Durban — Shauwn Mkhize and her Royal AM Football Club, whom the Durban High Court found together had defaulted Sars by over R50 million, seems to have ditched a sponsorship from the eThekwini Municipality in favour of a more lucrative deal from Msunduzi.
The team discarded the sponsorship from eThekwini worth R15 million before the end of the contract, for a much bigger three-year R27-million deal with the Msunduzi Municipality.
The Midlands municipality, which has a record of financial mismanagement that has kept it under administration since 2019, signed a bigger bill despite its poor service delivery and failure to maintain its dilapidated infrastructure.
According to a document signed by eThekwini Mayor Mxolisi Kaunda and Speaker Thabani Nyawose, and released to the media by DA caucus leader in Msunduzi Ross Strachan, the team’s three-year contract with the metro, which started in 2021/2022 financial year, was due to be completed at the end of 2023/2024 period.
But soon after Msunduzi stopped sponsoring Maritzburg United due to its relegation from Premier Soccer League in June, Mkhize jumped at the opportunity to snatch a high-income deal for her team from the cash-strapped capital. This made Royal AM the new Pietermaritzburg-based PSL team.
Strachan described Mkhize’s move as a breach of her existing contact with eThekwini.
“Royal AM’s move meant that the club had double parked between the two cities – ultimately hedging bets on ratepayers’ money,” said Strachan.
The team informed Durban’s tourism department on July 19 that it was relocating to Pietermaritzburg to use Harry Gwala Stadium as its home ground, the same day Msunduzi Council approved the deal. But Durban officials only informed councillors about this last month.
At a meeting of eThekwini’s Economic Development and Planning Committee on October 26, the municipality revealed the termination of the contract would save the city R3500000, and that the money would be channelled to other “sporting partnerships to help Durban.”
The city said for the past two years it had gained from its partnership with Royal AM “through destination branding, logo placements on the team sleeve, with a range of on-the-field branding and team players and management promotions.”
Among questions that were sent to eThekwini spokesperson Mluleki Mtungwa but not answered was whether or not the city’s contract with the team did not bind the team not to abandon its contractual responsibility for another similar deal.
However, eThekwini’s report stated: “The processing of this matter including this submission to the council is based on the legal opinion given by the Legal & Compliance Unit, and that the obligations of the Partnership Agreement regarding cancellations will be invoked as well.”
While it was sponsored by eThekwini, the team used Chatsworth Stadium as its home ground.
The fact that the team entered into the deal with Msunduzi before it completed the one it had with the metro has prompted Strachan to accuse the team of dribbling between the two municipalities to score ratepayers’ money.
“While the history of how the dodgy deal between the financially-strapped Msunduzi Municipality and Royal AM was initiated and concluded has been well-documented, new revelations show the billionaire-owned football club breached an existing contract with eThekwini at the cost of millions,” said Strachan.
There has been an outcry about Msunduzi spending millions sponsoring the team whose owner had been described as one of the richest women in the country with a net worth of R300 million. Mkhize had been previously reported to have scored approximately R1 billion worth of provincial government tenders.
The concern was exacerbated when the Durban High Court found that both the team and its multimillionaire tenderpreneur owner owed the taxman about R50m in outstanding tax payments.
The court delivered the warrant of execution against Mkhize on August 21 granting the sheriff powers to attach and remove movable property. Mkhize owed Sars R12749232.62, while Royal AM owed R37915549.77.
Mkhize did respond to this reporter’s questions.
Msunduzi spokesperson Nontobeko Mkhize, who previously said the municipality would seek legal opinion with regard to the court’s tax orders, did not respond to questions regarding the municipality sponsoring a person who allegedly breached a deal with eThekwini. Instead she said: “The matter is in court and therefore we can not comment on it in respect of court processes.”
Strachan had on August 5 filed papers at the Pietermaritzburg High Court seeking an order to stop the municipality from continuing with the sponsorship or even to reverse any money that Msunduzi might have already given to Royal AM.
About the alleged breach of eThekwini contract, Strachan said: “The DA will also be updating the courts, through litigation against Msunduzi, on these new revelations by means of supplementary affidavits.”
Of concern to Strachan was that the municipality was short of budget to deliver basic services, yet it was spending money funding the team.
The KwaZulu-Natal capital city’s CBD was filthy and some of its streets have had uprooted pavements for years, while some of its buildings were left in a state of debilitation.
Action SA’s caucus leader in eThekwini, Zwakele Mncwango, said Royal AM’s breach of contract was not worth fighting because of the team’s tainted reputation.
“It is enough that the city terminated the funding although we don’t know the terms of the contract.
“It depends on how much value we get from Royal AM because you fight for something that benefits you, and I don’t think that we benefited from Royal AM,” said Mncwango.
Sunday Tribune