State ‘loses’ R30m bank account
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In March last year, then public works MEC Raymond Elisha attempted to have the high court order rescinded.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.
MINE North West businessman Wandile Bozwana in front of some of his buildings