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THE cash-strapped Nala municipality in Free State is accused of breaking the law by appointing a company that did not have a tax clearance certificate.
In 2009 the municipality was placed under administration after it wasted millions of rands on fruitless expenditure.
The municipality allegedly employed Zingaro Trade 83 since 2007 to do electricity and water meter readings in Bothaville and Wesselsbron.
It is alleged that Zingaro did not have a tax clearance certificate from the South African Revenue Service when the tender was awarded. This was done against government procurement rules which required that companies doing business with government should, among others, have a tax certificate.
Department of cooperative governance and traditional affairs spokesman Senne Bogatsu said the appointment of Zingaro Trade was one of the issues of concern raised in the damning KPMG forensic report. He said the municipality was investigating the appointment of the company.
According to the documents in Sowetan's possession, the VAT number on the company's letterhead does not exist on Sars' records.
Zingaro does not have its own offices where it operates. Instead, it uses an office on the municipality's premises. The company is paid R124000 a month for their services. The municipality also pays the company an extra R195800 every six months for their "additional services".
According to the company's records at the Companies and Intellectual Properties Commission, in November 2009 the company was in the process of deregistration.
In July 2010 Zingaro Trade was finally deregistered. During the process the company was still rendering services to the municipality.
Sars spokesman Adrian Lackay said if the allegations were true, Zingaro owners should face the law.
Puleng Mathibela, who claimed to be a director in the company, denied the allegations.
"We have a relevant tax clearance certificate. The tender was fairly awarded to us," she said.