Committee to probe Cape Town Cup flop

Focus on unauthorised payments and irregular spending

THE CITY council’s Municipal Public Accounts Committee (MPAC) is set to conduct a probe into the R26.6 million in losses suffered as result of the failed Cape Town Cup in July last year, when the city had expected to make a profit of R34m.

In total, the city made R1.8m from the event, generating an income of R696 520 in ticket sales after reducing prices at the eleventh hour in an attempt to boost spectator numbers.

The city’s finance directorate said the majority of the losses were as a result of the more than R10m in unauthorised advance payments to each of the overseas clubs Crystal Place and Sporting Lisbon, after first-choices Everton and Atlético Madrid were unavailable.

Eddie Andrews, mayoral committee member for economic development, events and tourism, said yesterday that under the Municipal Finance Management Act (MFMA), the city was obliged to investigate possible unauthorised, irregular or wasteful expenditure of public funds.

Andrews noted while his predecessor Garreth Bloor and executive director of the same portfolio, Anton Groenewald, were no longer employed by the city, the council still had to determine if they had deliberately or negligently authorised the expenditure.

The MFMA requires those responsible for fruitless expenditure be held liable. “As the city we are confident we followed all due legal and financial requirements, but it is clear the underlying revenue model for the event had flawed assumptions and there were marketing shortcomings,” said Andrews.

In the immediate storm that erupted after the event, Groenewald resigned a week later, while Bloor did not stand for re-election in the August polls.

Andrews said the council was required by law to refer the matter to MPAC for investigation and for the committee to make appropriate recommendations to council for consideration.

In a report considered by mayco yesterday, it was revealed the pre-payments to the overseas teams had not been approved.

Besides these payments, the city also paid Ajax Cape Town R3.2m in lieu of an appearance fee, a management fee to take care of visiting teams, accommodation, security and laundry costs.

Ajax has since repaid the city R553 445 and a further amount of R543230 is still owing in respect of broadcasting rights.

The mayco report also revealed the city approved R28m to host the event in May 2015, even though an unsigned draft report from the city’s special events committee in March 2015 did not provide any financial implications for the event. A second report included a financial loss risk warning due to the overseas teams not being as well-known in South Africa as the original choices were envisaged to be.

Ticket sales were thus much lower than the potential income or loss reflected in a June 2015 report to mayor Patricia de Lille. According to the close-out report for the event, the city only sold around 22 000 tickets for the weekend event.