CTICC grilled over soaring expenses

CTICC Cape Town Convention centre. Picture handout

CTICC Cape Town Convention centre. Picture handout

Published Jan 15, 2015

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Cape Town - The top management of the Cape Town International Convention Centre were grilled by the City of Cape Town’s oversight committee on Wednesday, with red flags raised about spending on directors’ remuneration, overseas travel and the almost tripling of its legal expenses during the 2013-14 financial year.

But the city’s Municipal Public Accounts Committee also found itself in a tight spot as it was forced to approve the CTICC’s annual report, despite the information not yet being considered by any of the other portfolio committees in the city.

A recommendation to table the CTICC’s annual report and note the annual statements and audit report for 2013-14 was rushed through council late last year, after a recommendation from the mayoral committee. This was despite reservations by opposition parties that there were the outstanding matters of forensic probes into allegations of fraud and maladministration.

The report was approved at the December 3 meeting and forwarded to the public accounts committee for the preparation of an oversight report.

But with a tight deadline before the council meets at the end of this month to consider the Integrated Annual Report – which includes the CTICC’s annual statements – the committee was forced to make comments on Wednesday without input from any of the city’s other portfolio committees.

The public accounts committee’s role is financial oversight. It can’t assume any of the mandates of the other portfolio committees.

ACDP councillor Grant Haskin said it appeared as if the item was pushed through the council last year to protect the CTICC from thorough oversight.

“It is premature to send it back to council without thorough oversight from the other portfolio committees.”

With concerns about the CTICC’s occupancy, expenses for the hiring of equipment and the need for clarity on which local organisations benefit financially from the CTICC, the committee initially considered approving the annual report on Wednesday, but “with reservations”.

However, councillors pointed out that this could have negative connotations as the Auditor-General had already given the organisation a clean audit.

Although it was agreed to accept the CTICC’s annual report, councillors made sure their concerns were dealt with by the management team.

DA councillor Errol Anstey said he was concerned that the number of national conferences had dropped in recent years. One of the considerations was the CTICC’s increased venue costs. And he pointed out the poor attendance of meetings by directors who had received increases of almost 50 percent to their packages during the financial year.

Questions were also raised about the R350 million “cash in hand” reflected on the CTICC’s books.

Anstey said the CTICC was being hit by bank charges of up to R1m, and suggested the various bank accounts reflected in the annual report could be pared down to minimise these costs.

“The overall net profit has dropped from the previous year, yet employee costs have jumped by 16 percent.”

He said there was no evidence of the benefit to the CTICC in spending R860 000 on overseas travel.

Councillor Grant Haskin said overtime costs had doubled for the period under review, while “minor breaches” or deviations of about R14m were referred to in the annual report. “Cumulatively, that’s no longer minor. Why are they occurring and are there managerial problems?”

He also wanted more detail about the CTICC’s spending on consultancy fees and the tripling of legal fees.

CTICC chief executive Julie-May Ellingson hit back, saying the entity had managed to keep costs, on average, below inflation. “We are not aware of any business being turned away because of cost.”

She said the overtime costs related to work done on public holidays and weekends, when many events were held.

“We manage our overtime very tightly.”

She said the CTICC was forced to use consultants for specialised needs, such as internal audits, to keep up with international best practices and standards.

But she agreed that the CTICC’s legal fees had increased, mostly through the forensic report commissioned by the city to investigate allegations of maladministration and fraud relating to the CTICC’s R800m expansion.

Former chief executive Rashid Toefy had not been paid a termination-of-service package after he was cleared of wrongdoing by the CTICC’s own investigation, since he had resigned to take up another post.

The CTICC’s annual report was released before the findings of the forensic probe were finalised.

Ellingson also defended the CTICC’s spending on travel to overseas trade fairs and events, which was approved by the board in advance.

Those trips were imperative to retain the CTICC’s competitive edge.

“If we don’t attend we won’t even be considered (to host events).” With six new international conference centres in Africa, the CTICC had to ensure it was exposed to new markets.

“The CTICC still hosts almost double the number of international conferences in South Africa and Africa. But with increased competition, we need to get out there.”

Fairoza Parker, the CTICC’s chief financial officer, explained the cash in hand was money that had been ring-fenced for the expansion.

The CTICC had strict controls in place for supply chain management, and the “minor deviations” referred to instances where the entity had tested the market before going through the procurement process.

Almost 90 percent of the CTICC’s local spend was with Cape Town-based service providers.

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