Tens of million of rands paid by the Nelson Mandela Bay Municipality to its stadium operators is under scrutiny, forming part of the national Treasury’s probe into chaotic bus system.
An elaborate paper trail of internal documents, seen by The Herald, details how the city forks out hefty amounts monthly to pay for Access Management’s operational and other costs, in a complex contractual funding model which has come under the spotlight.
According to the invoices, the city paid at least R30-million to Access in the last three months.
This is a fraction of the millions paid to Access in recent years, which the Bay’s Ratepayers’ Association claims also unduly ends up in the coffers of the financially strapped EP Kings rugby team.
Access was contracted by the municipality to manage the world-class stadium until June next year. EP Rugby and the Premier Soccer League side Chippa United, which is also struggling financially, are anchor tenants at the R2-billion facility.
On Monday, ratepayers’ association chairman Kobus Gerber claimed the city had, through Access, bankrolled the Kings’ operational costs and player salaries for years.
While many of the documents show that the municipality pays Access, the paper trail does not show if and how much they pay to the Kings.
Nor does it show the agreements signed by all entities, which would determine the financial obligations of each party.
One of the documents seen is a memorandum written in September by chief financial officer Trevor Harper asking mayor Danny Jordaan to approve a R5-million increase in funding support for EP Rugby.
Harper said in the memorandum the metro needed to increase funding to buy the commercial rights of EP Rugby from R16-million to R21-million, a more market-related price.
He said the EP Rugby Union’s current financial situation was weak, and without financial support the forthcoming season’s player recruitment and sponsorship acquisition would be severely compromised.
“The risk of losing Super Rugby in 2016 will be unacceptably high,” he wrote.
Harper’s recommendation was signed off by the city manager and mayor, subject to conditions and the council’s approval.
While Harper confirmed writing the memo, he refused to comment further.
Budget and treasury portfolio head Rory Riordan said he did not know about the memo.
He said that since taking over, the only money the municipality had given to EP Rugby was a R5-million loan about two months ago, which was taken against the team’s future income.
Harper’s memo is yet to go to council.
Yesterday, Jordaan said he had asked Riordan to look into Access’s contract with EP Rugby and Chippa to establish why the two teams were struggling financially.
Acting city manager Mzwakhe Clay said yesterday he could not verify if the additional R5-million stated in Harper’s memo had already been paid to Access Management.
“The issue concerning the stadium operators is actually part of the IPTS investigation and at this point in time we cannot divulge all the information,” Clay said.
“During the investigation [by Deloitte], some things about the stadium operations began to come out.
“Once the report is finalised it will be tabled to council and recommendations will be made, and they will be made public.”
A senior metro official, who did not want to be named, said Deloitte uncovered that about R11-million had been channelled through Access Management in 2011 to a few companies, of which R2.7-million was given to EP Rugby.
EP Rugby executive member Vernon Stuurman said the union had noted Gerber’s allegations.
“As the finance referred to is said to have come from the . municipality, EP Rugby regards itself as a major stakeholder playing a particular part in the space of [inclusive] governance,” he said.
“As a responsible anchor tenant of Access Management, we take pride in our business relationship with them which is built on sound . ethics.”
Access spokeswoman Sindi Ximba said: “All assistance given by Access . to either of the stadium’s anchor tenants is rendered in line with the stipulations of the operator’s contract and such commercial agreements approved by and entered into with the anchor tenants from time to time.
“Any funds used by Access in the running of the stadium are contained in an expense budget presented to and approved by the municipality.”
Gerber said while the ratepayers’ body planned to take Access to court, they had held back on their application to give EP Rugby president Cheeky Watson time to secure sponsorship for the EP Kings.
He said they had decided to go public with their claims now to get a “sustainable sponsor” in place for the Kings for the next three years.
Article source: http://www.sacommercialpropnews.co.za/property-companies-news/7756-stadium-funding-under-scrutiny.html
