Court orders payments for Zuma nephew's 'cash starved' bus firm

2017-04-10 13:57
Tansnat bus. (News24, file)

Tansnat bus. (News24, file)

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Durban - The wheels of Durban's city buses will continue turning for now, after a court on Monday ordered the eThekwini municipality to pay more than R7.5m to creditors of operator Tansnat.

Tansnat is owned by the nephew of President Jacob Zuma, Mandla Gcaba.

Greg Harpur, for Tansnat, told KwaZulu-Natal High Court Judge Peter Olsen that negotiations between the two parties had "stuttered for a while", but would now continue over other amounts allegedly owed.

By agreement with the city, Olsen ordered it to immediately approve payment of the R7.5m to creditors. He ordered the city to pay the costs of the application.

The service - with 450 buses and 900 employees, and which transports about 600 000 people per day - has been disrupted many times because of a legal dispute between Gcaba and the municipality.

Last Friday, while unconfirmed that it was related to drivers not being paid, there was traffic chaos as drivers blocked freeways. They left their buses unattended, with the keys in the ignition, so traffic officials could move them.

The litigation began in January 2015, when the city tried to liquidate Tansnat, claiming it owed more than R53m and that Gcaba was using its bank accounts as his own. Gcaba said the city owed him money and had reneged on subsidy payments.

Owed R132m

In 2016, the parties entered into a settlement agreement through which an "intervention team" was established to take control of the finances.

Both Gcaba and the municipal manager had to sign off any payments. The agreement also made provision for the appointment of an adjudicator.

Former Chief Justice Sandile Ngcobo was named as the man for the job, but has yet to start work.

In the meantime, the relationship between Gcaba and the city continues to sour.

Gcaba was back in court in 2016, complaining that the city owed him R132m in subsidies.

The money was in a bank account under the intervention team's control, but the municipal manager was refusing to approve payments.

Gcaba complained that the city was making deductions to itself.

In his affidavit to the court, Transnat chief operating officer Stephanus Joubert said that after litigation in 2016, the city appeared to have a "change of heart" and for two months the subsidies were paid into the account without any prior deductions.

'Existence severely threatened'

But then it reverted to previous practice - making deductions and not approving payments.

"This has caused a crisis. Our continued existence is severely threatened. Substantial creditors are not being paid and judgments are being taken against us," Joubert said.

He said another issue was the "political changes" in the council after the municipal elections last August.

Tansnat suffered a "difficulty" when its previous CEO, Dan Cloete, was dismissed because of "internal problems with his performance".

Joubert was appointed in January this year.

"Notwithstanding this, we have been able to trade profitably," Joubert said.

He said, as things stood, Tansnat was owed more than R22m "and there is adequate money to pay creditors R7.5m".

"In the meantime we are cash starved."

They were having "enormous difficulties" and were five months behind on rent payments, he said.

Read more on:    durban  |  public transport

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