Current Edition >> Archives Section >> Spot Coverage >> 17 - 31 October 2003
The recent publication of the annual report for 2002/3 of the Free State Development Corporation (FDC) placed the financial affairs of the corporation under the spotlight, elicited in certain instances some concerns. With a view to obtaining better insight in the pluses and questionmarks raised, the editor of the Free State Business Bulletin, dr. Johann Dannhauser, conducted the following interview with the MD of the FDC, Mr. Max Makhubalo:
The amount being owed to the FDC by accounts more than 90 days in arrears, increased from R1 442 755 on 1 March 2002 to R12 004 767 at the end of March 2003 - an increase of 732%. Why is this and what are the implications ?
Since these figures stem from the period before the present FDC Board and management were appointed, it is not easy for us to determine exactly how these figures were arrived at. Presumably the figures cover the entire FDC debtors book and are thus not a true reflection of the current state of the financial affairs of the FDC. What I can say categorically is that present management has instituted a specialist debtors section which is currently dealing decisively with money being owed to the corporation and we are on top of the situation.
The FDC last year bought Unico meat-processing at Bethlehem for R7,8 million, but the company has since then not been operational. What is the situation ?
The FDC has now recovered its investment in Unico by selling the business for R8 million to an operator in the meat industry based in KwaZulu-Natal.
The case of Highlands Furniture Factory at Harrismith has long been problematic and costly for the FDC - what is the latest about it ?
For HFF we are in a process of finalizing a joint venture with two companies involved in the furniture industry. An auditing company has been engaged to check financial statements of prospective joint venture partners, after which an external consultant will be employed to do due diligence.
The legal proceedings instituted by the DBSA against the FDC for allegedly non-payment of loan installments and interest - could you briefly fill us in ?
The current outstanding liabilities of the FDC towards the DBSA amounts to R69 425 876,36 up to and including 30 November 2003, made up as follows:
• Industriqwa and Qwa Qwa loans : R58 424 232,51
• Thaba Nchu loans : R11 001 643,85
Currently negotiations are taking place between the Free State Provincial Government and various stakeholders (including the DBSA) to effect settlement of this dispute. The matter has been set down for hearing in 2004, but all indications are that the dispute will be settled out of court.
Pre 27 April 1994, the former Qwa Qwa Development Corporation (predecessor of the FDC) in total effected the amount of R33 337 035,04 towards payment of these loans towards the DBSA. Post 27 April 1994, the FDC, with the Free State Provincial Government as shareholder, in total effected R21 009 674,96 towards payment of these loans to DBSA. The last payment was made on 1 April 1997 to the amount of R3 529 966,64.
In so far as the Industriqwa and Qwa Qwa loans are concerned, virtually all capital has been repaid. As for the Thaba Nchu loans are concerned, the FDC had to take over these liabilities from the former North West Development Corporation by virtue of an agreement between the Premiers of North West and the Free State with effect from 1 July 2001. No payments have however yet been made by the FDC towards the Thaba Nchu liabilities.
Your comments on the prospect of the FDC fulfilling its mandate as main developmental vehicle for the Free State province in the financial year 2003/4 ?
The bottom line of the 2002/3 financial report is the FDC made a nett profit of R7, 266 million, whereas it was budgeted for a profit of R7,010 million. Although this is slightly down on the R8,459 million profit shown for the 2001/2 financial year, it should be seen against the turnaround achieved in 2000/01 when a nett loss of R19,929 million was turned into a profit of R4,201.
Further detail about our success stories and future objectives is contained in the annual report, all serving to indicate how extensively and progressively the FDC is involved in structural economic development in the Free State, reflecting the indispensable role of the corporation.
We have gained immense and invaluable experience, which we are putting to use diligently. While we are not faultless, our integrity is beyond reproach. The Free State Dept. of Tourism, Environmental & Economic Affairs, under whose auspices we are, has voted R55,2 million for the operation of the FDC in the ensuing year and which should be seen as a vote of confidence.
To sum up, the FDC is better than ever capacitated and geared to fulfill its mandate.
Remarks in closing ?
The successes of the FDC by far outweigh the minority negative elements and should therefore rather be focussed on. Amidst the rough and tumble of the business and political worlds, the facts show clearly that the FDC is right-on on course. In a 2002 survey by an independent research company about the perception of clients about the services rendered by the FDC, a 71% satisfaction level was achieved, against a target of 70%. The corporation has moreover revised its branding strategy, introducing a new identity and a set of brand values embracing our desired market image. In so doing, we are on a drive of excellence towards delivering a world-class service to our clients.
Nog 'n eiendom wat onlangs deur die Georgiou Trust in Bloemfontein gekoop is - die Sanlam Provinsiale Hoofkantoor op die hoek van Nelson Mandela Rylaan en Tweedelaan.
Present at the official presentation of the FDC Annual Report 2002/03 on 9 October 2003 at a gala dinner in the Bram Fischer Building, Bloemfontein, were from left Messrs.Mokoeta Mokoena (property developer from QwaQwa), Freddy Kenny (Kenworth Shopping Centre, Mangaung), Dr. Vuyelwa Manzana (Deputy-chairperson FDC Board), Messrs Makhosini Msibi (Head of the Department of Local Government and Housing) and Max Makhubalo (MDof FDC)
According to a media release, the Free State Local Government & Housing Department has won an Annual Public Sector Reporting Award as adjudicated by the SA Institute of Government Auditors (SAIGA) in recognition of pursuit of excellence in published annual reports. According to SAIGA “this is a significant initiative and must be seen against the background of the promulgation of the Public Finance Management Act and related legislation such as the Treasury Regulations.” The Award is managed and administered by SAIGA in conjunction with the Accountant-General and Auditor-General to ensure total independence from the executive branch and finance departments. The FS Dept. of Local Government & Housing obtained 87,96%, followed by Western Cape Finance, Office of the Premier in KwaZulu-Natal, Office of the Premier in Limpopo, Office of the Premier in Gauteng, Sports and Culture in the Northern Cape, Finance in North West and Public Works and Roads and Transport in Mpumalanga. The Office of the Premier in the Eastern Cape obtained 88,15%. Professor Dieter Gloeck, executive president of SAIGA and chairperson of the Awards Committee, praised the departments for sterling performance. “Such an achievement sets a standard or benchmark which would inspire others to improve. It bodes well for increased transparency and public accountability,” Gloeck said.
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