A Limpopo businessman is suing the Special Investigating Unit (SIU) and the Fetakgomo Tubatse municipality for R1.26bn for reputational damage his company suffered after it was accused of inflating prices in an electrification tender.
In papers filed by Lufuno Mphaphuli, director and founder of Mphaphuli Consulting, in the Polokwane high court, the businessman argues that the two institutions acted unlawfully during an investigation by the SIU that was ultimately submitted to the president.
Mphaphuli Consulting started doing business with the municipality when it was still called the Greater Tubatse municipality.
Greater Tubatse local municipality merged with Fetakgomo local municipality to establish Fetakgomo Tubatse local municipality in August 2016.
Among other responsibilities, Mphaphuli Consulting was tasked with engineering, design, procurement, construction and management services to assist the municipality in expediting the electrification of households, with the goal of achieving universal access.
The project design and individual household cost estimate were submitted to Eskom for approval. The budget for the project was based on Eskom's pricing for similar projects in the area.
The costing of R16,000 per household for Operation Mabone was benchmarked against and aligned with Eskom's electrification costing in the Greater Tubatse municipality.
After receiving approval from the National Treasury, the Greater Tubatse municipality asked for funding from the department of mineral resources & energy (DMRE).
The project was to be 99% funded by the DMRE and the municipality would carry 1% of the cost.
On March 2 2015 the scope of the project was set at R326.49m which was for 19,178 households in 35 project areas.
The DMRE committed to grant allocations of R66m for 2014/15, R70m for 2015/16 and R80m for the 2016/17 financial years.
In the court papers, Mphaphuli said during implementation there were delays in the payments, but his company successfully compelled the municipality to pay through the court process.
On August 1 2014 the president signed a proclamation for the SIU to investigate the municipality for maladministration and unlawful expenditure after the auditor-general's reports of 2010/11 and 2011/12 financial years, which preceded the contract in question.
The proclamation mandated investigations into maladministration, unlawful expenditure and irregular transactions spanning from March 2004, the court papers said.
Mphaphuli said the SIU investigation did not include the Mphaphuli Consulting contract because the investigation was initiated after the auditor-general's reports of 2010/11 and 2011/12 financial years, which preceded the contract.
However, in its report submitted to the president in September 2019, the SIU stated that the mayor and municipal manager requested the investigation of the Mphaphuli Consulting contract, Mphaphuli said in the court papers.
“It is evident that the SIU's investigation of the first plaintiff [Mphaphuli Consulting] and its contract with the first defendant exceeded the scope of Proclamation R52 of 2014 for the Greater Tubatse municipality, which was limited to investigating the conduct of municipal officials and employees within the specified time-frame and matters outlined in the schedule,” Mphaphuli said in his papers.
In June 2017, Mphaphuli complained about this move to the public protector but this was rejected.
In July 2020, City Press published an article alleging there had been doubling of prices and tampering with tender documents and how a Limpopo municipal official siphoned off R160m.
When asked by the journalist whether the alleged tampering was investigated under the existing proclamation, the SIU allegedly said investigations were complete and the final report was submitted to the president in October 2019.
Mphaphuli argues that the report prepared by the SIU was unlawful.
“The report underscores a fundamental breach of the principles of natural justice, particularly the audi alteram partem rule, which requires that both parties be given a fair opportunity to be heard. The SIU's actions contravened the first plaintiff's right to procedural fairness by failing to consult or inform them of the nature of the allegations under investigation during the probe,” Mphaphuli argued.
Mphaphuli argues that the SIU’s media statements and social media posts based on the report submitted to the president caused irreparable reputational damage to the business and himself.
He said the SIU finalised its report with adverse findings against his company without affording him an opportunity to provide his side of the story.
Mphaphuli said the SIU statement misrepresented the facts as it claimed that his company overcharged the municipality by R73m.
Mphaphuli Consulting wants the court to declare that the municipality failed its contractual obligations and the SIU acted out of its legal authority when it investigated the dealings of his company with the Fetakgomo Tubatse municipality post-merger.
Mphaphuli is claiming R1.26bn for loss of income suffered by his firm.
SIU spokesperson Kaizer Kganyago declined to comment on the court application.
“We do not comment on court processes. This matter is before court. Let us not pre-empt the court,” Kganyago said
