More trouble in Kings country
REACTION: The Eastern Cape region is never far from controversy and so it proved yet again.
The Nelson Mandela Bay Municipality and stadium management company Access Management are the latest to go head-to-head in court.
This comes at the end of a year that saw the South African Rugby Union take control of the Southern Kings (to avoid a multi-million Rand lawsuit), the Eastern Province Kings being declared bankrupt and stripped of all its player assets, while SARU also pulled the plug on its funding of the EP Rugby Academy (which may result in the institution having to close its doors because of a lack of funding).
However, the latest episode in the ongoing money troubles of rugby in Port Elizabeth included allegations of bugging devices discovered in Nelson Mandela Bay Stadium operators Access Management's offices and an 18-month agenda by the Nelson Mandela Bay Municipality to discredit them.
In an unprecedented step, Access Management broke its silence in the long-standing dispute with the municipality and trade union - issuing a statement after the NMB municipality has dragged them to court, claiming the stadium operators forced them to pay out ZAR200-million more than they should have in a six-year period.
Access, in response, said the accusation is baseless.
"Access can no longer stand by and have our proud 30-year track record in the SA sports industry tarnished by baseless allegations," Access Director Rian Oberholzer said in a report in the Port Elizabeth-based Herald newspaper.
The municipality accused Oberholzer, Access Chief Executive Chantal du Pisani and municipal assistant director of finance Nadia Gerwel of fraudulent misrepresentation.
The court move came more than a year after AfriForum first accused Access of being underhanded and asked the municipality to set aside its contract with them.
Events coordinator Andrea Wessels and her company, Zeranza, are also cited for allegedly claiming R8.9-million not actually due to her.
In the papers filed with the Port Elizabeth High Court last week, the municipality accused Access of either over-claiming on expenses incurred by the Nelson Mandela Bay Stadium, or under-declaring their profits.
Nelson Mandela Bay mayor Athol Trollip said residents had been subjected to rampant corruption and looting for too long.
"This government is serious about stopping corruption in all forms," Trollip said in the same newspaper report.
"We have already identified a number of dubious contracts, which have been frozen, and are now looking to recoup large amounts of public funds that our legal teams believe were spent illegally and misused.
"Under the previous administration, supply chain management was mismanaged and overspending of public funds was allowed to continue through the uncontrolled use of deviations.
"Those days are now over."
The parties were given 10 days in which to file their notice to oppose court action.
While Oberholzer and Du Pisani are the directing minds of Access, the municipality said Gerwel purported to represent the municipality and was responsible for payments to it.
Oberholzer said: "Over the past 18 months, Access has been acutely aware of a clear agenda to discredit us, led by senior role-players in the municipality and related organisations.
"These actions are either to enable other third-party stadium operators to be appointed or an attempt to pave the way for the stadium to be managed internally.
"While the municipality has the right to pursue this option, it cannot do so at the expense of Access."
Oberholzer said he had been made aware of several stadium-related meetings in the first half of the year between senior municipal officials, where the topic of discussion was discrediting Access. They had also found bugging devices in their offices twice.
"To date, Access has made no media comment on this because the stadium is owned by our client, the municipality," he said.
"Our business ethics and respect for the reputation of the stadium and our client have dictated that we remain silent … but we can no longer stand by and have our reputation tarnished.
"We have never enriched ourselves or misappropriated any funds."
The court papers say an agreement was reached in September 2009, before the 2010 soccer World Cup, for Access to operate and manage the stadium from October 1, 2010, to June 30, 2012.
In May 2012, an agreement was concluded for the period July 1, 2012, to June 30 last year.
"On March 13, 2015, [the municipality] approved a resolution to grant a deviation of the supply chain management policy … in terms of which [Access] was appointed for the same purpose for a further 12 months," the papers say.
In terms of the agreement, Access was obliged to pay all turnover and income generated from the stadium to the municipality.
Access was, meanwhile, entitled to claim payment from the municipality for certain costs incurred, such as authorised events, capital expenses, fixed operating expenses, management fees and variable event expenses.
Between February and March 2012, Access submitted several invoices to the municipality for nearly R12-million in total, the papers say.
Gerwel, in turn, ensured that the municipality paid ZAR8.9-million to Access, and a further ZAR2.9-million to the EP Rugby Union.
But the municipality now alleges that neither entity was entitled to that payment.
"The defendants did not at any time disclose to the [municipality] that the payments were being made in circumstances where they were not entitled to the funds," it says.
"This constitutes a fraudulent misrepresentation on their part.
"Had the defendants made the necessary disclosure to the [municipality], it would not have paid the funds."
* Article continues below!
THE FULL STATEMENT ISSUED BY ACCESS MANAGEMENT
"On 18 November 2016 Access Management ("Access"), operator of the Nelson Mandela Bay Stadium ("Stadium"), received a summons for ZAR211 million from the High Court of South Africa, issued on behalf the Nelson Mandela Bay Municipality ("Municipality"). On 23 November 2016 this information was reported on by the local media.
"To date, Access has made no media comment on this, or numerous other reports about our operation of the Stadium. We have done so for two important reasons:
* The Stadium is owned by our client, the Municipality; our business ethics, and respect for the reputation of the Stadium and our client, have dictated that we remain silent, particularly in 2016 as an election year; and
* The Stadium operator agreement contains a confidentiality clause which restricts our ability to comment in the public domain, a statute that we have rigorously adhered to for the past seven years that we have operated the Stadium.
"Access can no longer stand by and have our proud 30-year track record in the South African sports industry, and our exceptional seven-year track record at the Stadium tarnished by baseless accusations and the incompetent analysis of the Stadium financial operations, and will take whatever action is required to clear our names.
"Over the past 18 months Access has been acutely aware of a clear agenda to discredit us, led by senior role-players in the Municipality and related organisations.
"These actions have aimed either to enable other third-party stadium operators to be appointed, or are an attempt to pave the way for the Stadium to be managed internally by the Municipality. While the Municipality has the right to pursue this option, it cannot do so at the expense of Access's good reputation.
* been made aware of several Stadium-related meetings in the first half of 2016 between senior municipal officials - two of whom continue to play a key role in Stadium matters - where the topic of discussion was discrediting Access, while ensuring that we submitted a detailed Stadium operator request for proposal (RFP) - thus allowing them to gain access to our valuable intellectual property;
* twice found listening devices (bugs) in our offices and meeting rooms;
* faced a concerted effort to prevent Access from submitting our RFP in May 2016, to operate the Stadium in 2017 and beyond;
* provided confidential financial and electronic Pastel accounting records to a third-party company (EOH) appointed by the Municipality to investigate Access in 2016;
* responded to numerous out-of-the-ordinary requests for detailed financial and other information from the City Manager's office in 2016;
* faced baseless claims by the Nelson Mandela Bay Ratepayers Association (NMBRPA) and AfriForum regarding payments, made under instruction of the Municipality and in terms of our contract, to the EP Kings and Chippa Utd; and
* been investigated by the Auditor General, Deloitte Inc and the Hawks since 2013, in connection with the Municipality authorised and funded MBay MegaFest concert scheduled for May 2012, which never took place. We also instructed Grant Thornton to conduct an independent forensic audit into this event.
"Despite this, on 25 November 2015, the Municipality submitted a letter of demand on Access to reclaim R11,95 million from the MBay MegaFest concert, and cancelled the Stadium operator agreement. Acting City Manager Mettler withdrew the proceedings on 18 January 2016.
"Access has complied fully, promptly and in detail and has cooperated with all the investigations and requests for information listed above. We have received no feedback whatsoever, or any follow-up action.
"Access was the only one of five South African stadium operators to successfully comply with the Stadium tender requirements and evaluation, and the Tender Evaluation Committee recommended in October 2016 that we are re-appointed as the Stadium operator from 2017.
"However, on 6 October 2016, after this recommendation, Acting City Manager Mettler cancelled the Stadium RFP process, without providing a rationale for doing so, or following due process and first gaining Council approval.
"At the time, Access decided not to take the matter further, and to co-operate fully with the Stadium operator handover process to the Mandela Bay Development Agency.
"Now, after receiving the High Court summons we are reconsidering this decision, and reserve our right to contest it. We further note that since May 2015 when Mayor Jordaan was appointed, Access has made numerous requests, both in writing and verbally, to meet senior Municipal leadership, as was the norm previously, not only to clarify the above situation, but to present our vision and plans for the Stadium, which is the Municipality's most valuable asset.
"Since acting City Manager Mettler was appointed, Access has had one meeting - in January 2016 after which he confirmed in writing on 18 January 2016 that further round-table discussions, preferably without lawyers, should take place. However, he has subsequently refused all requests to meet with us.
"Furthermore, we have, and continue to work, closely with the Municipality's Budget and Treasury directorate to strictly adhere to the applicable Municipal legislation and regulations regarding financial management of the Stadium. This includes:
* annual preparation of a zero-based budget that is submitted to the Budget and Treasury directorate each April; (This budget is then approved, or amended and Access is informed of the results after the budget-approval process. We have no input into this process after submission of our proposed budget.)
* once approved, Access adheres to this budget, submitting a monthly income statement to the Municipality, with every supporting invoice, as we have done for seven years;
* the Municipality approves these expenses and relevant payments are made, using the Municipality's seven-signature approval process - whereby all payments to be made are verified and it is ensured that both Access and the City are aligned to the approved budget;
* monthly management accounts are submitted to the Budget and Treasury directorates;
* quarterly reports are provided to the Budget and Treasury Performance Management Committee; and
* there is provision for ad hoc reporting to the full Council.
"Access is audited annually by independent auditors Grant Thornton and has received clean audited financial statements every year.
Access fully supports the Municipality's recent crackdown on corruption, but cannot allow ourselves to be falsely tainted and implicated.
"We have never enriched ourselves or misappropriated any funds.
"As stated clearly in our affidavit submitted to the High Court in the AfriForum matter: 'It is denied that there is any impropriety whatsoever on the part of Access…. Access has at all material times acted under the instruction of the municipality and in terms of the operator's agreement.'
"The summons for R211 million, makes it clear, once again that, despite full and transparent access to all Stadium financial records and seven years of working closely with the Budget and Treasury directorates of the City, we face a now familiar scenario - where the organs of state are being misused, or the Municipal Finance Management Act has been contravened by a lack of understanding of the Stadium operator agreement and financial processes. Fruitless and wasteful expenditure has, and continues to be, incurred by the Municipality on a baseless matter.
"Access will continue to respond promptly and transparently to all legal requests for information, and will again, formally, request the opportunity to meet senior municipal leadership face-to-face, making the current approach unnecessary and irresponsible, both from a Stadium and Municipality public relations and financial point of view.
"We are no longer prepared to stand by while our reputation is tarnished."
Source and additional report: The Herald