News > In the media > Kgetlengrivier Municipality faces legal action by Sakeliga about unlawful third-party collections

The business organisation Sakeliga has filed an application in the Mahikeng High Court to interdict the Kgetlengrivier Municipality from utilising a third-party service provider for collecting municipal revenue for rates and levies on the municipality’s behalf into its own bank account. Sakeliga undertook an investigation into the municipality’s administration after being informed by some of its members and other members of the public that a questionable method had been adopted to collect municipal revenue.

From the documentation provided by residents in Koster, Swartruggens and Derby it was ascertained that the Kgetlengrivier Municipality was using a company called Ideal Prepaid to provide services for prepaid electricity metering and to collect all municipal revenue. What makes this state of affairs not only irregular but also unlawful is that revenue collected is not paid directly into the bank account of the municipality as required by section 8 of the Local Government: Municipal Finance Management Act (No 56 of 2003), but is paid into one of five bank accounts of Ideal Prepaid.

This in effect means that not only has the municipality delegated its revenue collection services to a third party but it has also lost control over the management of its finances and bank account. Furthermore, residents of the Kgetlengrivier Municipality have no way to dispute any accounts rendered to them by Ideal Prepaid as is provided for by section 102 of the Local Government: Municipal Systems Act (No 32 of 2000). Residents are also unable to exclusively pay for specific services such as prepaid electricity as funds are first deducted from owed municipal revenue and then put towards prepaid electricity.

To use an external service provider such as Ideal Prepaid the municipality should have done a feasibility study, together with community consultation, which seems to not have been done in any event. The financial turmoil the municipality finds itself in is exacerbated by the list of unauthorised, fruitless and wasteful expenditure the Auditor-General identified and commented on in a report dated 30 November 2017.

“This litigation forms part of Sakeliga’s broader campaign to halt corruption and municipal dysfunctionality, which is to the detriment of South Africans in general and specifically businesses, that suffer irreparable harm due to the lack of municipal competence and accountability. A municipality that has no control over its own finances is in no position to govern the residents it presides over. Our aim is to uphold the rule of law and, most importantly, to ensure that South Africa has a business environment where fears of the consequences of maladministration are kept to a minimum”, said Armand Greyling, Legal Practitioner for Sakeliga.

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