CAPE TOWN - South Africa's largest specialist fixed-income money manager, Futuregrowth Asset Management said that governance mismanagement at the water board may create the risk of its bonds being suspended or even terminated, according to the City Press.
This comes after lawyers representing the fund manger wrote to Water and Sanitation Minister Nomvula Mokonyane and said she had defied the Public Finance Management Act by illegally appointing Msizi Cele as the acting chief executive and accounting officer of KwaZulu-Natal province’s Umgeni Water.
The Umgeni Water provides drinking water to about 6 million consumers.
Mokonyane is undertaking follow-ups to allay investors’ fears and has done nothing that falls outside the prescripts of the Public Finance Management Act, Mlimandlela Ndamase, a spokesperson for the Department of Water Affairs and Sanitation, said. The minister is expediting the appointment of a new board as well.
According to a spokesperson for the Umgeni Water utility, Shami Harichunder, they are pleased that the interim structures are sufficient to ensure continued strict adherence to good corporate managment.
Notably, the company has received clean audit opiniions from the auditor general for the past five years and the appointment of the acting CEO is in line with the PFMA, said Harichunder.
Umgeni Water’s bond balance at June 30, its fiscal year-end, was R1.5bn, he said. It has remained within predetermined borrowing limits set by the National Treasury.
However, Umgeni Water said in February it needs at least R200bn to address a service backlog, almost double the country’s total budget for water and sanitation for the three years up to 2019.
Independent Media reported in June this year that Umgeni Water has launched a preliminary investigation following allegations of corruption against a high-ranking official at the water utility.
This follows a damning email which claimed company officials were exploiting their position.
The utility's spokesperson, Harichunder responded by clearing these allegations.
“The board, executive management and staff of Umgeni Water subscribe fully to good corporate governance in all its manifestations and are similarly committed to ensuring that Umgeni Water remains steadfast in its endeavours to promote an impeccable image of an organisation beyond reproach", declared Harichunder.
- BUSINESS REPORT ONLINE