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eThekwini Municipality in breech over sale

The eThekwini municipality appears to have acted illegally by selling a property valuation and management computer program to another municipality for R1.36 million, the city’s legal adviser has warned. According to a report by municipal legal services head Nokhana Moerane, which was handed to executive committee members last week, the municipality breached section 164 of the Municipal Finance Management Act by hiring Data World to sell the Value Assist program. The act states that no municipality or municipal entity may conduct commercial activities. Value Assist manages the valuation rolls for municipalities, including the maintenance and publication of valuation and supplementary rolls, and management of objections and appeals.

Data World developed the software in 1997. Moerane said she had been asked to provide legal opinion on whether the payment of R273 600 to Data World, owned by prominent Durban businessman Willy Govender, was in contravention of any legislation applicable to local government. This was after the finance and procurement committee had recommended that the executive committee should approve payment of the commission to Data World for the sale of Value Assist to the Ekurhuleni municipality. The committee also recommended that eThekwini enter into a 36-month contract for Data World to act as agents to sell the program. Moerane said that if the executive committee approved payment of the commission, it would also approve the sale.

“The sale of Value Assist to other municipalities is commercial activity, which is prohibited by section 164. I would advise exco not to approve this,” she said. Moerane said the municipality had spent millions of rand developing the program and would wish to recover some of that money from municipalities wanting to use the product. This could be done, provided that Finance Minister Pravin Gordhan granted eThekwini an exemption from section 164. Moerane said that if the exemption was granted, a demand analysis would be needed to work out what to charge so that eThekwini was not seen to be making a profit from other municipalities. She said the council should register the program under intellectual property legislation.

Municipal spokesman Thabo Mofokeng said the council was in the process of paying the commission to Data World. He said Value Assist, Version 1, was owned by Data World and the intellectual property rights for additional development, done locally at SmartXchange, was owned by eThekwini. The municipality is seeking approval from the National Treasury for the sale.

Source: iol.co.za

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eThekwini Municipality in breech over sale

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