Council sued over M120 million tender
BIG Bravo Investments 503 CC has taken Maseru City Council to court for allegedly failing to return performance guarantee documents the South African construction firm submitted when bidding for a M120 million tender two years ago.
The company claims in papers filed before the Commercial Court on 25 September 2015 that Council has ignored numerous requests for the return of performance guarantee documents it submitted when bidding for the contract in February 2013.
The tender was for refurbishing Matala Phase 1 and Ha-leqele roads in Maseru, and the company’s bid was unsuccessful despite being earlier informed otherwise.
However, the South African firm is not contesting the apparent U-turn but only seeking the return of the guarantee papers issued by Compass Insurance Company Ltd.
The performance guarantee, insured to the tune of M11.9 million, was a commitment by Big Bravo to satisfactorily complete the project by the set date of October 2014.
Big Bravo had paid Compass Insurance M1.3million to get the guarantee.
In his court papers, Big Bravo Investments 503 CC Managing Director Mphulane Ramorena, said Council informed him that his company had won the tender through a letter dated 12 February 2013. After the letter, he says he was asked to provide the performance guarantee, only to realise that another company called Big Bravo Lesotho (Pty) Ltd owned by Bothata Mahlala had been awarded the contract.
After this realisation, Mr Ramorena said he demanded the insurance guarantee back but the request went unanswered. And so were similar requests by the insurers, according to supporting documents in the court papers. Mr Ramorena further claims an official from the Ministry of Local Government visited the company’s Bloemfontein premises to ascer- tain if it had the capacity to undertake the roads project. It was after being convinced of the capacity that Big Bravo Investments was asked to submit the insurance guarantee, he adds. He also says it therefore came as a surprise to him that another company with a similar name had won the tender although he is not challenging this apparent change of heart in the court. What also worries Mr Ramorena is that he personally guaranteed the insurance, hence his lawsuit to claim the documents from Maseru City Council.
“Failure to honour the return of the performance guarantee puts me at risk because I had signed as personal surety and I have since been sequestrated as a consequence of the recalcitrance of the respondents herewith,” he notes in the papers.
In one of the letters written to Maseru Town Clerk Mantai Phaila dated 29 July 2014, Compass Insurance Company Limited Managing Director Paul Carragher, notes: “I refer to the construction guarantee issued by Firedart and Construction Gurantee (Pty) Ltd on behalf of Compass Insurance Co Ltd on 9 April 2013, a copy of which is attacked hereto for identification purposes.
“It has now come to the attention of the insurers that the contract for the upgrading of Matala Phase 1 (Matala to Leqele Bus Stop roads in Maseru) was concluded between the City Council of Maseru and a company called Big Bravo Construction (Pty) Ltd of Unit 80 (a) Bedco Office Complex, Sebaboleng.
“The guarantee issued by the insurers does not cover that contract since it was issued to cover the obligations of Big Bravo Investments 503 CC, a close corporation registered in the Republic of South Africa.
“You are advised that the insurers hereby recall the aforesaid guarantee and will not entertain any claim made pursuant thereto. Kindly return the original to this office.”
Mr Ramorena noted in the founding affidavit that these requests were ignored, including a letter of demand written by his lawyer, Advocate Haae Phooofolo, on 18 May 2015.
Mr Ramorena continues in the affidavit: “I was made to believe in 2014 that the contractor, Mr Bothata Mahlala of Big Bravo Lesotho Pty Ltd, was arranging another performance guarantee to replace the existing one but this looks like it never materialised.
“Whilst this matter was also a subject of media, public and police concern, Maseru City Council never made any efforts to engage either myself or the applicant company (Big Bravo Investments) despite my constant visits in my official capacity as its managing director.
“It is on the basis of this non-engagement and or deliberate inertia on the part of the respondents that I make this application before this honourable court and demand the documents as prayed for in the Notice of Motion.”
Meanwhile, the Lesotho Times understands Advocate Salemane Phafane (Kings Counsel) who represents the respondents in the case has since filed a notice of intention to oppose Mr Ramorena’s application.
Contacted for comment, Compass Insurance Company Ltd Head: Legal and Claims, Adel Walker told the Lesotho Times via email: “In terms of our confidentiality policy, we are not at liberty to discuss this matter with external parties”.
Repeated attempts to contact Ms Phaila were fruitless this week.