Special Tribunal rules that PMB police unit's 17-year lease is invalid

The Special Tribunal has ruled that a lease entered into by the public works department 17 years ago for offices for the police’s Pietermaritzburg family violence, child protection and sexual offences unit is invalid.

However, because the unit still occupies the premises judge Lebogang Modiba suspended the order to ensure there was no disruption to “services to the most vulnerable members of society”.

Modiba said irregularities in the awarding of the lease to Plebian Properties “infracted every requirement in section 217 of the constitution”, which required an organ of state, when contracting for services, to do so in accordance with principles of fairness, equitability, transparency, competitiveness and cost-effectiveness.

However, she noted that any monetary claim against the company had prescribed. She also said there was no basis to Special Investigating Unit (SIU) allegations that the company “induced the award of the bid by fraud”.

“This matter displays some of the difficulties the SIU may encounter to recover monies the state has lost ... in the context of endemic procurement irregularities, corruption and maladministration that has endured over a long period of time,” Modiba said.

“There are just too many cases to investigate and with limited resources, the SIU’s efforts may be futile unless legislative changes are introduced to remove the legal inhibitions it is likely to face.”

The lease was first procured in 2004 and renewed five times.

It would only have come to the attention of the SIU in 2014, when the president signed a proclamation for the investigation of public works lease agreements — about 2,300 — entered into from January 2013.

It was not surprising, she said, that it took the SIU seven years to bring the application before the tribunal.

The unit sought an order that Plebian Properties repay it between R22m and R28m, the alleged excessive rental the company collected over the years.

Modiba said the bid and subsequent lease agreement stipulated that Plebian Properties would provide about 935m² of office space and 19 undercover parking bays at the Willowton Road premises.

The SIU, she said, alleged that when it bid for the tender, the company misrepresented that it complied with bid requirements, resulting in excessive rentals being charged for parking bays that did not exist.

The department, the SIU said, negotiated subsequent lease agreements without “using the opportunity to ensure that appropriate rental rates were charged”.

The application was opposed by Plebian Properties, which raised several technicalities, including prescription. The department did not “enter the fray”.

Modiba added that the SIU said the company’s bid should have been rejected because the premises could not accommodate the required undercover parking bays (later changed to 30), that they were zoned general industrial and could not be used as offices and there was no compliance with national building regulations or applicable municipal bylaws.

This, largely, became common cause.

The parties had since signed a settlement agreement in which Plebian accepted it failed to provide the requisite parking bays and, as a result, overcharged the department by R973,000.

It repaid some of the money and the balance through a R40,000 reduction in the monthly rent.

“It says that it has fully discharged this liability,” Modiba said.

While she ruled that the company misrepresented that it could accommodate the parking bays in its bid proposal, there was no evidence to conclude that it would not have been awarded the bid in spite of these failings and that the original lease was “induced by fraud”.

Modiba found, however, that after the bid closed, Plebian, as the highest bidder, was given the opportunity by department officials to offer a lower bid, “giving it an unfair advantage”.

Even then, it was still not the lowest bidder, but recommended for approval.

“The renewal of the subsequent leases were also irregular and unlawful,” she said, saying the officials “maladministered the procurement process”.

“The irregularities are material. They render the procurement process unfair and not equitable ... It was also not economic and cost-effective.”

Regarding the suspension of the order of invalidity, she said that would remain in place until there was a determination of a “just and equitable order”. 

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