Redforce axed: Walvis politicians overpower technocrats
Debt collector blames politicking for contract termination
Redforce and the Walvis Bay municipality parted ways this week after the latter opted out of a five-year contract, which lasted only seven months.
The advice offered by Walvis Bay municipality executives to politicians serving on the municipal council not to terminate the municipality’s debt-collection contract with Redforce Debt Management fell on deaf ears after the latter bowed to pressure from residents.
Spurred on by disgruntled residents who felt they were being suffocated by Redforce’s strict tactics, councillors unanimously supported the move to axe the debt-collection agency during Tuesday night’s meeting.
Speaking anonymously, at least three executives at the municipality cautioned that the contract termination would haunt the municipality for years to come because its debt will continue escalating and this will adversely impact its revenues, ultimately leaving it with no money to maintain the town.
Namibian Sun understands that Redforce is cheaper and more efficient than enlisting lawyers to get the harbour town’s defaulting residents to cough up.
Residents and businesses currently owe the municipality N$378 million in unpaid municipal fees. Of the municipality’s 33 000 accounts, 8 000 have been handed to Redforce since it commenced with its debt-collection duties in August last year.
Sacrificial lamb
The municipality, in a letter dated 24 April, informed Redforce that it is terminating its contract for debt collection and debt management services.
“The municipal council of Walvis Bay at a special council meeting convened on 23 April, upon an unopposed motion submitted by councillor Ephraim Shozi, passed a resolution to the effect that the contract with Redforce must be terminated immediately after adoption of the motion,” a notice issued by the municipality’s acting CEO John Esterhuizen read.
Redforce is of the view that it has been made a sacrificial lamb by Walvis Bay municipal councillors who terminated the contract between the two entities because council allegedly had no knowledge of the debt-collection services being provided.
The decision to terminate the contract comes days after the council was provided with a comprehensive update about the performance of the debt collector and how it managed to collect about N$85 million from defaulters since it started.
Redforce is now perplexed as to how the councillors are claiming they have no knowledge of its services.
“It is very concerning and highly misleading for the very same councillors who were present during this presentation and meeting to now say they had no knowledge of Redforce and were never consulted by the executive administration prior to our appointment,” the company’s deputy CEO and legal advisor Margaret Malambo told Namibian Sun yesterday.
She added: “This change of stance by the council is highly misleading and serves only to garner political and public votes, with Redforce as the sacrificial lamb”.
According to Malambo, the municipality failed to consider the legal ramifications that will ensue, as well as the costs, when it decided to terminate the contract.
Tread carefully
Namibian Sun last week reported that the municipality’s finance general manager, Frans !Gonteb, cautioned that cancelling the contract with the debt collector “will end up in legal battle with costs [of about N$45 million]”.
The N$45 million is calculated as 12% interest of the N$378 million currently owed to the municipality by residents and businesses.
Asked about Redforce’s next course of action following the termination of the contract, Malambo responded: “This is a David versus Goliath situation, and only one of us has the stone and slingshot”.
A breakdown of the municipality’s debtor dues showed that Kuisebmond residents collectively owe the municipality N$95 million, Narraville N$29 million and Meersig N$14 million, while residents of the luxury enclave Langstrand collectively owe N$7 million.
Spurred on by disgruntled residents who felt they were being suffocated by Redforce’s strict tactics, councillors unanimously supported the move to axe the debt-collection agency during Tuesday night’s meeting.
Speaking anonymously, at least three executives at the municipality cautioned that the contract termination would haunt the municipality for years to come because its debt will continue escalating and this will adversely impact its revenues, ultimately leaving it with no money to maintain the town.
Namibian Sun understands that Redforce is cheaper and more efficient than enlisting lawyers to get the harbour town’s defaulting residents to cough up.
Residents and businesses currently owe the municipality N$378 million in unpaid municipal fees. Of the municipality’s 33 000 accounts, 8 000 have been handed to Redforce since it commenced with its debt-collection duties in August last year.
Sacrificial lamb
The municipality, in a letter dated 24 April, informed Redforce that it is terminating its contract for debt collection and debt management services.
“The municipal council of Walvis Bay at a special council meeting convened on 23 April, upon an unopposed motion submitted by councillor Ephraim Shozi, passed a resolution to the effect that the contract with Redforce must be terminated immediately after adoption of the motion,” a notice issued by the municipality’s acting CEO John Esterhuizen read.
Redforce is of the view that it has been made a sacrificial lamb by Walvis Bay municipal councillors who terminated the contract between the two entities because council allegedly had no knowledge of the debt-collection services being provided.
The decision to terminate the contract comes days after the council was provided with a comprehensive update about the performance of the debt collector and how it managed to collect about N$85 million from defaulters since it started.
Redforce is now perplexed as to how the councillors are claiming they have no knowledge of its services.
“It is very concerning and highly misleading for the very same councillors who were present during this presentation and meeting to now say they had no knowledge of Redforce and were never consulted by the executive administration prior to our appointment,” the company’s deputy CEO and legal advisor Margaret Malambo told Namibian Sun yesterday.
She added: “This change of stance by the council is highly misleading and serves only to garner political and public votes, with Redforce as the sacrificial lamb”.
According to Malambo, the municipality failed to consider the legal ramifications that will ensue, as well as the costs, when it decided to terminate the contract.
Tread carefully
Namibian Sun last week reported that the municipality’s finance general manager, Frans !Gonteb, cautioned that cancelling the contract with the debt collector “will end up in legal battle with costs [of about N$45 million]”.
The N$45 million is calculated as 12% interest of the N$378 million currently owed to the municipality by residents and businesses.
Asked about Redforce’s next course of action following the termination of the contract, Malambo responded: “This is a David versus Goliath situation, and only one of us has the stone and slingshot”.
A breakdown of the municipality’s debtor dues showed that Kuisebmond residents collectively owe the municipality N$95 million, Narraville N$29 million and Meersig N$14 million, while residents of the luxury enclave Langstrand collectively owe N$7 million.
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