/ 25 August 1999

Banks to foreclose on debtor towns

PHILLIP NKOSI, Nelspruit | Wednesday 8.30pm

MUNICIPALITIES throughout Mpumalanga face having their prime assets attached by commercial banks after failing to repay loans totalling millions of rands.

Local government MEC Fish Mahlalela confirmed on Tuesday that banks such as Sanlam are about to move against at least four towns in the province.

He criticised the banks, however, for originally extending loans to obviously financially “challenged” councils and said he fails to understand how the loans were given in the absence of proper repayment plans. “Some municipalities borrowed the money without any intention of repaying it,” said Mahlalela.

Mahlalela said White River alone owes ABSA about R9-million after being granted a R7-million loan. It failed to repay the money and has since been charged R2-million interest.

White River town treasurer Frans Fourie was in a meeting on Tuesday, and was not available for comment. Graskop town treasurer Rudolph van Vuuren confirmed, however, that his council owes the Development Bank of Southern Africa more than R2-million.

Van Vuuren said the loan was taken out in the 1997/98 financial year build a public swimming pool, roads and pavements.

Van Vuuren said only about R42000 had ever been repaid and that the council simply does not have any more funds to meet the rest of the debt.

Mahlalela said the Graskop council’s view was that the province should help them repay the money.

Sanlam has meanwhile threatened to attach property belonging to Komatipoort’s council for an unpaid loan, Mahlalela said. He was unable to give additional details but warned that the issue is viewed as very serious by the provincial government.

Mahlalela added that it was obvious some municipalities think it is the function of the provincial administration to bail them out or help repay the money.

Mahlalela pledged R8,5-million to help some towns cope with infrastructure backlogs of more than R1-billion last Friday as part of a separate initiative. –African Eye News Service