Friday, September 18, 2009

Mahala for Masana

There's absolutely no point to BEE and AA if you're trying to do business with government, because you won't get paid anyway. That's what IT company Masana (see exec team) - amongst thousands of other providers - has learned to the tune of R100 million.

Johannesburg is bankrupt. Hence the increasingly frenzied screaming for tighter AA legislation. When all else fails, try lack of style over lack of substance.

Joburg wants contractors to work without pay - IT company goes bust

Johannesburg is considering asking contractors working on 2010 Fifa World Cup soccer stadiums and the on the bus rapid transit system to continue working without pay until next year.

This comes as an information technology company with 160 staff - which is owed up to R100-million by the city - has been forced to close "because of non-payment".

City officials told The Times that, at a mayoral committee meeting yesterday, the Johannesburg Development Agency proposed asking contractors to begin submitting their invoices only next year.

This follows reports that city officials have been asked to cut spending in a bid to save R1-billion as the recession takes it toll.

Media reports have revealed that the city is struggling to pay its creditors and contractors.

Now the national Treasury has undertaken to give the council a R1-billion "grant" for "infrastructure projects".

Treasury spokes-man Lindani Mbunyuza rubbished claims that the grant was a bailout for the city.

Speaking at the mayoral committee meeting yesterday, DA councillor Victor Penning said the development agency's proposal was on the committee's agenda. But development agency chief executive Lael Bethlehem has denied that the proposal was made.

Companies contracted to the metro have complained that they are not being paid.

One of them, Masana Technologies, an information technology supplier, has filed for liquidation. It blames its demise on the city's failure to settle a R100-million debt.

Masana was formed about a decade ago after the city decided to outsource its IT functions.

Reuben Miller, of RMG Trust, the liquidators of Masana, said the metro owed the company between R60-million and R100-million.

"They give you all the reasons when you make follow-up inquiries on outstanding payments, but they just don't pay at the end of the day," he said.

City of Johannesburg spokesman Nthatisi Modingoane said: "The city denies that the liquidation of Masana is due to non-payment on the part of the city.

Modingoane said the Johannesburg metro was not willing to "debate this matter in the public arena". Miller said he would test Modingoane's contention during the liquidation.

The DA's Penning attributed the city's financial woes to its inability to collect rates and services arrears, reportedly amounting to R7-billion.

4 Opinion(s):

Pensioner said...

I have been saying all along that this 2010 fiasco is going to bankrupt South Africa. we'll all be broke soon and then Blatter can switch on plan "B".

Dachshund said...

@Pensioner: It's a culture of non-payment all around. Businesses have been complaining about late or non-payment since 1994. The ANC government couldn't be bothered to collect the money owing to them by the black townships. Only SARS gets money in from taxpayers, and that's not looking good this year as a lot of taxpayers have either folded or left the country.

But yes, I agree, South Africa shouldn't have taken on 2010.

Loggi said...

Great post Dashund

They mange to go bankrupt without even maintaining roads, water , electricity, hospitals. Will there ever be enough money to repair the damage?

Then there are folks that read this blog and try and convince us everything is peachy in Mandelatopia

Mad Kiwi said...

From their BEE page:

Masana is 100% owned by the privately-held and black-owned investment holding company Peu Group (Pty) Limited, against this background we are committed to the empowerment of those who have been economically marginalised and previously disadvantaged with a main focus on creating a work environment which promotes equal opportunities for all and to ensure that the future environment within which we work will reflect the demographics of the South African society.

FAIL!