The controversy surrounding Knysna’s "R60 million" rates dispute with Grey Elephant Investments (GEI) shows no sign of resolution, despite a council decision last week that GEI pay R10 million to settle the matter. The Democratic Alliance (DA) and Knysna Independent Movement (KIM) have voiced their discontent, alleging that the debt write-off was pushed through by mayor Aubrey Tsengwa.

The DA in Knysna has called on Mayor Aubrey Tsengwa to present a detailed payment plan addressing the municipality’s ballooning debtor’s book, which has surged by R200 million since the ANC-led coalition took power in September 2022. According to the latest Section 71 report from July 2024, Knysna’s financial liabilities now stand at R575 million, raising concerns about the town’s fiscal stability.

The Section 71 report paints a grim picture of Knysna’s fiscal mismanagement, showing that the municipality’s monthly commitments exceed available cash reserves by R75 million. This cashflow crisis, compounded by irregular financial oversight, places the town on the brink of insolvency.

The DA is also demanding a comprehensive debtors' report from Knysna’s Chief Financial Officer, with particular focus on major outstanding debts, including those of Grey Elephant Investments (GEI). The company is alleged to owe over R70 million in unpaid rates and services, and the governing coalition is reportedly negotiating a significant debt write-off with GEI.

In their official statement, the DA touted their leading performance in local financial performance. The Auditor General’s recent audit of local government performance further underscores this decline, with Knysna’s financial standing eroding in contrast to the DA-governed municipalities in the Western Cape, 20 of which achieved clean audits. Among them, the City of Cape Town remains the only metro in the country to maintain such a clean record.

Correspondence from GEI’s lawyers, dating back to February and included in the council agenda, reportedly pressured Tsengwa and former municipal manager Ombali Phineas Sebola to clarify allegations about the write-off, which GEI deemed "harmful and defamatory."

Responding to local media, Tsengwa stated that the council had acted in accordance with its credit policy and declined to comment on individual accounts, citing confidentiality and adherence to municipal regulations.

Council documents reveal that GEI is expected to pay R10 million of the purported R60 million owed. A council resolution formalising the settlement was passed on 22 August, although the DA opposed the decision. The party criticised the ANC-led coalition for approving what it called a "significant" debt write-off, calling it an affront to Knysna’s law-abiding ratepayers and a blow to the municipality's already precarious finances.

Compounding the political drama, a no-confidence motion against Tsengwa, tabled by KIM, collapsed due to technical difficulties during a virtual council meeting. KIM leader Susan Campbell was unable to participate in the discussion in time, causing the motion to lapse.

KIM and the DA condemned the council's handling of the dispute, accusing the ruling coalition of manipulating resolutions to suit their agenda. KIM decried the decision as "administrative Jenga," leaving the ultimate fate of the R60 million question unresolved amid conflicting statements from councillors. The dispute, it seems, is far from over.