HOW TO DO BUSINESS IN THE NEW SOUTH AFRICA

The public bus service in Durban has closed down, leaving thousands of daily
commuters with no way to get to work or home again. It has closed because it
is insolvent.

How on earth did that happen?The public bus service was run and operated by
the city municipality from1912 until 2007. It did receive subsidies from the
City, but these were recovered from the Government and not from the
ratepayers.

In essence the public transport system ran at a profit sufficient for it to
replace its own vehicles as needed. In 2007 the City Council decided that it
was illegal for them to operate the public transport under the new
Constitution – it had to be run and operated privately by someone from the
previously disadvantaged community.

The City Manager, Dr Mike Sutcliffe, then sold the public transport
operation to a private company named Remnant Alton (Pty) Ltd for R70million.
This sum also included the route operating licenses and all the vehicles,
equipment and buildings in Alice Street where the buses were garaged,
serviced and repaired.

So far so good. Remnant Alton (Pty) Ltd immediately sold off the buses,
(mostly new vehicles), one by one, to independent “owner-operators”
contracted to Remnant Alton.

An owner-operator would drive their bus over allocated routes, collect the
fares and use the bus garage in Alice Street as a facility for maintaining
the bus.

They would also buy their spares and diesel from Remnant Alton (Pty) Ltd.By
the end of 2008 most of the buses were in such poor condition they were
unsafe. Broken down buses were the order of the day, and the service to
commuters was a shambles.

Remnant Alton (Pty) Ltd approached the City Council for help, and the City
Council lent them R40 million at a very low interest rate to restore the bus
service. This was in March 2009.

At the beginning of April 2009 Remnant Alton (Pty) Ltd went into liquidation
and ceased all operations. The R40 million was “gone”, so the City Council
seized the company. The 1,500 “owner-operators” then took the Council – as
the new owners of the business – to the labour court, and won their case.

The Council was ordered to compensate them with the same income they
wouldhave received had the service continued operating until the end of
theircontracts. Naturally the R40 million “loan” plus the award to the
owner-operators comes out of Council revenue, paid by the ratepayers of
Durban.

Now the Council, who suddenly decide that it is NOT illegal to operate
thebus company, spends a fortune on buying new buses and restoring the
transport service to its former state. Nobody yet knows what this has cost
-the bills are still coming in. But suddenly there is a “whoops”.The Council
can’t run the buses, because it sold the licenses to operate over the routes
to Remnant Alton (Pty) Ltd. No problem. Just buy them back.

Remnant Alton was willing to sell them back to the council, and the council
was willing to buy them back. The only teensy weeny problem is that Remnant
Alton (Pty) Ltd had sold them to its Managing Director and he wanted
slightly more for them than what Remnant Alton had originally paid.

After tough negotiations the council beat him down to a lower price and
bought the route licenses back for R45 million. Yes, that’s right. R45
million. OK.

On the income side, the ratepayers scored R70 million when the bus company
was originally sold. Now, on the debit side, they have an unrecoverable loan
of R40 million,written off Plus the cost of restoring the company to a good
operating standard – say another R100 million Plus the cost of buying the
route licenses back – R45 million Plus the cost of recompensing the
owner-operators – 1,500 of them, for four months at R8,000 per month
each=R48 million

So the total cost to ratepayers is R233 million less R70 million =
R163million.

Well, its a lot of money, but at least we will have a working bus service
back.

Now here is the real kicker. The Council says it doesn’t have the capacity
to operate the bus company, so it will be looking for a private company to
operate it in the future – and they have found the perfect candidate. Yep.
You guessed it. They are GIVING it away, lock, stock and barrel,completely
FREE, to…..Wait for it……Remnant Alton (Pty) Ltd. I kid you not.

Now, the Durban (Ethekwini) Metro Council is overwhelmingly ANC, and they
got VERY upset when a Democratic Alliance Councillor asked if they knew that
the Managing Director of Remnant Alton (Pty) Ltd had at some stage in
thepast been found guilty of fraud, and served time for that offence?The
response? No, we didn’t know that. After more questions – Well, actually,
the City Manager did know, but it was some time ago, and the “gentleman”
concerned had served his time and paid his debt to society, so we didn’t
think it was important….

Meanwhile, the buses haven’t begun running yet. Nobody has a clue when they
will operate again. But the citizens of Durban can take solace in learning
the new and unpronounceable street names as they walk to and from work,
hoping they won’t step in the turds and filth, or get mugged. They may even
see our City Manager sweep by in his fancy luxury car, with a cavalcade of
body guards,as he makes his way to his new luxury penthouse, valued at
several million,at the Point Waterfront – smiling as he goes because the
area has been declared, BY HIM, as a rates-free zone until 2014.

Effectively he is totally unaffected by this huge cock-up. He doesn’t even
have to pay his share in his rates bill.

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One Response to “HOW TO DO BUSINESS IN THE NEW SOUTH AFRICA”

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