Contracts valued at more than R300m are central to Special Investigating Unit's (SIU) multiple litigations against businessman Mcebisi Mlonzi's company Kwame Capital.
Kwame Capital has been embroiled in alleged unlawful hire-purchase contracts involving yellow fleet machinery and agreements with at least five municipalities mainly in the Eastern Cape.
The contracts involve the procurement of yellow plant and machinery in which Kwame Capital is accused of misrepresentations, mainly for claiming it owned the plant while the plant was leased to the company.
SIU spokesperson Kaizer Kganyago told TimesLIVE Premium they were awaiting two appeals that were “noted” after two favourable court judgments in R71.2m of contracts involving Mbhashe local municipality and a R92.4m contract with Amahlathi local municipality in Stutterheim.
The judgments related to the court ruling in favour of the SIU that the Special Tribunal has jurisdiction in hearing the matters relating to the contracts being declared unlawful and set aside.
The SIU is pushing to get public funds spent on paying Kwame Capital recovered.
“No [money has been recovered] ... these matters are still pending litigation before court or the special tribunal,” Kganyago said.
Mlonzi told TimesLIVE Premium that the withdrawal of fraud charges which were recommended by the SIU in the Amahlathi case showed that there was no case against him.
He also cited a matter involving the Ngqushwa municipality that ended in a settlement with the municipality paying his legal costs as an indication that there was no fraud in the deal which is similar to those that the SIU is investigating.
“These cases are similar, I can't win one case then lose the other because they are all the same,” Mlonzi said.
He accused the SIU of “failing in every respect” to prove their allegations and of dragging him to different courts including the Special Tribunal to “eat from my pocket”.
He said he has managed to deliver the plans to all the municipalities bar one as per the agreement signed with his company that the plant would be procured on a lease-to-buy basis and would be delivered after three years.
“The plant was transferred, and it's making roads in the Eastern Cape. With Amahlathi, [the plant was not delivered] it was because they did not follow the procedure. The contract was cancelled before the three years lapsed,” Mlonzi said.
Asked about the SIU's plan to recover in excess of R300m, Mlonzi said: “They won't recover anything, I'm sorry ... it's only where it's proven that I have charged more [where they can recover money].”
He said he was confident that at the end of all the litigation, which was before court, there wouldn't be any wrongdoing found against his company.
The pending matters before the courts or the Special Tribunal between Kwame Capital and SIU involve:
- a R71.2m contract with Mbhashe local municipality;
- R92.4m contract with Amahlathi local municipality;
- R75.5m with Alfred Nzo local municipality, and;
- R41.9m with Raymond Mhlaba local municipality
Kganyago said the contract involving Amahlathi was declared unlawful and void in October, granting the SIU a second shot at recouping about R92.4m paid to Kwame Capital.
“The matter was then remitted back to the court of first instance (trial court) to hear further evidence and arguments in respect of an appropriate order to be made ... determination of a just and equitable relief,” Kganyago said.
A full bench of the Makhanda high court declared unlawful and void the 2014 multimillion-rand hire-purchase agreement between Kwane Capital and Amahlati for which Mlonzi was paid more than R92.4m.
The matter stems from the multimillion-rand contract awarded to Kwane Capital for the lease of heavy plant and equipment to the municipality for three years.
The contract was awarded without going through the competitive bid process, but went through as a deviation.
An SIU investigation found Kwane Capital did not own the plant and equipment but was leasing it from Barloworld. The SIU ordered the municipality to cancel the contract and return the machinery to Mlonzi.
It was the SIU’s case that Mlonzi misrepresented that his company was the owner of the equipment. Kganyago said they were still awaiting a court date in the case.
In 2019, TimesLIVE Premium's sister publication DispatchLIVE reported that the SIU investigation found the Mbhashe municipality had awarded Kwane Capital a R106m rent-to-buy plant machinery tender despite it submitting a fraudulent tax clearance certificate.
Kwame Capital had allegedly stated that it was not in a joint venture when it bid for the multimillion-rand contract in 2015.
Three other companies quoted the municipality between R64m and R72m, with all their accompanying documents in order, but the bid adjudication and evaluation committees awarded the tender to Kwane Capital. More than R92m was paid to Kwame Capital.
The case involving the Alfred Nzo district municipality was at case management stage in the Special Tribunal, Kganyago said.
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