in the next two weeks.”
Motau said the scope of his investigation was vast, and included all contracts signed after the minister took office.
New Integrated Credit Solutions, which was established in 2001, boasts clients such as Telkom, many municipalities, banks and the South African Revenue Service.
The company was recently linked to unexplained payments made to SARS second-in-command Jonas Makwakwa, in a preliminary report by the Financial Intelligence Centre.
The report identified “suspicious and unusual” payments totalling R1.2-million paid over a six-year period. Through a complex network of bank accounts and companies, investigators traced some of the payments back to a February 2015 payment of R17.87-million by the Department of Water and Sanitation in favour of New Integrated Credit Solutions.
The tender for debt recovery was put out in September 2012 after the department realised it had a R4-billion backlog in unpaid water bills.
New Integrated Credit Solutions was appointed in 2013 to assist in recovering debt from more than 67 000 customers.
At the time the contract value INVESTIGATION: Minister Nomvula Mokonyane was set at R500-million for two years. But the source said there had been several variations, including recovering VAT from SARS and an extension period to the contract, which had cost the department an additional R60-million.
According to the sources, the investigation would also cover how the department signed off on these variations. Ratau said the variations were above board. “The department’s contract stipulates that if the NICS does not collect any debt then no payment or commission is paid to them,” he said.
New Integrated Credit Solutions chairman Baker Maseko would not answer questions, citing confidentiality.
There is proof showing the entity took on water projects because it was going to get money from NICS