Sunday News Reporter
BULAWAYO City Council (BCC) could lose the Tower Block and Revenue Hall after Kingdom Bank demanded title deeds for the properties following the failure by the local authority to pay off a loan it took to purchase top-of-the-range vehicles for senior staff members.
To compound its woes, the BCC is also failing to produce the title deeds as it cannot locate them, Sunday News can exclusively reveal.
The BCC last year entered into a loan facility with the bank that saw it getting a total of US$5,7 million with US$4,2 million being set aside for the purchase of vehicles for the top brass while US$1,5 million was channelled towards payment of workers’ salaries.
Some of the vehicles, which cost as much as US$100 000 each, include Town Clerk Middleton Nyoni’s Range Rover, a Toyota Fortuner for finance director Mr Kimpton Ndimande and a Toyota Prado for the director of Housing and Community Services, Mr Isaiah Magagula.
The loan was payable within 12 months but council is failing to repay the loan. It is now considering rolling it over for a further 12 months but the bank is demanding collateral in the form of title deeds.
Properties that have been identified include Tower Block, its grounds and Revenue Hall, three of its flats (Tregen, Parkhurst and Lyndhurst courts) and its Matsheumhlophe water reservoir.
The vehicle loan facility saw the council’s senior officials being availed with funds to purchase top-of-the-range vehicles, a move that put them on a collision course with residents who argued that the local authority was misplacing its priorities.
Confirming the latest developments, the city’s mayor, Councillor Thaba Moyo, said this was an internal matter between the local authority and the bank but they would ensure that measures taken did not leave them in a loss position.
“That information is sensitive and highly confidential but for your benefit, I would say we are discussing it with the bank and I am sure something beneficial to both parties will be agreed upon because at the end of the day we are talking of monies that we have already used,’’ said Clr Moyo.
According to a council confidential report, the loan was for the purchase of vehicles with part of it being an overdraft the council took to pay salaries for its workers.
“The loan for vehicles was US$4,2 million and had an initial period of 12 months with an option to roll over for another 12 months while the working capital overdraft was US$1,5 million because of subdued cash inflows the Financial Services Department would like to exercise the option of rolling over for another 12 months.
“Because of changes in the financial market the bank now demanded collateral security in the form of title deeds to some fixed property,’’ reads the report.
During the ensuing debate the chamber secretary, Mrs Sikhangele Zhou, confirmed that chances of council property being attached were high while Clr Moyo noted that the move would place council property at risk.
“The bank is aware of council’s financial position and collateral security being requested is for the existing loan and there was no plan of how it will be repaid if rolled over,’’ said Clr Moyo.
The deputy mayor, Clr Amen Mpofu, on the other hand cautioned council against acceding to the request saying that should council fail to pay, municipal properties would be sold or auctioned.
Meanwhile, the same report states that the local authority is in a quandary as it cannot locate title deeds for the Tower Block and Revenue Hall.
“It has been noted that the majority of council properties are not registered and as such could not be used as collateral. Revenue Hall is sitting on six stands and Tower Block on three stands, the actual title deeds have not been sighted but are thought to be kept at the City Hall record files,’’ reads the report.
Council has in the past faced a number of financial problems and at one point the local authority almost went bankrupt after 90 percent of revenue collected went to workers’ salaries with just 10 percent being directed to service delivery which was against a Government stipulated ratio of 70 percent service delivery to 30 percent salaries.
It is also set to retrench over 1 000 workers.
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