State ‘loses’ R30m bank ac­count

CityPress - - News - SETUMO STONE setumo.stone@city­press.co.za

Af­ter a North West busi­ness­man at­tached a state bank ac­count – with a R30 mil­lion bal­ance and 44 ve­hi­cles be­long­ing to the province’s public works depart­ment – over a dis­puted pay­ment, the pro­vin­cial gov­ern­ment ap­proached the Con­sti­tu­tional Court in a bid to re­verse the court or­ders. The bank ac­count, known as the rev­enue fund, con­sisted of the ex­che­quer ac­count – used to re­ceive the province’s eq­ui­table share from Trea­sury for in­vest­ment pur­poses – and the pay­mas­ter and gen­eral ac­count – used for the depart­ment to at­tend to its daily oper­a­tions.

At the cen­tre of the dis­pute was a R23 mil­lion bill that public works signed in 2010 as a set­tle­ment agree­ment with Tsoga De­vel­op­ers, owned by pop­u­lar Mafikeng busi­ness­man Wandile Bozwana.

Tsoga De­vel­op­ers had claimed dam­ages for a can­celled con­tract to build a gov­ern­ment hos­pi­tal in Brits.

How­ever, the health depart­ment, which held the funds for the pro­ject, re­fused to make the pay­ment to Tsoga De­vel­op­ers be­cause they were not party to the set­tle­ment ne­go­ti­a­tions be­tween public works and the com­pany, and were not con­sulted, ac­cord­ing to doc­u­ments in City Press’ pos­ses­sion.

The set­tle­ment agree­ment was made a court or­der in May 2013 af­ter the le­gal rep­re­sen­ta­tives of public works in­di­cated that their client was no longer will­ing to pro­ceed with lit­i­ga­tion against the agree­ment. But the North West gov­ern­ment later did an about-turn and is now pur­su­ing the mat­ter.

The Con­sti­tu­tional Court is due to hear the case on Septem­ber 29.

The pro­vin­cial gov­ern­ment un­der Premier Supra Mahumapelo brought the case to the Con­sti­tu­tional Court, cit­ing as re­spon­dents the Tsoga De­vel­op­ers, Bozwana, the sher­iff of the high court in Mafikeng, heads of the North West public works depart­ment, the health depart­ment and the fi­nance depart­ment.

The North West gov­ern­ment ar­gues in court pa­pers that the court or­ders at­tach­ing the pro­vin­cial bank ac­count and 44 ve­hi­cles be­long­ing to the public works depart­ment have had a neg­a­tive ef­fect on ser­vice de­liv­ery, and a sec­tion of the State Li­a­bil­ity Act pro­hibits that such or­ders be granted.

In March last year, then public works MEC Ray­mond Elisha at­tempted to have the high court or­der re­scinded.

Judge Ron­ald Hen­dricks of the North West High Court dis­missed the ap­pli­ca­tion on the grounds that the depart­ment drew up the set­tle­ment agree­ment on the ad­vice of its le­gal coun­sel and, four years later, it was try­ing to get out of the agree­ment. De­spite the judg­ment, the North West gov­ern­ment con­tin­ued to dis­pute Tsoga De­vel­op­ers’ claim un­til Septem­ber last year, when the com­pany at­tached 44 ve­hi­cles be­long­ing to public works.

In March this year, the com­pany got another high court or­der to at­tach the rev­enue fund bank ac­count, con­sist­ing of R30 mil­lion.

In June, Act­ing Judge Tebogo Djadje ruled in the high court in June that the writ of ex­e­cu­tion ob­tained by Tsoga De­vel­op­ers in March to at­tach the bank ac­count reg­is­tered in the name of the pro­vin­cial public works depart­ment was valid and en­force­able.

The depart­ment of public works awarded the ten­der for the con­struc­tion of the Brits Hos­pi­tal to a joint ven­ture be­tween Ilima and Tsoga De­vel­op­ers in July 2008. The con­tract, amount­ing to R456 mil­lion, was signed in Jan­uary 2009.

In Au­gust 2009, Ilima was liq­ui­dated and ceased to be in busi­ness. Lit­i­ga­tion be­tween the com­pany and Tsoga De­vel­op­ers saw a court set­tle­ment in Novem­ber 2009, al­low­ing Tsoga De­vel­op­ers to con­tinue with the hos­pi­tal con­tract. Ilima’s liq­ui­da­tion was fi­nalised in April 2010.

How­ever, the North West gov­ern­ment ar­gued in court that it was “a ma­te­rial term” of the prin­ci­pal build­ing agree­ment that “upon liq­ui­da­tion of one party of the [ joint ven­ture], the [agree­ment] would ter­mi­nate”.

They said con­tin­ued work by Tsoga De­vel­op­ers on the site af­ter Ilima’s liq­ui­da­tion was in con­tra­ven­tion of the Con­sti­tu­tion.

The gov­ern­ment said that a new ten­der process should have been re­opened af­ter the joint ven­ture col­lapsed and that the con­tin­ued stay on the site by Tsoga De­vel­op­ers was not in ac­cor­dance with the re­quire­ment to man­age gov­ern­ment con­tracts in a fair, eq­ui­table, trans­par­ent, com­pet­i­tive and cost-ef­fec­tive man­ner.

PHOTO: DU­MISANE LU­BISI

MINE North West busi­ness­man Wandile Bozwana in front of some of his build­ings

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