Durban - Controversial transport boss Mandla Gcaba gave himself a R30.7 million unsecured loan from the coffers of his subsidised, yet ailing, company which operates Durban’s floundering bus service – and auditors warned two years ago that if it was not paid back, the company would hit the financial skids.
Now the eThekwini Municipality says that has happened and it has launched an urgent Durban High Court application to wind up Tansnat Durban CC in an attempt to get the money back.
Municipal officials say the close corporation owes the city R52m, no financial statements have been finalised in the past two years, the company cannot pay its bills and it is battling to buy diesel to run the 450 buses it leases from the municipality to ferry about 50 000 passengers a day.
The city says it has bailed out Tansnat, owned by Gcaba, a taxi boss who is President Jacob Zuma’s nephew, too many times and officials cannot find out if the loan was ever repaid.
In October last year, a report by a city official - which has never been made public before - recommended an urgent take-over of Tansnat’s financial affairs, one of the reasons being to “ring-fence Durban transport from other personal and business affairs of Mr Gcaba”.
In his affidavit, which came before Judge Rashid Vahed, city treasurer Krish Kumar said the city first outsourced the bus service to Tansnat in 2009, the original agreement being amended the following year.
This provided for Tansnat to pay the city about R15 000 a month to lease each bus.
Tansnat received a Department of Transport subsidy of about R16m, a subsidy from the city of about R15m, passenger fares of about R15m, and income of R1m from special hiring.
Out of this, it had to pay salaries and wages, the bus leases and the fuel costs.
In December 2013, chief executive Dan Cloete told the city that it could not pay for diesel and asked for help.
This resulted in a new deal being struck in March last year in which the city increased its subsidy retrospectively, resulting in a “credit” of R26m.
Out of this, the city agreed to pay some of Tansnat’s debts, including a tax bill, contributions to provident funds and workers’ compensation totalling R23m.
Tansnat still owed the city R26m which it would pay off through ceding is Department of Transport subsidy.
But, Kumar said, by October Tansnat could not pay wages or buy fuel. The city again bailed it out, giving it a subsidy of R15.4m on condition that it agree to a take-over of its financial affairs by a professional team.
In December, bus drivers again went on strike over wages and bonuses and the SA Revenue Service was demanding R6m.
Provident fund payments of R7.5m were due and the city, through its lawyers, attempted to cancel the bus lease agreement.
Kumar said that in a “bizarre” response, Tansnat claimed it owed the city nothing, citing the March settlement agreement.
“They are overlooking the fact that this was only intended to give them a means to continue trading and had nothing to do with future indebtedness… they now owe R52m,” he said.
He said the city had an obligation to provide its citizens with a reliable bus service, but Tansnat had indicated it would resist any attempt to cancel the deal.
A provisional liquidator, he said, would be able to recover the R30m from Gcaba and run the business until it was finally wound up and the city had formed a new “juristic entity” to take it over.
Tansnat is opposing the liquidation application and has been given until the end of the month to file its papers.
Gcaba’s attorney Sandile Khoza declined to comment on Monday.
The Mercury