CFO: law firm in the clear

2011-02-02 00:00

QUESTIONING of the uMngeni’s Municipality’s chief financial officer, Bertus van der Merwe, continued on the second day of this year’s first sitting of the commission of inquiry into the affairs of the municipality.

Questions from both senior counsel Gerhard Roberts, representing Venn, Nemeth and Hart (VNH), and evidence leader Paul Schumann centred on Van der Merwe’s opinion on whether there is a conflict of interest in VNH’s relationship with the municipality.

The firm is the municipality’s debt collector and some of its partners are property developers in the area. Following a rates dispute, one of these developments, Gowrie Estates, was a debtor to the municipality.

In November Democratic Alliance councillor Tim Lindsay-White asked the commission to investigate an alleged conflict of interest between VNH and the municipality.

In his questioning, Roberts drew attention to letters written to the municipality regarding the rates dispute involving Gowrie Estates, in which Guy Smith was a signatory for VNH on some and on others as a representative of Gowrie Estates, of which he is the developer.

Van der Merwe agreed that he knew Smith is both a senior partner at VNH and the developer and this had no bearing on the collection of rates.

When Schumann questioned Van der Merwe on the details of the rates dispute, Roberts objected on the grounds that such a line of questioning is not within the terms of reference of the commission. Roberts said that VNH is not on trial and that “the wild goose chase of Tim Lindsay-White is nothing but a red herring”.

Subsequently all parties agreed that individual rate disputes would not be raised in order to expedite the inquiry.

Questioned further, Van der Merwe said he did not know that seven other directors of VNH were involved with trusts which had interests in local developments, including Gowrie Estates and Garlington.

Schumann said that not only representatives of VNH but also family members have direct financial interests in these two estates.

Van der Merwe said that if he had known this he would have acted just the same.

Asked if he thought it is inappropriate for the debt collectors to collect debts from themselves, Van der Merwe said: “I don’t see anything wrong with that.”

He said he trusts the directors of VNH, with whom he has “a fantastic relationship”, to sort out any anomalies arising from such a situation.

Questions were also asked about what Schumann called an “exclusive contract” being created with VNH as the municipality’s debt collectors without apparently going through a proper tendering process.

Proceedings continue today at 11.30 am at the uMngeni Municipality council chamber.

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