ELM banking accounts frozen over debts

Emfuleni Municipality

A major legal battle is expected between ELM and former smart meter service provider BXCSA on  Tuesday in an urgent application by the municipality to restore its frozen Standard Bank account. The ELM account was attached  earlier this month after a recent record Johannesburg High Court default judgment of R492-million.

But a Vaalweekblad’s investigation can now reveal to the public and other stakeholders that ELM has at least one other bank account with ABSA which is used to circumvent emergencies such as legal attachments and orders from its primary Standard Bank account. It is also known that another R64 million in ELM vending electricity revenue has not been paid over by vendor company Ice Cloud to ELM for undisclosed reasons since 2018 – revenue that should already be in ELM’s account and subject to legal action. This means that ELM has additional revenue of R64 million that is unknown to both creditors and possibly ELM councillors.

As of 5 October, the “primary” ELM Standard Bank account had far less funds than the ABSA account –  R133 297 463 in ABSA as opposed to R57 284 343 in the official Standard Bank account, according to detailed financial records in Vaalweekblad’s possession. This was after paying third parties which ELM has claimed in court documentation already submitted for Tuesday’s court action that it cannot do if its Standard Bank account remains frozen – and the reason it claims it wants the attachment of its Standard Bank account rescinded in court next week.

Yet in responding to the matter internally, ELM insisted in a written internal staff communication on Friday 9 October – and in possession of Vaalweekblad – that salaries for staff and councillors will be paid on October 25 despite its account being attached. ELM also said in the communication it would seek to have the Writ of Execution on the attached bank account stayed until it could bring a rescission application to set aside the R492 million judgement. The municipality did not say when it would do this.

Legal documentation in possession of Vaalweekblad also indicates that ELM is expected to argue next week that it cannot function without the attached and frozen bank account – despite ELM knowing it has another bank account used to circumvent legal judgments and creditors. ELM’s “two-or-more” bank account system is now seen as undermining and defeating the ends of justice so its officials and councillors can continue paying themselves despite any legal action attaching its known Standard Bank account and funds therein.

Thinking they have attached all ELM cash available as intended through legal action, creditors  will then see ELM funds in its known bank account either evaporate despite bank attachment orders or see ELM divert revenue to another account beyond their reach.

In another financial practice to avoid consequences of any bank attachment and reduce its cash asset profile, ELM can also channel its national and provincial government grant and equitable share payments – often exceeding R300 million at a time – into a secondary ABSA account.

But ELM earlier this month paid third parties – Medical Aid, SARS and union deductions – from a “secondary” ABSA bank account around 6 or 7 October  after its Standard Bank account was already attached by its former smart meter service provider BXCSA on 2 October.

Vaalweekblad has obtained detailed data on both ELM accounts with detailed balances of sub accounts as of 5 October following BXCSA’s attachment of the primary Standard Bank account on 2 October. Balances were as follows:

ABSA Main: R133 297 46, ABSA Salary: R602 069, ABSA Traffic R86 857

Standard Bank Main (account frozen) R57 284 343, Standard Bank Salary: R1 759 831, Standard Bank Traffic R3 727 683.

–Vaalweekbald

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