Past mistakes haunt TCM

LYDENBURG – It seems as if TCM’s financial predicament is now catching up with them when council was this week again served with a legal letter regarding outstanding money owed to the Infrastructure Finance Corporation Limited (INCA).

The letter, of which the newspaper received a copy, stated: “This letter is to inform you that the rights and obligations of the Public Investment in terms of a loan agreement (December 8, 1993) entered into with the Thaba Chweu Municipality was ceded to the Infrastructure Finance Corporation Limited (INCA).” The aforementioned transaction took place on April 23, 2004.

INCA was established in 1996 as a response to the South African government’s call for increased private sector involvement in infrastructure funding. Since its establishment, INCA is synonymous with municipal finance and it became the primary private sector investor in socio-economic infrastructure in South Africa, drawing on local and international marketing funds, raised through a series of INCA bond issues and long-term loans from international development finance institutions.

According to the letter, TCM has defaulted on the monthly payment due to INCA and the executive management of the INCA portfolio took a decision to proceed with legal action against the municipality.

“The purpose of this letter is firstly as a final demand for outstanding payments due by the Thaba Chweu local Municipality to INCA, and secondly, to set out the action INCA intends to take if these demands are not met.”

TCM apparently failed to make any payments since November 2012 up to August 2013. The outstanding amount plus interest amounts to R1 564 854,80 as at August 2013. Further interest was, however, also charged and the outstanding amount to date is now R2 372 920.

The letter stated that if the arrears plus interest are not settled within 30 days of the date of this letter that INCA would proceed with summons and, after judgement, with execution by attaching TCM’s assets.

The letter further stated a copy of the letter would be sent to National Treasury and the Department of Cooperative Governance and Traditional Affairs.

DA Cllr Nicko Janse van Vuuren said he was really glad he was not the CFO of TCM this week.

“It seems the poor man doesn’t only have enough current crises’ to deal with, he also has to deal with the ghosts of past bad financial decisions. It seems that the issues at TCM are piling up faster than the rubbish at our local dumpsite. How on earth do we not pay our creditors? Are they just ignored or is the money diverted to more pleasurable ends?” he asked.

The newspaper sent through queries regarding the outstanding debt to TCM. By the time of going to print, no response had been received.