Shauwn Mkhize, whose Premier Soccer League Royal AM FC’s R27 million sponsorship has been taken to court. Picture: Ayanda Ndamane / Independent Media
THE DA has firmly placed its hope in Pietermaritzburg High Court to nullify the Msunduzi Municipality’s three-year contract to sponsor Royal AM FC with R27 million after its attempt to get the matter debated in the full council fell flat.
The team belongs to Shauwn Mkhize, who is currently facing allegations of being dishonest with the taxman.
The party filed papers at the Pietermaritzburg High Court soon after the city awarded the sponsorship, which started in July 2023, that would be paid in instalments of R9 million per annum until the end 2025/2026 financial year.
In the 2023/2024 financial year, which started in July 2023, the municipality paid the first R9m. They were supposed to pay the second R9m from July 2024.
In exchange of the sponsorship, the team was going to benefit the city by attracting soccer fans to fill up its Harry Gwala Stadium.
On January 21, the DA tabled a motion to the Speaker Eunice Majola.
Municipality spokesperson, Ntobeko Ngcobo, said through the contract, which was signed in June 2023, the municipality only made the first payment and that the second one “has not been processed due to contractual obligations that must be fulfilled by Royal AM FC before any further disbursements can be made”.
“While the first payment has been made, no further payments have been processed.
“The second payment has not been processed due to contractual obligations that Royal AM FC must fulfil before any further disbursements can be made,” said Ngcobo.
Ngcobo said the first payment was made because at the time, the team complied with obligations.
“The team has to comply with the obligations annually. There are a number of obligations, which I cannot disclose right now, but they include submitting an annual financial report to show how they used the money,” said Ngcobo.
She was not at liberty to explain why the municipality would continue to sponsor a team whose owner violated tax policies.
Ngcobo said the municipality’s Legal Services Unit was viewing the tax allegations “involving the team’s owner”.
“Once this process is finalised, the matter will be tabled for council’s consideration, and members of the public will be informed of any developments.
“As the matter is currently before the court, it is sub judice, and the municipality is bound by the rule of law, which prohibits discussion of the matter at this stage.
“The municipality remains committed to enforcing all contractual terms and safeguarding public funds in alignment with governance principles and the law,” she said.
Both Mkhize and Royal AM general manager, Richard Makhoba, have not responded to the questions sent to them.
DA councillor Ross Strachan, who has been lobbying for the nullification of the contract, said the municipality has so far not disclosed what obligations the team have to fulfil.
“I am not 100% convinced of what they say because they are not giving us information to prove the facts,” he said.
The team has been under curatorship since November, a situation linked to the cancellation of its Betway Premiership and Nedbank Cup games.
The curatorship, which left players not being paid salaries in December, was linked to a raid at Mkhize’s properties, confiscation of her movable properties, and freezing of her bank accounts in November.
The team’s boss, a tenderpreneur worth over R300 million, is alleged to be owing the South African Revenue Service (Sars) about R50m in outstanding tax payments.
Strachan said the council has rejected the motion for debate.
“On dismissing the motion, they said they are not going to talk about the issue that it is in court as they were legally advised not to say anything that is going to compromise the case,” he said.
Strachan wanted the council to debate the curatorship, the cancellation of the team’s Betway games, which he said was no longer benefitting tourism in the city, or ratepayers, and that the team’s brand was attracting negative publicity, which tarnished the city’s image.
“The legal department (of the city) is tasked with reviewing the sponsorship contract and evaluating ways of terminating it, and publicly distances itself from Royal AM,” read the DA’s motion.
Strachan said the matter would be heard in court on February 28.
“And I am happy that the matter is in court because at least we are going to hold people accountable and get the information and the facts.
“We are looking forward to winning the court case,” he said.
bongani.hans@inl.co.za