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Contractor gets government to agree to pay its bills

Exercises a lien over Department of Public Works property for non-payment of R49m.
Enough, said Falcon Suppliers after unpaid construction bills had mounted up for a year and a half. Image: Supplied

Contractor Falcon Projects shows that it is possible to get government’s attention for non-payment of bills: exercise a lien over the property. A lien is a right to claim or keep possession of property belonging to another person until a debt owed by that person is settled.

Falcon Projects, a small BEE builder that won three tenders for the upgrade of kitchen equipment on behalf of the Department of Defence in Pretoria, has been exercising a lien on the property because of the mounting unpaid invoices for more than a month.

Pleas had been falling on deaf ears

Writing letters, pleading and pointing out the contractual obligations of the Department of Public Works and Infrastructure (DPWI), which is the body responsible for funding state-owned properties of this kind, came to naught.

But once Falcon instructed its attorneys ENSAfrica to exercise a lien on the property, things started to move in the right direction.

Moneyweb understands that the DPWI has agreed to settle the outstanding bill by the first week of July.

Falcon’s legal advisor, Douglas Molepe of ENSAfrica, tells Moneyweb the lien will remain in place until the bill is finally settled.

Three contracts

In 2017, Falcon Projects won three contracts for the upgrading of kitchen equipment, two of them at the army facility at Thaba Tshwane in Pretoria, and the third at the SA Army College, also in Pretoria.

Two of the contracts were for R12.85 million each and the third was for R16.7 million – a total of R42.4 million.

Work commenced on the building shortly thereafter, but DPWI started to fall into arrears on payments on all three projects from September 2018. This eventually accumulated into total short payments of around R49 million across all three projects, which includes interest and other amounts.

“This is what can happen to small contractors dealing with government,” says Molepo.

“It can be a life and death matter for a small business and while the sum outstanding may seem like a large amount of money, that is money that the contractor has to find from other sources.”

Read:

In email correspondence seen by Moneyweb, Falcon was paying security of R40 000 a month on the property which was under construction.

In effect, it was paying for the DPWI’s security while the DPWI was ignoring repeated calls to settle its bills.

DPWI officials seemed surprised

A trail of email correspondence between government officials and Falcon Projects shows surprise on the part of senior executives in DPWI as to why it had taken so long to pay the outstanding invoices.

In one exchange between government officials, it appears that DPWI lacked the funds to settle the invoice.

“Hopefully, this matter can now be brought to a close,” says Molepo.

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Perhaps the invoices were not motivated by a bulging envelope ? ANC government ethics.

Don’t pay your taxes and watch what happens

Hope the suppliers of the kitchen equipment are not in liquidation by now ?

Seeing is believing.
But to be honest, with the information and track record we all know, who still does business with the government can/must be prepared for this.

would be interesting to see in what state are these revamped / upgraded three facilities after 4 years

the fact that one needs ones attorney to get money out of the DPWI give the impression that dpwi had no intention to pay in full from the start – hopefully Falcon Projects learned something out of this government deal / contract

And it was ENS no less… the contractor must’ve been paying through its nose for the lawyers. Glad they managed to remain solvent long enough to get what was owed to them.

All the ANC-connected and value-destructive plunderers and criminals get paid in advance while the honest, value-adding businesses have to take their own government to court to enforce payment according to the contract. In effect, this government steals the cash flow from businesses to support connected cadres. There are zero honest and patriotic ANC members at any municipality, parliament, SOE, or government facility. People support the ANC in anticipation of their opportunity to loot the shared resources of the nation. They contribute nothing, while they are determined to extract personal gain from public assets.

Every single ANC supporter uses his vote to extract a BEE contract, a social grant, free housing and services, an inflated wage at a defunct department, and freedom from accountability from the public resources. They plunder the taxpayers and destroy the accumulated assets of the nation.

It is impossible for the ANC to stop this inherently corrupt attitude of its supporters like it is impossible for the coronavirus to strengthen the immune system of the patient. Collectivism is a fatal disease and South Africa has entered the terminal stage as displayed by the number of bankrupt municipalities, departments, and SOEs as well as the Debt/GDP ratio and unemployment figures. The ANC government is a failed state in the making because it represents a failure in human capital. Luthuli House struggles to uphold the facade of efficiency and sophistication but in reality, it is built with manure and plastered with dung.

True. It’s not sustainable. As RJ Johnson stated, SA can either choose to have a modern industrial economy or the ANC, but we cannot have both.

100%. Always think of derik hannekom pretending he’s still a good guy hanging out in the anc.

The equivalent would be me hanging out having braais every weekend with my daughters rapist.

A truly uptight person would find it totally and utterly repulsive to even be in the same company of such thieves and scum. Unless……….

I agree but the question we should ask ourselves is how survive amid the decay. I am for communities that are sustainable – that is produce their own electricity, much of their own food and have access to clean water. Some form of agriculture and or agri-processing seems to be part of the answer. The Western Cape has some areas where this seems possible.

Interestingly, in the USA, there are similar communities of people who are seeing their numbers increase significantly in semi-rural ares with those who are disenchanted with Biden’s government and also Covid related restrictions…

This is basically how farmers all over the country are living as part of normal daily life. They have their own sewarage system, water supply, roads, security and many are installing solar panels and generators. Farmers have been using the old Lister generators before the old Eskom supplied them with affordable electricity. South Africa is the land of milk and honey if you have your own cow and beehive.

Non payment by ANC Govt has put many contractors out of pocket, and has result in the liquidation of many businesses including two listed ones, Seakay and RBA, amongst others.

My farm staff used to think that interest free loans from me expired in the new year. They used to tell me that was last year, all over, the new year starts clean.

Same damn mentality here.

Sensei – where is your farm in the land of milk and honey..?

Sensei, I have finally made it to the Western Cape / land of milk and honey after 40 plus years in the wilderness. But I still don’t have a farm. Just a ‘huisie by die see’.

These days financing for agricultural ventures is tricky, with a non-functional Landbank, and difficulty with financing generally. It would be great if Moneyweb would look at ‘opportunities in agriculture in South Africa’ – I prefer to remain positive…!

End of comments.

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