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Friday May 18, 2018

Big business 'not paying Joburg council rates'

About 2 000 business accounts have been deliberately removed from the City of Joburg’s billing database, resulting in the account holders not paying their municipal rates and services.

Mayor Herman Mashaba has expressed grave concern over the large number of big businesses - including major tertiary institutions - who fail to pay for services and whose details have disappeared from the database.

Mashaba has written to the chief executives of the SA Institute of Chartered Accountants (Saica) and the Independent Regulatory Board for Auditors (IRBA) to raise these concerns.

It is estimated that the city is losing between R7 billion and R10bn in revenue a year as a result of municipal accounts having been removed unlawfully from the billing system.

"I have requested the intervention of Saica and IRBA to ensure its members are aware of these challenges and to advance greater ethical practices when it comes to accounting, and the auditing of businesses in Joburg.

"Of particular concern to me is the number of wellknown businesses and establishments that have been identified as not paying for municipal services," he said.

The mayor gave the following examples:

  • About R30.5 million was collected from a company whose account was in arrears. The company has also entered into an acknowledgement of debt to settle the outstanding balance of R23m over a period of six months.

  • In a separate matter, the city received a payment commitment of about R55m from two companies whose accounts are in arrears.

  • Another company, situated in the west of Joburg, owes the city just over R48m.

  • A higher learning institution in Braamfontein has a debt of R7.6m.

  • A shopping mall owed the city R5m, but when the account was revisited, the charges on the account were reduced to R2m.

    "It is shocking that there are city officials colluding with business people to have their municipal accounts deleted from the city’s database. There are numerous such cases currently under investigation," Mashaba said.

    On February 6, the city launched Operation Buya Mthetho - a multi-departmental operation aimed at enforcing by-laws and restoring the rule of law in Joburg.

    It is a joint operation between all key city departments and entities, such as the city’s group forensic and investigation service (GFIS); Joburg metro police department; environmental health; social development; infrastructure services; the city’s legal department; and development planning.

    The operation targets properties across Joburg that are not paying for municipal services.

    To date, Operation Buya Mthetho has resulted in the city collecting R341m in unpaid municipal rates and taxes in just three months.

    "The number of businesses failing to pay their municipal debts or who have disappeared from our billing system altogether is alarming, and requires urgent action, the mayor said.

    "Given the extent of this practice, it concerns me that such incidents are not being picked up by accountants and auditors at these companies.

    "Accountants and auditors, in general, need to make a greater effort to ensure that businesses honour their debts to local government for services that are rendered, and that they pay their rates and taxes timeously," Mashaba added.

    Anna Cox
    City Watch
    The Star

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