Hospital contract payment impasse continues

THE long-standing saga over the construction of Soweto’s Bheki Mlangeni Hospital is far from over as construction firm Ilima Projects wants the Gauteng Department of Infrastructure Development to pay up its R21.5 million debt.

Ilima Projects was part of a joint tender contract released by the provincial government for the construction of the hospital in 2006 at an initial cost of R335m.

The amount later ballooned to more than R1 billion.

South Gauteng High Court Judge Roland Sutherland has now ruled in favour of Ilima Projects in its bid to stop the department’s MEC Tasneem Motara from making claims in court papers that the ground for the lawful cancellation of the contract was due to the company’s irregular tax clearance certificate.

“The defendant (Motara) is stopped from making any averments in its plea that the grounds for a lawful cancellation of the contract is that an irregular procurement process was undertaken by the defendant in respect of the award of the contract,” Judge Sutherland said in his recent ruling.

The judge also ordered Motara to amend her plea within 60 days.

According to the judgment, Ilima Projects was contracted to build the hospital but the joint venture collapsed.

The company now wants the department to pay the R21.5m which it is owed for resetting up or remobilising the site operations during the construction of the hospital.

The hospital, which was built to alleviate congestion at the Chris Hani Baragwanath Academic Hospital, was eventually opened in April 2014 after long delays.

Court papers show that Ilima Projects was cash-strapped when it was awarded the contract and a company called Country Cloud lent it R12m and required a repayment of R20.5m.

When the contract was cancelled Ilima Projects could not pay Country Cloud and as a result, Ilima was liquidated in 2010 and Country Cloud was out of pocket, according to Judge Sutherland.

In 2014, the Constitutional Court found that the department was not responsible for Country Cloud’s loss.

Judge Sutherland said adopting an approach that disallowed in principle an opportunity to challenge the unlawfulness of the cancellation issue, was too much of a mechanical approach for South African jurisprudence.

Ilima Projects’ liquidation saw its over 700 employees lose their jobs and the company lose out on several lucrative government contracts, including a R456m tender to build hospitals in Brits and North West and a R137m contract to build a government office complex in Vryburg, North West, among others, due to the company submitting a fraudulent tax clearance certificate.

In the Eastern Cape, government construction work valued at R450m was also canned.

Judge Sutherland has also ordered that further pleadings be filed in the matter and that a judicial case management conference should resume.