MCC fails to pay M10, 5 million taxes


Bereng Mpaki

THE Maseru City Council (MCC) has been flagged by the auditor general’s office for its failure to remit to the Lesotho Revenue Authority (LRA) about M10, 5 million it deducted from its employees for pay as you earn (PAYE) during the 2017/18 and the 2018/19 financial years.

This was revealed by acting Auditor General (AG), Monica Besetsa in her report for the year ending 31 March 2019.

“MCC was not remitting PAYE withheld from staff to LRA on monthly basis as required by law,” Ms Besetsa said in her report released this week.

“The PAYE withheld and not remitted to LRA amounted to M4 481 383 and M6 117 614 for financial years 2017/18 and 2018/19 respectively.”

PAYE is tax deducted from an employee’s salary and should be remitted to the LRA on a monthly basis.

Ms Besetsa said instead of remitting the money to the LRA, the MCC had converted it to its own use to cover operational expenses allegedly because the grant it received from central government for the purpose was not enough.

“The management’s response was that the grant MCC received the government has been systematically decreasing and as a result, they have only been able to pay salaries and barely paid for operational costs,”

Ms Besetsa subsequently advised the MCC management to prioritise its activities and put in place clear financial management controls. This will help the MCC avoid using funds that are due to the LRA and also to ensure proper adherence to finance laws and to also take action against non-compliance.

She also found that the MCC owes its suppliers over M2 million.

“Suppliers who have provided goods, works and services should be paid in return. However, MCC was owing office space rent amounting to M856 770, 29 as of February 2019 while other suppliers were owed M1 520 304, 24 dating as far back as 2016.

“It was recommended that the MCC should protect its image by putting strict financial controls in place and ensuring adherence. Management’s response indicated that they would seek a bailout from the central government to meet these debts.”

The audit also found that the MCC was poorly managing its cell phone benefit policy for its staff.

“There was no control regarding monthly over limits by the beneficiaries and MCC paid for the exceeded limits. For instance, in December 2018 and January 2019 the total costs for cell phone contracts was M25 955. MCC paid service providers M72 602 resulting in an overpayment of M46 647.

“The audit further established that the two-months entitlement for the administrative secretary was M2000 but the council paid M20 892, 35 and that resulted into an overpayment of M18 892, 35 Within this period, the administrative secretary acted as Town Clerk for three weeks and his cell phone expenses (different number) amounted to M8 727 against the limit of M3000. Cell phone usage for this officer for two months period amounted to M29 169, 45 which is 62 percent of total overpayments.

“The position of town clerk was filled in January 2019 but the administrative officer continued to enjoy cell phone benefits of a town clerk up to March 2019. MCC further paid M6 297 over his limit.”

The audit found that staff promotions at MCC were being handled in an obscure manner particularly for lower grades. In most cases, the promotions were not approved by the Local Government Service Commission (LGSC) while there was also no indication of vacancies, the AG’s report said.

“Without the approval of LGSC, it was difficult for MCC to offer the promoted officers the incentives as compensation. Management was advised to ensure that promotions are made in accordance with the requirements of the regulations.”

The MCC’s recruitment process was also found wanting as it was “mostly influenced by external forces”.

“Without a clear organisational structure with specific numbers required personnel and allowing externally influenced recruitment, MCC runs the risk of absorbing more staff than required while attracting a huge wage bill,” the report said.

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