Durban - The company running the eThekwini Municipality’s bus service is in a “crisis” because it is owed R140million by the city.
Tansnat Durban CC, owned by Mandla Gcaba, filed an “urgent” high court application, which is set down for Durban on Monday, to compel the city to pay its dues.
Attorney Sandile Khoza of law firm Norton Rose Fulbright, acting for Tansnat, said the application was marked urgent because the outstanding money was crippling his client’s day-to-day operations.
More than 600000 commuters, who relied on the company’s daily service, would be stranded if the 450 buses Tansnat operated were parked, which would also leave the company’s 900 employees jobless.
In court documents, Tansnat claimed that by not paying the money the city had acted in defiance of an agreement the two parties had reached, and ordered in court, last year.
The arrangement came about after the city brought an application to have Tansnat liquidated in 2015. In the application, the city claimed Tansnat owed more than R40m for various expenses and that Gcaba had used Tansnat’s bank account as his own.
Tansnat defended the liqui- dation application and that court battle ended in March last year after the parties had reached an agreement. The parties agreed that the city would pay in full, and not make any prior deductions, the subsidy payable to Tansnat for the service it provided.
Tansnat claimed the subsidy amount owed was R132060256.
The subsidy payment was supposed to have been paid into a “ring-fenced” bank account. Instead, the city breached the agreement by making payments to itself, through prior “non-transparent” deductions, against the subsidy amount, the company claimed.
However, the city had a temporary “change of heart” and paid money towards the Tansnat’s subsidy, without prior deductions, into the stipulated bank account in September and October only. But it reverted to its stance of claiming money due to themselves and not paying the subsidy amounts from November.
File picture: Nqobile Mbonambi/Independent Media
Tansnat also alleged that legitimate business expenses amounting to R7574933, which needed to be paid by the city, via the ring-fenced bank account, were not paid.
The company couldn’t understand why the city acted in such a manner because the expenses (R7.5m) due to creditors were in accordance with the agreement.
All payments to Tansnat from the stipulated bank account had first to be verified and confirmed by accounting firm KPMG before Gcaba and the city manager signed for the release of money, according to the agreement.
KPMG was tasked with leading the intervention team that scrutinised all Tansnat’s payment claims, related to the ring-fenced bank account.
The company said it had a substantial list of creditors, who were not paid because of the city’s non-compliance, which had “severely threatened” Tansnat’s existence.
Tansnat alleged that “political upheaval” also had a bearing on its plight because after last year’s local government elections Dumisele Nene was appointed acting city manager, and had refused to sign off any of the KPMG verified payments.
The company found the city’s stance on payments strange because R22m was available in the ring-fenced bank account. Various letters were sent to city officials, including treasurer Krish Kumar.
A big concern for Tansnat was that its creditors could bring liquidation applications against the company.
It said its daily operations had become a struggle as it has been “starved for cash” by the city, while it acknowledged it owed the city money. But the city was “not entitled to illegally hinder Tansnat’s cash flow and operations", it said.
The city’s communications spokesperson had not responded to questions at the time of going to print.