uMngeni finance chief quizzed at inquiry

2011-02-01 00:00

SENIOR counsel for city law firm Venn, Nemeth and Hart (VNH) began cross-examination yesterday at the start of the year’s first sitting of the commission of inquiry into the affairs of uMngeni Municipality.

The law firm came under the spotlight in November when Democratic Alliance councillor Tim Lindsay-White asked the commission to investigate an alleged conflict of interest in the relationship between VNH and the municipality.

Evidence had been led that the law firm wears several hats — it is the municipality’s debt collector, its partners are property developers in the area; it is allegedly one of its major debtors as well as being the municipality’s main source of legal advice.

First in the stand was uMngeni Municipality’s chief financial officer (CFO) Bertus van der Merwe. under cross-examination by Gerhard Roberts SC he denied an inappropriate relationship exists with VNH.

He offered explanations countering the allegations made by Lindsay-White.

Van der Merwe said the appointment of the firm as debt collector is above board and done through a tender process.

He agreed with Roberts that there was nothing wrong with the firm charging 17% commission because it carried the risk and the municipality paid no legal fees, apart from such disbursements as the sheriff’s fee.

He also agreed this was a better deal than they had got from other law firms. Van der Merwe said he had never seen a firm so dedicated to debt collection.

Roberts asked: “And with terms so beneficial to the municipality?”

“Yes,” said the CFO.

Van der Merwe also agreed that property developer Guy Smith, a senior partner with VNH, had written to the municipality and raised in person various discrepancies that developers felt needed to be ironed out over the payment of rates.

Roberts pointed out that it is not a secret that Smith was a developer of the Garlington and Gowrie Estates and that delays in payment of rates could not be attributed to any dealings on the part of VNH.

Van der Merwe said it was a backlog at the Deeds Office and administrative problems within the municipality that were the reasons for delays in rates payments at Garlington and Gowrie.

Evidence was also presented that once all problems on the subdivisions of the estates and the registration of the properties were sorted out then rates were payable retrospectively. So the municipality was not losing out.

Roberts pointed out that the municipality sought the opinion of VNH senior partner Matthew Francis because he is an expert on public law. He demonstrated that several opinions offered to the municipality by Francis were upheld by higher courts.

He said the opinions were in favour of the municipality getting more rates revenue rather than losing revenue.

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