Bay residents draw battle lines in fight against RedForce

Metcalfe report alleges corruption, mismanagement by municipality

Sep 26, 2024

Advocate Richard Metcalfe, who had been commissioned to investigate the agreement has strongly criticised the municipality and the settlement agreement with RedForce after the company turned to the High Court to be reinstated, following the motion to cancel its contract in April. Metcalfe subsequently declined to represent the municipality in two ongoing High Court cases involving RedForce on the grounds that the municipality was not complying with relevant laws or its own policies.

At the time, Redforce co-founder and CEO Julius Nyamazana said,

“We have welcomed the settlement agreement and we are happy that we can work cordially together again. Ours is to save the municipality from sinking into unsustainable debt and to encourage residents to manage their municipal debts better.”

In terms of the settlement, “The agreement between the parties shall endure on the same terms and conditions as if it were never terminated, and the parties shall continue to carry out their rights and obligations in accordance with the agreement.”

“Such settlement agreements condone the extortion of illegal levies and fees from customers of Walvis Bay Municipality, tailored tender documents and the ignoring of the Walvis Bay municipality Credit Control Policy,” he noted.

Among other problems with the deal, he found that,RedForce had collected money from customers in arrears “but added a 12% collection levy with FULL authorisation by the Municipality of Walvis Bay.*

He told The Daily Current in an email on Wednesday that “The legal effect is that the Municipality of Walvis Bay will have to reimburse ALL of its customers with the illegal 12% levy on collection fees. It is as plain and simple as that.”

Problematic Deal

Metcalfe had reported several glaring irregularities and argued that the appointment of RedForce was not lawful and went on to criticize the decision to withdraw the motion to cancel RedForce’s contract, as it also undermined the ongoing investigation.

Metcalfe’s report showed that the municipality had paid RedForce approximately N$17 million in the first nine months of the contract with over N$2,7 million paid over in December 2023. Approximately N$2 million was also due for payment in May 2024.

Payments to RedForce over that period were recorded as follows:

22 Sep 2023 - 313,030.00

13 Oct 2023 - 1,032,958.75

10 Nov 2023 - 1,759,563.81

1 Dec 2023 - 2,414,832.80

19 Dec 2023 - 2,317,841.65

25 Jan 2024 - 1,908,001.48

28 Feb 2024 - 1,738,726.49

28 Mar 2024 - 1,939,207.75

30 Apr 2024 - 1,695,505.26

Corruption and Mismanagement

Metcalfe has since accused the municipality of corruption, mismanagement, and failure to adhere to municipal laws as his report alleged that there was fraud and theft involved.

These findings led to public calls for the termination of the controversial contract, but the matter was soon settled, with the municipality agreeing to apologise to RedForce and reinstate the contract.

The report highlighted irregularities, including the imposition of a 12% collection levy without proper authorization; financial irregularities, such as the deduction of nearly N$20 million from account holders through unauthorised commissions, as well as the disconnection and re-connection of water supply without legal authority.

Unlawful water cuts

He reported that RedForce’s actions had detrimental effects on residents and implicated top-level municipal personnel in the controversial deal, as the council had in contravention of the Local Authorities Act, against its own Credit Control Policy and Water Regulations contracted RedForce to operate in a manner that defied relevant laws and regulations, particularly by allowing the company to enter residents’ premises to disconnect household water supply, which they had no legal right to.

Top officials implicated

“At this juncture, it is also already clear that the general manager for finance and manager for revenue and credit control will face a barrage of disciplinary offences once the investigation is finalised over and above any criminal charges to be proffered against them.”

Finance general manager Frans !Gonteb and the manager for revenue and credit control, Johanna Shidute, reportedly authorised the forwarding of debtors’ accounts to RedForce after only 30 days, contrary to the official credit control policy of 90 days. !Gonteb and Shidute were suspended on 8 May.

Metcalfe held that:

“Their role was not as has been alleged by some sources as being mere signatories to documents for RedForce and its appointment as debt collector and or its debt collecting operations. All municipal employees (17 to date) have freely and voluntarily assisted and expressed concerns pertaining to RedForce and its debt collection operations and its refusal to comply with the Credit Control Policy,”

Tender smokescreen

There was an implication of collusion — a criminal act in terms of the Public procurement Act — as he also alleged that the tender was specifically intended and designed to benefit RedForce, given that the criteria — among other conditions — required applicants to have their own legal division and seven years relevant experience, with at least five projects worth over N$100 million.

“The only logical conclusion that can be drawn from these requirements is that RedForce had already been designated as the entity to be awarded the tender and that the tender was but a smokescreen to justify such an award.”

The arrangement with the private debt collection agency was simply not lawful and resulted in significant costs to the local authority, he found, while there seemed to be no appropriate disciplinary measures against officials implicated, despite signifiance financial implications and costs to the municipality.

“Senior municipal employees are immune from disciplinary proceedings who occasion N$20 million loss to the Municipal Council of Walvis Bay without further investigation and/or disciplinary proceedings,” he reported.

The local authority had “no interest in the finalisation of the Report into the Appointment of RedForce… and/or its operations and/or the residents and ratepayers of Walvis Bay. We accordingly cease and desist with such investigation,” he said.

Forced apology

His investigation reportedly found evidence of corruption, fraud and theft, which he initially attributed to RedForce, but in mid-July he was obliged to issue an apology, in which he stated that any suspected corruption, fraud, and theft were solely attributable to the municipality. Metcalfe did not retract the evidence of fraud and theft alleged in his report, referring to his findings as “facts”.

In a carefully worded statement, he wrote:

“The writer apologises that the facts discerned from investigations disclose apparent fraud and theft. This, however, can not be attributed to RedForce Debt Management Close Corporation, as it is now glaringly obvious that all actions of RedForce are initiated and condoned by the municipal council of Walvis Bay, as constituted by the six councillors, GM: Finance and Manager: Revenue and Credit Control. No blame can be attributed to RedForce and suspected corruption, fraud and theft is solely attributable to the Municipal Council of Walvis Bay. In such circumstances, an unreserved apology is tendered to RedForce.”

Metcalfe subsequently announced his withdrawal from representing the municipality in two cases involving RedForce, citing the municipality's apparent refusal to comply with relevant laws and regulations as the reason for his withdrawal.

Call to action

Following his withdrawal from the case, Metcalfe has come out calling for mass action:

“It is high time for ordinary people who are forced to pay illegal levies to resort to mass action to get rid of disrespectful politicians who refuse to observe the law and who ignore the credit control policy to milk Walvis Bay Municipality customers who struggle whilst the leaders languish in luxury. It is not RedForce that is the problem. The problem is self-serving councilors who won’t follow the law.”

**Elvis Goseb readas a petition outside Council offices.** Source NBC

But the residents are not taking it lying down and are now threatening legal action against the Council’s decision to reinstate RedForce’s contract. Elvis Goseb, who has led several demonstrations against the debt collectors in recent months, says:

"As residents, we have decided to mobilise ourselves so that we can do mass applications for legal aid so that the state can also help us in this, because as residents we are also pressed economically and we cannot pay this 12% that they are forcing us to pay. There were many missteps from the council's side when this RedForce was appointed. So we will challenge this in the High Court. We want all the councilors to go to the High Court and [the] administration to explain to us the legality of this contract."

Residents of the bay are now threatening to approach the courts for a remedy to the lingering problem.