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Urgent court bid to stop R950m payment to PEU

Tshwane won’t give an undertaking to refrain from paying.

Business grouping AfriBusiness will submit an urgent application to the North Gauteng High Court at 9:00 on Wednesday to prohibit the City of Tshwane from paying another R950 million in terms of its irregular smart metering contract with PEU Capital Partners.

According to AfriBusiness attorney Willie Spies, payment is imminent.

This follows after city mayor Kgosientso Ramokgopa refused to respond to a question by DA shadow MMC for finance Lex Middelberg at a council meeting on May 30 about the payment that he then said was scheduled for July 1. Middelberg wanted to know what the impact of such payment would be on the city’s budget, since no provision was made for it.

In the 2014/15 financial year the city payed R880 million to PEU and announced in May last year it would cancel the contract because it was unaffordable. The cost of cancellation has never been fully disclosed. The payments, made daily, have for the previous and current financial years amounted to about R70 million per month and are continuing.

Ramokgopa said at the meeting, which was held to approve the city’s budget, that he had no knowledge of supply chain matters. The city did not respond to subsequent questions from Moneyweb regarding the alleged payment.

AfriBusiness on June 6 asked for an undertaking from the city that it won’t proceed with the payment. This was based on its pending application to have the contract reviewed and set aside, the view of National Treasury and finance minister Pravin Gordhan that the contract is unlawful, as well as the Auditor General’s ruling of the expenditure as irregular.

Irregular expenditure is expenditure incurred in contravention of applicable laws and regulations.

The city had not responded by AfriBusiness’s extended deadline on Monday.

Spies told Moneyweb the R950 million is styled as payment for PEU’s infrastructure. PEU earlier disclosed that Tshwane agreed to buy the infrastructure as a condition of the cancellation, at an amount to be determined by an independent valuer.

The city apparently tried to off-load the obligation to a new service provider and in its tender specification for this contract, it required bidders to pay R950 million for this purpose.

The city never responded to questions about the identity of the valuer and basis for the valuation. It subsequently appointed international consultancy Accenture, but it is not clear whether Accenture has committed to buy the infrastructure.

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It is comforting to know that we have a strong justice system in place, which can make sound and credible decisions (in most cases). However, it is disappointing to see that we cannot rely on the Government to make sound decisions and have to revert to the courts frequently in order to ‘govern’ the country and manage funds correctly. The bulk of these decisions should come (one would expect) from a credible government (any party entrusted to rule a country).

I can’t see why anyone would be disappointed by anything that the ruling party does in governing the country. After 20 years and specially the last 10 or so it is almost expected that a new issue will be reported on each day which involves mismanagement, corruption or outright theft. Investigative reporters will never run out of stories to publish. When that stops it means that censorship has taken hold. I don’t see this dictatorship giving up power any time soon so it means that the seeds of censorship will take hold first. Call me cynical.

OK, you’re cynical. So am I. We are not alone.

The media should apply for TV coverage of the court proceedings…..it’ll be more fascinating than the Oscar case! Especially a peep at the contract documents, etc…..

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