The continued occupation of the centre is exposing Nceda to financial risks of humongous proportions
THE COURT application to appeal the eviction of the occupants of the Mittah Seperepere Convention Centre has been postponed until a date yet to be determined, while the unpaid municipal account has since increased to R10 million.
As of October last year, the outstanding rates and taxes bill stood at over R9 million.
In court documents, the manager of human resource development and administration and former acting chief executive officer of the Northern Cape Economic Development, Trade and Investment Promotion Agency (Nceda), Teboho Luse, the convention centre has been “hijacked”, where the average revenue amounted to over R2.5 million per month.
“In the report generated by Provincial Treasury for the 2013 to 2016 financial years, a two-day event costs an amount of R1.2 million. The continued occupation of the centre is exposing Nceda to financial risks of humongous proportions.”
Luse added that the occupants – Umfana Business Enterprises CC and Silver Solutions joint venture trading as International Convention Solutions CC (ICS), were “still receiving and enjoying” municipal services free of charge.
“They continue to book the convention centre out at exorbitant fees for future events. They demand advance payments as deposits for future events.”
He indicated that the combined deposit for two events amounted to R1.4 million, where a 50 percent deposit had to be paid in advance for booking the venue.
Luse stated that “a huge financial prejudice” would result for members of the public who had pre-booked the convention centre, should the applicants lose the appeal.
“These members stand to lose whatever money they would have paid. The occupants are attempting to hold on to the convention centre for the purposes of exploiting it for their own benefit and to abuse the court process to facilitate their hold over the convention centre for as long as possible so as to maximise their ability to make a profit off their unlawful occupation.”
He said the refusal of the occupants to vacate the premises, interfered with and prevented the auditor-general from discharging his constitutional responsibilities.
Luse reported that the delay in the eviction of the companies before the end of March, that was in terms of a court order, made them “unlawful and illegitimate beneficiaries of the proceeds” of the convention centre and excluded other service providers from competing through an open bidding process.
According to a Northern Cape High Court judgment that was delivered in February, Umfana Business Enterprises CC and Silver Solutions joint venture trading as International Convention Solutions CC should have vacated before the end of March .
The companies were also ordered to disclose the income received from the hire of the venue and to submit their financial books for auditing by the auditor-general.
Luse stated that the occupants continued to conduct business at the convention centre and amassed profits that were meant for the fiscus.
“As a result of the respondents’ continued unlawful occupation of the convention centre, Nceda received qualified audit reports from the auditor-general. The auditor-general found that the transactions (venue hire) concluded at the convention centre were unaccounted for and that he was unable to confirm the extent of the transactions that were accounted for (as a result of the absence of sufficient appropriate audit evidence). As a result thereof, the auditor-general was unable to determine the adjustments relating to the convention centre required to the financial statements.”
In court documents, it was indicated that the Department of Finance, Economic Development and Tourism had rejected a settlement offer to purchase the assets of the convention centre for R4.5 million.
According to the offer, the department would also be responsible for the service fee of
R165 000 to date without interest that amounted to R9.9 million.
In its offer, ICS undertook to accept responsibility for the municipal account from August 1, 2014 until the date of handing over the venue to the department.
The department had pointed out that there was no basis for making payment.
“In terms of a contract the extension of which was found to be irregular during the 2013/14 financial year audit outcome, which culminated in Nceda receiving a disclaimer from the auditor-general.”
Payments made by provincial departments from 2013 until 2016 amounted to R13.8 million.
The department stated that the joint venture was operating two separate bank accounts to collect revenue, which could be “done with the intention of understating the income to Sars and trying to hide the income generated from provincial government, so as to support their constant claim that the centre was operating at a loss”.
The department in 2016 intended to report possible charges of fraud to the Hawks and Sars.
“The occupants are fully aware that the contract was terminated in November 2012 yet they are collecting money on behalf of the state without remitting same to the Provincial Revenue Fund. The occupants continue running their business on state premises at a huge cost to the state, including municipal accounts and maintenance costs, without remitting booking fees due and payable to Provincial Revenue.”