Treasury clinches deal with Sanyati over R25m

CAPE TOWN — National Treasury has reached a settlement with the liquidators of bankrupt civil engineering firm Sanyati to pay the company R25m for work it undertook on behalf of the Free State government.

Sanyati liquidator D&T Trust’s Theo van den Heever described the settlement as “fair and reasonable”, saying it reflected the claim the formerly listed Sanyati had on its books against the provincial government.

The agreement (without details of the sum) was disclosed in a letter by Minister of Finance Pravin Gordhan to Democratic Alliance spokesman on finance Tim Harris. This was in reply to the latter’s request in July for the urgent release of the R60m allegedly owed to Sanyati by the Free State department of police, roads and transport. Sanyati claimed the nonpayment of the money had forced it to file for business rescue.

The contracts related to the R4,2bn programme to rehabilitate 23 roads which the department embarked upon in 2009 without the approval of the MEC for finance.

Mr Gordhan said National Treasury found the contracts with the 14 construction companies contravened a number of laws and regulations and that Sanyati was partly to blame for entering into these illegal contracts.

“Given the stature of Sanyati Holdings it is expected that the company would have familiarised itself with the circumstances surrounding the feasibility and legality of the project and therefore would have been well aware of the dubious integrity of the contractual arrangement.”

Mr Gordhan said Treasury was assisting the Free State department reach “a mutually agreeable compromise on the fair value amounts” owed to the other contractors. It was trying to determine the actual performance of construction companies in road rehabilitation projects to assess how to compensate them.

The Free State roads department was one of a number of provincial departments taken over by national government last December because of financial mismanagement.

Mr Harris welcomed the settlement but reiterated his concern about the government’s failure to pay contractors within 30 days.

“Chronic disregard for this requirement puts numerous companies at risk.