Суд признал незаконными контракты на строительство жилья в муниципалитете eThekwini на сумму 30 млн рандов

The Special Investigating Unit (SIU) has welcomed a Special Tribunal ruling declaring low-cost housing contracts – worth some R30m – awarded to three service providers in the eThekwini Metropolitan Municipality as unlawful and unconstitutional. Image source: Sperring Geoffrey – 123RF.com The three companies, Woodglaze Trading (Pty) Ltd, Madupha Business Enterprise CC and Ready Homes CC, were appointed to develop the housing units in the municipality; however, an SIU investigation found that they “unlawfully benefited” approximately R29m allegedly due to procurement irregularities at the municipality. “The matter stems from a 2000 resolution by the eThekwini Metropolitan Municipality to use vacant sites in Phoenix for affordable housing for first-time homebuyers in lower- and middle-income groups under its Human Settlements Infill Housing Programme [MHSIHP]. “The municipality intended to sell vacant serviced land to service providers for R30,000 and bulk sites without municipal services for R100,000, excluding VAT. The service providers would develop the sites into residential dwellings and sell them to beneficiaries approved by the Municipal Housing Department. “On 5 September 2002, the municipality advertised for service providers to take over and develop 130 sites within two years,” the SIU said. Appointment irregularities The SIU’s probe found that Madupha Business Enterprise and Ready Homes were “appointed and continued participating in the programme without prior public advertisement, consideration and recommendation by a Bid Evaluation Committee (BEC), or Bid Adjudication Committee (BAC)”. “Woodglaze Trading’s continued participation was similarly not reviewed in accordance with the statutory framework or subjected to a public procurement process. “The municipality subsequently amended its appointment letter to allow Woodglaze Trading to take over a house previously allocated to Universal Property Development, which had failed to perform. “The investigation further established that Madupha Business Enterprise and Ready Homes were originally subcontractors to Sahamba Construction, the successfully appointed service provider, and that the terms of their participation and allocation of sites were negotiated and arranged with parties within the municipality,” the SIU said. Illegitimate and unauthorised sales Furthermore, the investigation uncovered that the three companies sold properties contrary to the programme’s objective by selling properties to unapproved buyers who did not meet the income or first-time homebuyer eligibility rules. Added to that, some sites were also misused for unauthorised commercial developments like shops and business parks, with service providers pocketing the sales revenue. “In some instances, properties sold by the municipality for R34,200 were subsequently sold by the service providers for amounts ranging from R350,000 to R9m. “For example, a stand situated at 155 Canehaven Drive was sold by the municipality to Woodglaze for R21,090 and subsequently sold to an unapproved beneficiary for R9.54m. Woodglaze unlawfully benefited from the MHSIHP to the value of R25,321,099, Madupha Business Enterprise R2,256,894 and Ready Homes R1,563,428,” the SIU explained. The Tribunal ruled that: No debatement of account or disgorgement order be made at this stage, meaning there is no immediate repayment order. The three service providers may complete dwellings already commenced at the date of the judgment and sell completed dwellings in accordance with applicable law. Service providers are prohibited from commencing construction of any new dwellings under the invalid arrangements. Should eThekwini wish to continue developing further dwellings under the programme, it must institute a lawful procurement process compliant with the Constitution, the MFMA, the applicable supply chain management framework and its own procurement policies. Where any of the three service providers has paid for undeveloped sites and concluded contracts with third parties, they may continue completing buildings on those sites. Where sites remain undeveloped and have not been sold to third parties, the respondents may place further evidence before the Tribunal for consideration of just and equitable relief. “The SIU is empowered by Proclamation R.9 of 2021 to probe allegations of maladministration, fraud, and improper conduct within eThekwini Metropolitan Municipality. “The SIU remains committed to protecting public resources, advancing clean governance, and reinforcing constitutional values in the management of State contracts,” the unit stated. SAnews.gov.za is a South African government news service, published by the Government Communication and Information System (GCIS). SAnews.gov.za (formerly BuaNews) was established to provide quick and easy access to articles and feature stories aimed at keeping the public informed about the implementation of government mandates. Go to: http://www.sanews.gov.za