Rugby debt behind stadium contract renewal
EASTERN Province Rugby’s indebtedness to Access Management emerged in court papers as the alleged reason behind the municipality’s decision to renew the stadium operator’s contract without putting it out to tender.
It is claimed the deal was made to facilitate the repayment of millions of rands by EP Rugby to Access Management, the operator of the Nelson Mandela Bay Stadium.
Afriforum and the Nelson Mandela Bay Ratepayers’ Association now want the Port Elizabeth High court to:
ý Review and set aside the agreement between the Nelson Mandela Bay Municipality and Access Management for the period July 1 last year to tomorrow;
ý Order the municipality to appoint an accounting firm to conduct an audit; and
ý Order the accounting firm to deliver a report pertaining to the municipality’s activities from January 1 2014.
Lawyers for Access and the municipality are seeking a postponement to respond to the “very serious claims”. The parties return to court today. The stadium was completed in June 2009 in time for the 2010 Soccer World Cup.
A Request For Proposal (RFP) process was undertaken to procure and appoint a stadium operator for a period of 33 months.
Due process was followed and Access Management was awarded the role of stadium operator on October 1 2009.
In May 2012, the contract was renewed for a further three years. It was allegedly part of the Renewal Operator Agreement that an RFP would take place after June 30 last year.
Ratepayers’ association chairman Kobus Gerber claims in an affidavit that the municipality was advised to compile a fresh request for a proposal for an operator to manage the stadium beyond that date.
However, Gerber said, the municipality deviated from supply chain management policy and renewed Access Management’s contract for another year.
“[Access] was fully entitled to participate in any RFP process for the contract, and if [its] performance was as stellar as claimed, they would have likely won reappointment through the RFP process,” the court papers state.
But there were ulterior motives behind the renewal, Gerber claims.
He said the municipality did not want to open the stadium management contract for tender.
He alleged that the municipality and Access wanted to conceal certain irregularities.
Gerber alleged further that the municipality’s accounts suggested that Access Management owed it more than R89-million.
He said the stadium had a turnover of about R89-million for the period July 1 2013 to June 30 last year, meaning Access had not paid over income generated from the use of the stadium to the municipality for at least two years, as per the terms of the renewal agreement.
Despite this, Access invoiced the municipality for its stadium turnover incentive of R9.6-million.
With regards to the beleaguered EP Kings, Gerber said Access and EP had entered into an agreement on January 9 2014.
Access loaned EP Rugby R11.6-million, and EP, in turn, ceded its match hosting rights, ticket sales and hospitality and food rights.
On July 15 2014, Access allegedly invoiced the municipality for R13-million.
“This invoice was marked as paid, which means [the municipality] paid off EP Rugby’s debt to [Access],” Gerber alleged.
“The payment was made to [Access] instead of directly to EP Rugby, which means the nature of the payment and the financial losses suffered by EP Rugby and the stadium could be more easily disguised.”
He said the council did not authorise the payment.
Access allegedly entered into a second rights agreement with EP Rugby on June 29 last year, with the EP Kings and Southern Kings ceding their branding rights.
EP Rugby received R18.9-million in return, Gerber said.
“I note that the terms of this agreement coincide with the renewal period of the stadium operators,” he said.
“I respectfully submit that this is further evidence that the representatives of [the municipality] had ulterior [motives] in renewing the agreement.
“I will argue that the reason why the respondents went to such lengths to renew the stadium operator agreement with Access was to facilitate the repayment by EP Rugby of the money outstanding to [Access].”