Inaction may cost eThekwini R8.7m

The eThekwini Municipality may have to write off an R8.7 million debt owed by a company that ran the city’s parking meter system, because it failed to take concrete steps when the contract was breached. The municipality and Emtateni Logistics, which lists well-connected businessman Sifiso Zulu as a former director, entered into a five-year contract in 2008 to install, operate, maintain and manage the city’s parking meters. The Mercury has previously reported that in terms of the contract, the company, which is in liquidation, should have paid R11.3m over the five-year period. According to a report before the city’s executive committee, the company failed to make the payments and the revenue section tried to collect the outstanding amounts. “Telephone calls were made monthly and a final demand was sent.

“There were several instances where the amounts owing were set off against the amounts that were supposed to be paid to Emtateni Logistics. The debt only accumulated when the municipality could not do set-offs and the directors were not found.” The report also said that when the contract was breached, the city could have placed Emtateni under judicial management, brought an application for liquidation or taken judgment against it, but none of these steps had been taken. The city could also have cancelled the contract after a breach by giving the company seven days’ notice, but this was not done. It seems the city had been set to take legal action to recover the money when an application for provisional liquidation was brought by another creditor, Johannesburg-based EOH Security and Technologies. The city is waiting for legal advice about whether to lodge a claim as a creditor or to write off the debt.

The company was placed in final liquidation in 2013 after EOH Security and Technologies brought an application claiming Emtateni was unable to pay its debts and owed it R26m in rent. The company had rented security equipment from EOH including pay-and-display machines and an information management system. In the court papers in the liquidation application, one of the liquidators, Johannes Muller, said Emtateni had been on a downward slide because of poor management and financial record-keeping. At the request of the city, the liquidators continue to run the parking meter system until a new contract has been awarded. The municipality said that the process of appointing another company to take on the contract was being finalised by the bid adjudication committee. The city would not comment on the value of the tender as it said various bidders had submitted different quotations.