Interest-free loans for officials

2010-07-19 00:00

THE municipal manager of uMzimkhulu may be in hot water for dishing out more than R200 000 in personal interest-free loans from municipal funds to his senior officials.

Lulamile Mapholoba confessed to not knowing that he had breached the Municipal Finance Management Act (MFMA) when he gave out the loans.

The Witness is in possession of documents showing that the loans were made between November 2009 and March 2010.

• A loan of R50 000 went to corporate service manager Mluleki Ndonde on February 23 2010;

• R50 000 went to social service manager N.C. James on January 4 2010;

• R7 000 went to PR councillor Ntuseng Duma on March 8 2010; and

• R80 000 went to chief financial officer Zolani Cezu on November 19 2009.

A source, who wished not to be named, said that former mayor Bheki Dzanibe’s request for R155 000 had not been approved.

According to the MFMA: “No municipality or municipal entity may make loans to councillors or officials of the municipality, directors or officials of the entity or members of the public. This could lead to conviction and punishment is a five-year jail term or a fine.”

The Act states that only loans gran­ted or taken before July 1 2004 remain valid until they are paid back.

The money was paid over either on the day of the application or on the following day. The loan applications make for interesting reading.

James’s motivation for financial assistance was to pay a deposit for a new vehicle. She promised to pay back the money at the end of April this year.

Duma wanted the money to pay instalments on her vehicle, which she was behind on by three months. She offered to repay by a deduction from her March salary.

In his application, Cezu, who, as chief financial officer should have known that the law forbids the issuing of loans, said: “I am borrowing a sum of R80 000 in order to finance my mortgage bond. Repayment of the borrowed funds will be deducted from my salary with effect from January to March, 2010.”

Ndonde’s case might be different because he actually applied for a salary advance. He said he wanted to use the money to settle a family commitment. But part of the Act warns: “The municipality and municipality entities are advised not to disguise the true nature of agreements in order to avoid or circumvent the prohibitions contained in section 164(1)(c).”

Dzanibe motivated for R155 000, which he didn’t get, to repair a ceiling in his house that had been damaged by water from a geyser.

The loans were approved by both Mapholoba and Cezu. But Mapholoba, as the administrative head of the municipality, gave the go- ahead.

Mapholoba said all four officials returned the money in June after the municipality realised that it had made a mistake.

In their applications, they all promised to repay either when they got their performance bonuses or before June. He said the practice had started while the municipality was under the Eastern Cape Province.

“This practice was not terminated by the previous management due to sentiment towards those officials and councillors who were in need.

“During the current administration no consideration was made of terminating this practice, as councillors and officials had received some form of salary advance. These advances were recouped in full during past years from the recipients’ salaries.”

Spokesperson for national Treasury Kershia Singh said the Act makes it clear that it is illegal to give loans using municipal funds.

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