Overdraft saga: DA voted against Mogale’s R100 million overdraft

Photo: File pic.

During the council meeting of 22 June, the council sought approval for a R100 million overdraft facility.

The 2018/ 2019 budget adopted by council is meant to be cash-backed, which will realise a surplus or at the very least break even. However, it is currently a bogus budget as it is being floated via an overdraft facility. The budget itself should have been tailored to reduce expenditure rather than finance an overdraft facility.

Also Read: DA vows to fight ANC’s nefarious campaign

“The ANC sought to approve the item eight days before the start of the budget year. Furthermore, the approval of the short- term debt is a non-delegated item, meaning that only council can decide on it and not an official of the municipality,” a statement from the local DA reads.

The DA voted against the overdraft facility as the interest payable could easily sky-rocket to over R700 000 per month.

“For an already cash-strapped municipality, utilising credit to fulfill operating obligations can only end up putting more stress on an already dire cash-flow situation.

“It is the DA’s belief that section 160 of the Constitution was also breached as the raising of loans requires the majority of council to vote. This means the item required 39 votes in order to be approved, and not that the majority of councillors present voted in favour of the item.”

According to section 160(2) and (3) of the Constitution, headed ‘Internal procedures’:

‘2. The following functions may not be delegated by a Municipal Council:a) The passing of by-laws;

b) the approval of budgets;

c) the imposition of rates and other taxes, levies and duties; and

d) the raising of loans.’

and ‘3.

a) A majority of the members of a Municipal Council must be present before a vote may be taken on any matter.b) All questions concerning matters mentioned in subsection (2) are determined by a decision taken by a Municipal Council with a supporting vote of a majority of its members.

c) All other questions before a Municipal Council are decided by a majority of the votes cast.'”The Speaker, Noluthando Mangole, carried the resolution without getting 39 votes. It has now come to light that these underhanded tactics were a desperate attempt to access more credit to pay outstanding debts such as the Rand Water account.

“The DA will write to the Department of Cooperative Governance and Traditional Affairs stressing the contravention of the legislation.”

Do you perhaps have more information pertaining to this story? Email us at  [email protected] (remember to include your contact details) or phone us on 011 955 1130.

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  AUTHOR
Janine Viljoen
Editor

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