By Jonews Reporter
JUST under half of the R3,9-billion deficit noted by the Auditor General (AG) in his report for the year ending June 2002 comes from "unfunded liabilities" on the City's pension funds which have accumulated to a staggering R1,5-billion.
These are generous benefits given to council employees by the former Johannesburg City Council, then-controlled by the Democratic Party. In October 1994, two months before the first democratic municipal elections, the outgoing council committed itself to paying mostly white staff members and pensioners, generous "bonus years of service", a 13th cheque for pensioners and post-retirement medical aid.
The council even resolved to use some city-owned buildings, including the Metro Centre, as collateral, but this plan was later rescinded. Still, the council bound itself to "pay to those funds the cost of fulfilling the obligation to pay bonus service".
These liabilities have, for the first time, been reflected on the balance sheet. Kenny Fihla, councillor responsible for finance and economic development in the city, describes this agreement as "financial sabotage - it is immoral". These benefits are now the subject of litigation. Kayoom Bhayat, director of finance revenue in the city, said the city will "take a staggered approach to provide for this amount. The need to raise funding is therefore not immediate ". Bhyat said a further R1,5-billion comes from deficit accumulated from the 2001financial year. R721-million is made up of unsubstantiated debit balances, cases in which there is no documentation or audit trail. Unreconciled difference on debtors control account amounted to R354-million. These figures were partially offset by the R83-million surplus recorded last year.
