EThekwini: Company won't be paid after contract was terminated

2015-10-29 11:24
EThekwini Mayor James Nxumalo (The Witness)

EThekwini Mayor James Nxumalo (The Witness)

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Durban – The eThekwini Municipality has taken a decision to rescind payment to a company whose contract had been terminated, it said in a statement on Wednesday.

EThekwini Municipality spokesperson Tozi Mthethwa said the decisions to rescind two earlier decisions regarding payment to DKS Holdings, were taken during a full council meeting held on Wednesday.

Mthethwa said DKS Holdings was awarded a contract in 2005 worth R18.2m for housing accommodation for the Umlazi Glebelands Community Residential Unit. She said the company incurred penalties when work was not completed on time.

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“The contractor then approached the executive committee in 2007 regarding the penalties. The fees were waived so work could be completed.

“The contractor had been paid R15.3m for the work. The matter was brought to the attention of the Municipal Public Accounts Committee this year and was referred to the City Integrity and Investigations Unit (CIIU) to be investigated.

“Based on a report from the CIIU, the executive committee in September approved recommendations to return money (R2.4m) paid by the contractor. This decision was upheld in the full council meeting that month.”

However, Mthethwa said, new information emerged after this decision was taken and eThekwini Mayor James Nxumalo tasked the Legal Unit to determine a way forward in the matter.

According to Mthethwa, the Legal Unit said the executive committee waived penalties in 2007 on a once-off basis for work to be completed.

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However, she said the relevant department did not implement this decision; instead, the department put a condition that the company was to release to them a work programme in seven days.

“When this was not done, the DKS Holdings contract was terminated. On termination of the contract, the municipality wrote to Constantia Insurance Company, which had issued a surety bond in favour of DKS Holdings, requesting compensation for the company’s failure to perform on the contract. The insurance company subsequently paid the municipality R1.8m.

“The insurance company then had recourse against DKS Holdings and took judgment against them in 2008.”

Mthethwa said there was no legal basis for the municipality to make any payment to the company.

Read more on:    james nxumalo  |  durban  |  local government

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