New Era still troubled by financial woes

A NEWSPAPER owned by Government still owes the Receiver of Revenue N$990 000 because it did not pay taxes deducted from its employees for several years, although they were deducted from their salaries, a Parliamentary committee heard yesterday.

“Not submitting PAYE (Pay as you earn) money to the receiver is a criminal offence,” said Johan de Waal, who chairs the Standing Committee on Public Accounts. “You are using the Receiver of Revenue as a bank to borrow money, but you must pay interest and penalties there, so rather borrow from a commercial bank to pay the Receiver, that is cheaper,” he said to Sylvester Black, the Managing Director of New Era.”The way you run the business is the wrong way.”Black and the newspaper’s financial manager, Jeremy Cloete, were however quick to point out that they both were only appointed in 2006 and the PAYE debts dated from before that time.”We actually tried to borrow money from commercial banks but the only collateral we would be able to use, the building we operate from, which was constructed in 2004, has not been transferred into the name of New Era.It is a nightmare, although some progress is being made,” Black said frankly.The newspaper still owes N$120 000 to the Chinese contractor who built the building.”The issue is made worse because the premises where our building is situated involves three plots of land (erven), which must be consolidated into one single unit, but before that can happen the ownership must be established.”The newspaper’s cash flow was also severely hampered because many advertising clients did not pay their bills, half them being Government ministries, regional councils, municipalities and parastatals.The bad debt of these customers stood at N$4,3 million at the end of the financial year ending March 2007, and it increased to N$4,9 million by last month.The Committee further questioned the fact that salaries make up about 80 per cent of New Era’s expenditure.”Expenditure for salaries came to N$9,3 million and income was N$11 million – you are not in business, you are practically bankrupt,” De Waal criticised.New Era also has outstanding debts of Value Added Tax (VAT) not paid to the Receiver, but the amount was not disclosed at the hearing.”You are using the Receiver of Revenue as a bank to borrow money, but you must pay interest and penalties there, so rather borrow from a commercial bank to pay the Receiver, that is cheaper,” he said to Sylvester Black, the Managing Director of New Era.”The way you run the business is the wrong way.”Black and the newspaper’s financial manager, Jeremy Cloete, were however quick to point out that they both were only appointed in 2006 and the PAYE debts dated from before that time.”We actually tried to borrow money from commercial banks but the only collateral we would be able to use, the building we operate from, which was constructed in 2004, has not been transferred into the name of New Era.It is a nightmare, although some progress is being made,” Black said frankly.The newspaper still owes N$120 000 to the Chinese contractor who built the building.”The issue is made worse because the premises where our building is situated involves three plots of land (erven), which must be consolidated into one single unit, but before that can happen the ownership must be established.”The newspaper’s cash flow was also severely hampered because many advertising clients did not pay their bills, half them being Government ministries, regional councils, municipalities and parastatals.The bad debt of these customers stood at N$4,3 million at the end of the financial year ending March 2007, and it increased to N$4,9 million by last month.The Committee further questioned the fact that salaries make up about 80 per cent of New Era’s expenditure.”Expenditure for salaries came to N$9,3 million and income was N$11 million – you are not in business, you are practically bankrupt,” De Waal criticised.New Era also has outstanding debts of Value Added Tax (VAT) not paid to the Receiver, but the amount was not disclosed at the hearing.