City in le­gal bid to scrap R2.7bn broad­band deal

DA con­tends ANC-led ad­min­is­tra­tion en­tered into con­tract il­le­gally on the eve of last year’s mu­nic­i­pal elec­tion

Pretoria News - - NEWS - RAPULA MOATSHE rapula.moatshe@inl.co.za

THE DA-led ad­min­is­tra­tion in the cap­i­tal has launched a le­gal bid to nul­lify a R2.7 bil­lion broad­band con­tract sealed by the pre­vi­ous ANC ad­min­is­tra­tion on the eve of last year’s mu­nic­i­pal polls.

The City en­tered into an 18-year con­tract with Tho­bela Tele­coms af­ter a ma­jor­ity of coun­cil­lors voted to ap­prove the deal last April.

MMC for cor­po­rate and shared ser­vices, Cil­liers Brink, said the DA – in the op­po­si­tion benches at the time – ques­tioned the tim­ing of such a mas­sive un­der­tak­ing so soon be­fore the elec­tions.

Brink was speak­ing to jour­nal­ists yes­ter­day at Tsh­wane House about a loom­ing le­gal bat­tle be­tween the City and the con­trac­tors.

Both par­ties had al­ready ex­changed le­gal doc­u­ments and were await­ing a Gaut­eng High Court, Pre­to­ria, date, he said.

The City would con­test the con­tract on the grounds that the ANC ad­min­is­tra­tion en­tered into it un­law­fully.

Brink said: “In Novem­ber last year, the auditor-gen­eral found the deal to be ir­reg­u­lar and de­ter­mined its value at R2.736 bil­lion.

“The find­ing prompted mayor (Solly) Msi­manga’s ad­min­is­tra­tion to in­ves­ti­gate the pro­cure­ment of the deal.”

The broad­band con­tract and its pro­cure­ment were rid­dled with ir­reg­u­lar­i­ties, he said, and non-com­pli­ance by the then ANC gov­ern­ment headed by Kgosientso Ramok­gopa.

Among the ir­reg­u­lar­i­ties Brink sin­gled out were changes to spec­i­fi­ca­tions af­ter the bids had closed, and a vi­o­la­tion of the Pref­er­en­tial Pro­cure­ment Act and its reg­u­la­tions.

Brink said other ir­reg­u­lar­i­ties were that two ven­dors from the same hold­ing com­pany sub­mit­ted bids and were not elim­i­nated.

Also, cru­cial ad­verse in­for­ma­tion about the pro­posed deal was with­held from coun­cil­lors when they voted to ap­prove it.

“The con­tract failed to com­ply with Sec­tion 112 of the Mu­nic­i­pal Fi­nance Man­age­ment Act re­lat­ing to cost ef­fec­tive­ness,” he said.

The deal was the third in a list of ma­jor, multi-year con­tracts con­cluded un­der the pre­vi­ous ad­min­is­tra­tion. These the Msi­manga ad­min­is­tra­tion want to set aside ow­ing to their il­le­gal stand­ing.

“The broad­band deal binds the City into an 18-year re­la­tion­ship with a ser­vice provider to build a broad­band net­work, which would later be­come a com­mer­cial out­fit. The ten­der price (ex­clud­ing VAT) was R2.736 bil­lion,” Brink said.

An as­sess­ment of the deal’s terms and con­di­tions con­firmed that it ex­posed the City to se­vere, one-sided li­a­bil­ity and did not of­fer value for ratepay­ers’ money.

“One of the many ques­tions now to be de­cided is, did the City, coun­cil­lors and the pub­lic know what they were get­ting into when the deal was ap­proved?” he said.

Ac­cord­ing to Brink, no fea­si­bil­ity stud­ies were un­der­taken to demon­strate the full costs and ben­e­fits of the con­tract. “In­for­ma­tion and com­mu­ni­ca­tions tech­nol­ogy in­fra­struc­ture should be di­rected at tech­nolo­gies that are fu­ture proof and scal­able to avoid fu­ture costs con­sid­er­ing the pe­riod of the con­tract.”

The project was deemed to fall out­side the scope of the pow­ers and func­tions as­signed to lo­cal gov­ern­ment in terms of the con­sti­tu­tion. Brink said.

“The auditor-gen­eral’s find­ing con­firmed some of our sus­pi­cions.

“A new co­hort of se­nior man­agers em­barked on a cum­ber­some in­ves­ti­ga­tion into how the broad­band deal was con­cluded.

“The auditor-gen­eral deemed the ten­der ir­reg­u­lar as a re­sult of non-com­pli­ance to re­quire­ments. Ac­cord­ingly, all fu­ture re­lated ex­pen­di­ture must be dis­closed in the fi­nan­cial state­ments as ir­reg­u­lar.”

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