Windhoek City writes off 10m debt

THE City of Windhoek has had to write off close to N$6 million in debt and expects a further N$4,3 million to follow, given the municipality’s inability to collect outstanding amounts from a variety of clients.

The news sparked tension on Wednesday night during the City Council’s first monthly meeting for the year, as councillors questioned the appearance of a number of well-established companies and other organisations on the list of those to be let off the hook.Organisations listed as having untraceable or unrecoverable debts include Pizza Den, Dannic Construction, the African Methodist Episcopal Church, Swabou Bank Limited and the Swans Rugby Club. The City’s Special Executive for Finance, Roger Gertze, said many of the clients listed could not be traced or were known to have left the country without settling their final accounts. Other bad debts were attributed to death, insolvency and administrative mistakes on the part of the municipality.’Some of the clients listed here as untraceable aren’t that difficult to get to,’ councillor Herbert Schultz said, referring to Dannic Construction and the rugby club.Gertze responded that in some of the instances the municipality signed contracts with chairpersons and directors in their personal capacity, resulting in situations where, once these members disappeared, the organisations involved disputed the debt attributed to them.In all the cases listed, the municipality’s lawyers had informed them that it would not be worthwhile following up these cases, as it was not deemed cost effective.Gertze said the writing off of the current debt should be seen as more of an accounting exercise than anything else, as it served to clear the municipality’s books of long-outstanding and irretrievable debt.One client who received special mention was defunct property developer Ombili Homes, which alone owes the municipality N$3,8 million for 174 properties bought from the municipality.’The company owner was a property developer who bought erven as well as houses and developed or upgraded them and resold to clients. The owner was involved in a fraud case and fled the country leaving final accounts unsettled,’ reads the finance department’s explanation to the council.The council deferred a decision on whether to write off this debt as well as another N$472 000 from clients against whom legal action was deemed not to be cost effective.In the meantime, the City is following up on 263 accounts that have been handed over to the Credit Bureau (ICT) and which are being investigated. Another N$2 million is at risk in these cases.The amounts mentioned above do not include a newly created ‘ambulance account’, which the municipality says was created due to an accumulation of accounts levied for its ambulance services, and where debtor details were either incorrectly or insufficiently obtained, making it impossible to trace these clients. ‘These accumulate annually and will similarly have to be written off, as it would be impossible to proceed with legal action. It would also not be practical to keep them on our books,’ reads the current council report.The ambulance account currently stands at N$1,3 million.