Property developer hauls Ekurhuleni to court for inflating service fees
Corruption allegations in a R484 000 civil case which Ekurhuleni is embroiled in regarding alleged inflation of services fees has highlighted the supposed strain property developers suffer from municipalities.
On Thursday, the South Gauteng High Court ordered the City of Ekurhuleni to reveal how it arrived at the amount of R484801.23 that the municipality said it would charge for a new point of supply and the reconfiguration of a Kempton Park property’s electrical connection.
This was after the trustees from Mlilolilo Property Holdings hauled Ekurhuleni to court to force it to break down how it calculated the figure.
In August, Ekurhuleni’s energy department sent a quotation to Vuyile Ntshangase, in her capacity as Mlilolilo’s managing director, setting out that the R484801.23 figure covered a connection fee of R112492.62, a deposit of R229950, a capacity charge of R142213.54 and an administration fee of R145.07.
Ntshangase, through her attorneys, then sent two letters to the city’s energy and legal departments in September, asking the city how it had arrived at the amounts.
“For instance, there is an item described as a ‘deposit’ for R229950.
"Mlilolilo would like to know what the deposit is for and why it is of such a high figure.
“The directors of Mlilolilo are of the view that, by charging Mlilolilo such an exorbitant and prohibitive amount, Ekurhuleni’s conduct is tantamount to punishing it even although it is an investor in the property sector within the municipality,” read Ntshangase’s founding affidavit, which The Star has seen.
The city had not responded to both letters Ntshangase’s lawyers sent, which prompted the court action against it.
A property insider, who spoke on condition of anonymity, said the concealing of the amount breakdown was due to prices being inflated in order for city officials to receive lucrative kickbacks.
The source said this happened in many municipalities, and not just in Ekurhuleni.
Ntshangase conceded in her affidavit that the city had a constitutional right to charge for all the services it rendered, but that Ekurhuleni also had a responsibility in terms of section 27(1) of the Property Rates Act to provide a rates account to a payer.
The act’s section states that, among other things, a municipality must furnish each ratepayer a written account specifying how the total amount was calculated.
“I submit that Ekurhuleni is in a position to furnish Mlilolilo with the breakdown of the calculations without any further delay as this information is and should be readily available in the municipality’s internal systems and that it can and should be gleaned therefrom instantly,” wrote Ntshangase.
Ekurhuleni spokesperson Themba Gadebe said the city would study the judgment before deciding on its next course of action.
However, Gadebe said the city’s energy department had provided the information which Mlilolilo had requested, including revising down the initial amount.
“A detailed calculation supported by guidelines and by-laws was prepared and the quotation was revised and the amount reduced to R357 221.89.
“Mlilolilo was provided with the revised quotation and it countered by requesting to take over some of the labour to be carried out on site like digging trenches in an effort to reduce the cost of installation.
“Ekurhuleni is strongly opposed to corruption and members of the public are encouraged to expose corrupt activities by reporting the same to the city or law enforcement agencies. The city has in place an anti-fraud and corruption hotline,” Gadebe said.