Ups And Downs Of Bouncing Rates

At last – major clean-up looms in Joburg administration.

- Jonathan Erasmus

AN ELABORATE PROPERTY RATES scam operating out of the City of Johannesburg’s rates department has allowed the rich and connected not only to avoid having to pay municipal rates on their high-value properties, but even to milk the system for cash refunds to which they are not entitled. These frauds effectively leave the owners of lower value properties to carry the city’s tax burden.

The discovery could finally result in a major clean-up in the city’s administration.

Besides allegedly rigging property valuations and rates assessments, the frauds are alleged to have extended to manipulating bills, illegally transferring properties and an “insider system” whereby rate payers were allegedly required to pay staff – from low-level messengers to managers – “costs” to accelerate a “billing correction” that would make a rates debt “go away” or, better still, generate a generous refund to the rate payer.

The gritty facts are detailed in a 52- page forensic report that shows how a sample of 22 high-value Johannesburg properties (together worth R885.26 million) were revalued downwards by an average of 58% of their real value by means of forged signatures and fake documents. All were handled by one city valuer, Mbali Maclare. She has since resigned.

Maclare managed to shave R499.78m off the formal valuation figures, causing the loss of R35.6m to the city’s coffers over a four-year period. It is unclear whether she worked alone but the culture of corruption within the city makes this unlikely.