SRPA - More questions than answers

Date: 03 September 2017 By: Anton van Zyl

The Soutpansberg Ratepayers Association (SRPA) has been evading questions and enquiries for more than two months, leaving serious question marks around the legitimacy and future role of this citizen’s body. The association was further dumped into financial uncertainty when its former manager seemingly neglected to pay back the money he allegedly owes.

The SRPA made the headlines earlier this year when the association laid charges of theft against its former manager, Phillip Olivier. The SRPA also applied for an urgent interdict in the Louis Trichardt Magistrate’s Court to stop Olivier from transferring R200 000 out of a trust account. The association argued in court papers that Olivier had taken just more than R474 000 of the SRPA’s money. The case was later settled when Olivier offered to pay back the money in dispute.

The dispute between the SRPA and its manager raised several questions, not only about the manner in which the association was run the past two years, but also about the existence of a possible surplus of close to R500 000 that was accumulated. Questions are also asked about whether the SRPA may have acted in contravention of any of the laws that serve as safeguards to protect citizens who deposit money at companies or associations.

HISTORY

The Soutpansberg Ratepayers’ Association was established in March 2007. This was during a period when communities throughout the country established such associations to try and pressurize municipalities to jack up service delivery. Right from the start the sentiment was that taxpayers should withhold payments to force municipalities to listen to the former's grievances.

The constitution adopted by the SRPA is inclusive, stating that the association represents “all those landowners within the area who subscribe to the aims of the association.” Some 50 members joined the SRPA when it was founded.

In Augustus 2007, a dispute was officially declared with the Makhado Municipality and a trust fund was established into which members could pay money equal to their municipal bills. The SRPA engaged into more discussions with the municipality, but these seemed to be of little use. In January 2009, a public meeting was held during which the SRPA’s members voted to start withholding payments to the municipality.

The process of withholding taxes started in February 2009. As far as could be established, the SRPA received the full amount payable, plus an additional 5% earmarked for administrative costs. In each case, the consumption charges were paid over to the municipality, but the basic charges and rates were paid into a trust account.

During the SRPA’s annual general meeting (AGM) held in February 2011, it was reported that the money in the trust fund had accumulated to R3,7 million. The SRPA had 522 members at that stage and handled 324 accounts every month.

In October 2011, the SRPA’s chairperson, Ms Inga Gilfillan, reported back that an amount of R15 000 had been budgeted for, should the dispute with the municipality be resolved, to reconcile all accounts. She mentioned that the SRPA had negotiated with the municipality to write off the interest charged on outstanding accounts.

In March 2012, the SRPA announced that the court case against the Makhado Municipality was heading for the North Gauteng High Court. The SRPA had filed their reply to the municipality’s 200-page affidavit and were awaiting a court date. Prior to that, the SRPA had obtained a court order to prohibit the municipality from cutting off the electricity supply to its members. (This case was later settled and the municipality agreed to pay R100 000 of the legal costs of the SRPA.)

During a year-end function of the SRPA in December 2012, Ms Gilfillan referred to the interest earned on the funds in the trust account, which was lower than the interest charged on outstanding municipal accounts. She expressed the opinion that the interest charged would, in all probability, be written off by the municipality.

In March 2013, the SRPA reported back that the funds being withheld amounted to roughly R5,5 million. The association had 523 members at that stage. The SRPA assured its members that their money was safe.

In April 2013, a Constitutional Court ruling effectively pulled the rug from underneath ratepayers’ associations. In the Olga Rademan vs Moqhaka Municipality case, the court ruled that ratepayers could not choose which municipal services they paid for, even if they were unhappy with the services they received. The court found that a municipality had the right to terminate the electricity supply to a resident who failed to pay the full property rates to the municipality.

In May 2013, the SRPA announced that part of the funds being withheld would be paid over to the municipality. The money to be paid over was for the basic charges, such as basic electricity, water and sewerage. While awaiting further legal advice, the members decided to still withhold property rates. The amount being withheld was close to R6 million, of which almost R1 million was paid over during July 2013.

During the SRPA’s AGM held at the end of July 2013, the decision was taken to pay over all the outstanding money to the Makhado Municipality, effectively ending the six-year-old dispute.

In August 2013 it was reported that the Makhado Municipality had agreed to write off the interest accumulated over five years by the SRPA members. Some of the adjustment fees charged might also be written off. The SRPA further announced that the members’ commission for administrative costs would be reduced from 5% to 3%.

During the August 2014 AGM of the SRPA it was reported that the reconciliation process had almost been completed. Some members might even receive money back, it was promised.

In February 2015, the new manager of the SRPA, Phillip Olivier, announced that the association would handle its own finances in future. Up to that point, the finances were being handled by an attorney’s office and the money was paid into a trust account. The SRPA opened its own bank account and invited members to deposit money directly into this account.

The last function of the SRPA that was reported on took place in November 2015. During this year-end function, the SRPA said that the association had many more plans for the future. The SRPA was still assisting members to reconcile accounts and sort out queries.

PROBLEMS

Early in 2017, rumours started circulating that all was not well at the SRPA. Based on what was stated in court papers, the SRPA’s committee members started suspecting that money was being moved out of the SRPA’s bank account. The fingers pointed at the association’s manager, Olivier, who had direct access to the funds. An auditor was tasked to do a forensic audit. In the report it is stated that receipts were issued to members, but the money paid into the accounts did not match the receipts. Some R274 000 could not be accounted for. The period during which the money was allegedly not paid into the SRPA’s account was between August 2016 and January 2017.

In the forensic audit report, it was also stated that Olivier had paid his own municipal accounts and those of his family members out of the SRPA’s account. The amount involved was just more than R34 400. He had also transferred R200 000 into another business account.

In February, the relationship between Olivier and the SRPA’s committee had deteriorated to such an extent that he asked a local attorney to represent him. He also transferred the R200 000 as “security” to a trust account at this attorney's practice.

On 24 March the SRPA laid criminal charges against Olivier at the Makhado police station. The association had to turn to the court on an urgent basis when it became apparent that Olivier intended to move the R200 000 out of his attorney’s trust account. The association managed to obtain the order on 10 May, effectively freezing the money.

The parties were in court again on 14 June and a settlement agreement was tabled. According to this agreement, Olivier needed to pay back R505 000 to the SRPA. The R200 000 in the trust account had to be paid over in seven days. The remaining R305 000 had to be paid over before 16 August. Apart from this, Olivier also agreed to pay back R8 900 for a cell phone contract, R5 000 for a bonus that was paid to him, R30 714 for legal costs and R15 714 for the audit fees. The SRPA agreed to withdraw the criminal charges.

In the court affidavit, the committee members of the SRPA are listed as Ms Aretha Smit, Mr Charl Naudé, Mr Solly Maano, Ms Marilyn Rita Hugo, Ms Inga Gilfillan and Mr Dirk Meissenheimer. Meissenheimer resigned from the committee during July.

THE UNLOVED MESSENGER

The Zoutpansberger only picked up on the story when it went to court in May. On 23 May, the first series of questions was sent to the SRPA. The association’s acting chairperson, Ms Inga Gilfillan, did not want to respond, stating that it would pre-empt matters, seeing that a court case was still pending.

When an article was published in the Zoutpansberger on 26 May, Gilfillan was very critical of the reporting style. She described it as one of the worst pieces of journalism she had witnessed. She was especially perturbed about a statement made in the article that the SRPA was technically bankrupt after “losing” almost R500 000. She still did not want to respond to direct questions, but on social media stated that the association had been able to pay all outstanding accounts and still keep the office running.

The statement of Ms Gilfillan that the SRPA was able to meet all its obligations prompted the question as to how this was then possible. One possibility was that the SRPA had managed to accrue a significant surplus over the years.

A series of questions was once again forwarded to the SRPA. The questions were referred to the association's legal representative, Mr André Naudé. In a letter dated 4 July, Mr Naudé replied that he had advised his clients not to respond to questions from the newspaper as the case was sub judice.

Mr Naudé defended the actions of the SRPA’s management committee, stating that they had acted responsibly at all stages. When the association's management became aware of possible fraud, a forensic audit was done and the necessary steps were taken to recover the money. He emphasized that the SRPA was a not-for-profit association that only utilized the 3% commission to cover the administrative costs.

In his letter, Mr Naudé mentioned that the SRPA’s committee members are all volunteers who do not receive any compensation for the work that they are doing. He said that the association’s auditors would do a full reconciliation and compile financial statements that would be tabled at the AGM to be held in August or September or shortly thereafter.

On 31 July, a detailed list of questions was sent to the SRPA’s acting chairperson. The Zoutpansberger wanted to know how many members the SRPA had at the time, whether any resignations from the committee had taken place and when last financial statements had been made available. Questions were asked about the availability of minutes of previous general meetings, whether members and former members had been made aware of a possible surplus in the SRPA’s account as well as how much interest had been earned on the money held in trust while the dispute with the municipality had been in place.

The issue of legislation was also raised and the SRPA was asked whether it complied with all laws serving to protect consumers where transactions of such a nature took place. The SRPA was asked to please respond before 4 August.

A response to the questions was received from the attorney’s office on 2 August. In this letter, Mr Naudé states that he first needs to establish the bona fides of the journalist and the reason why questions are being asked. He argues in his letter that it seems as if the questions asked are aimed at discrediting his clients. Mr Naudé complains about the short time frame allowed for answering questions.

In a letter to the SRPA’s legal representative it was then pointed out that most of the questions were straightforward and could be answered easily. The SRPA was again asked to please respond to the questions in the interest of transparency.

The Zoutpansberger became aware of a SRPA members' meeting that was held on 17 August. The media or any non-members were apparently not invited to this meeting. On 25 August the newspaper sent a letter to the SRPA, stating that it must be assumed that the association prefers not to respond to questions. The association is again urged to comment, preferably before 28 August.

A letter was received on 28 August from Mr Naudé in which he again states that he had advised his clients not to respond to questions, as the agenda of the newspaper in asking these questions is not clear. Mr Naudé accuses the newspaper of trying to entrap his clients. He again states that the SRPA’s unwillingness to answer questions should not be viewed as a refusal to answer questions. Naudé says that all questions will be answered when the SRPA holds its AGM.

In the letter, the newspaper is requested to first forward any article about the SRPA to the association before it appears. The SRPA will then decide whether it would want to respond. Should the newspaper not opt for such a route (where the article first gets scrutinized by the SRPA), the newspaper will have to wait for an AGM to get answers, the letter states.

THE LEGISLATIVE CONUNDRUM

One of the issues raised when news about the possible fraud or theft of SRPA funds first became known, was that of regulation. The financial services industry in South Africa is tightly regulated to protect consumers. This is especially important where deposits from members of the public are received.

The SRPA was formed as a voluntary, not-for-profit association. The question of whether the association should have registered as a financial service provider in terms of the Financial Advisory and Intermediary Services (FAIS) Act, was asked. The FAIS Act was designed to protect consumers of financial products and services. It applies to any provider of financial services and its representatives, as well as to any person who gives financial advice or who provides an intermediary service.

In order to get some clarity on this, questions were sent to the Financial Services Board’s media liaison office. Mr Jabhile Mbhele, Head of Registration at FAIS, responded by saying that, at face value, the SRPA does not seem to deliver a financial product as defined in the FAIS Act. “What’s worrisome is the collection of funds from its members into its bank account, which can be viewed as (a) violation of some section of the Bank Act,” he said.

The Bank Act governs, among other things, the acceptance of deposits from members of the public. There are exclusions for specific groups where a common bond exists, such as Stokvel associations and employee schemes, but even these exclusions are subject to stringent conditions, such as the timeous submitting of financial statements by auditors.

“It is also not clear on what basis were the funds taken away from the trust of the lawyers,” Mbhlele said in his response.

The Makhado Municipality was asked what the total amount of interest was that was written off by the municipality when the money was eventually paid over by the SRPA. Questions were sent to the municipality’s spokesperson, Mr Louis Bobodi, on three occasions. After weeks of unsuccessfully trying to get an answer from Bobodi, the newspaper gave up.

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Anton van Zyl

Anton van Zyl has been with the Zoutpansberger and Limpopo Mirror since 1990. He graduated from the Rand Afrikaans University (now University of Johannesburg) and obtained a BA Communications degree. He is a founder member of the Association of Independent Publishers.

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