Gauteng Human Settlements dept. ordered to settle R12m bill dating back to 1990s

2019-03-16 20:40
Public Protector Busisiwe Mkhwebane. (Antonio Muchave, Gallo Images, Sowetan, file)

Public Protector Busisiwe Mkhwebane. (Antonio Muchave, Gallo Images, Sowetan, file)

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A payment dispute involving over 40 small businesses - and which has dragged on for almost two decades - looks set to be finalised in the next 30 days, after the Public Protector recently ruled that the Gauteng Human Settlements Department must pay the contractors a total of R12m for work done on a low-cost housing project in Alexandra, Johannesburg, in the late 1990s.

Public Protector Busisiwe Mkhwebane ruled in favour of 42 of 45 companies in a December 2018 report.

Mkhwebane's office detailed the outcome of the investigation and its directives in a series of tweets on Friday.

The Public Protector said Gauteng Human Settlements MEC Uhuru Moiloa has assured her that his department will settle with all the affected parties in line with the directives set out in Mkwhebane's report.

The businessman's company and 44 others are owed amounts ranging from R400 to R900 000.

The pensioner, who founded his business in 1990 after resigning from a leading construction company, told Mkhwebane that some of the people who were waiting to be paid by the provincial government may even have died while waiting for justice.

He lodged the complaint in 2013 on behalf of his company and those of his colleagues. Three of the other companies subsequently withdrew from the case. In the complaint, he alleged that the department awarded them a tender to build houses in Alexandra in the late 1990s.

"He complained that they approached the department a decade later over unpaid balances. Several other attempts were made to secure payment from the department. When they turned to the Public Protector, 13 years after they first approached the department, there'd been no payment.

"This, the man alleged, was despite then Gauteng Premier, Nomvula Mokonyane, undertaking to settle the debt," said the Public Protector's office.

After investigating alleged maladministration and undue delay by the department to pay the complainants, Mkhwebane found that the man and his colleagues' claims were substantiated.

Contraction relationship

Evidence showed that there existed a contractual relationship or agreement between 42 of the 45 companies and the department.

Although neither of the two parties could produce signed copies of the contract, acceptance letters and handover of houses certificates formed the basis of the contraction relationship concerned.

"Information received from the complainants about the number of houses built by each of them and the outstanding balance owed them was found to be contradicting that of the department," the office said.

The complainants could not provide the Public Protector with sufficient supporting documents to substantiate their claims. Only a report by the Gauteng Audit Services, which contained a number of discrepancies in relation to the balances owed to some of the complainants, could be relied upon.

The report had been commissioned by the department.

"Although there were cession agreements signed by some complainants, the Public Protector found contradictory information from both parties regarding the implementation of the agreements. The department, without producing evidence, said it had purchased building materials for the complainants, who also, without proof, said they bought their own materials.

"It was found that the department failed to manage the contract or preserve audit and financial records in breach of record management laws. The department was further found to have failed to properly manage the project, financially prejudicing the complainants," the chapter nine institution said.

The failure to pay the complainants, which was in contravention of the public finance management law, was found to have affected the cash flow positions and sustainability of the businesses concerned, which fitted the definition of small, medium or micro enterprises.

This was found to amount to maladministration and improper conduct as contemplated in the Public Protector Act and the Constitution, respectively.

As a remedy, Mkhwebane directed the Head of Department (HOD) to effect payment of outstanding amounts to the complainants within 30 days of the report.

The HOD was also directed to appoint a quantity surveyor to conduct an assessment or audit of work done and the amounts payable, if any, in the case of nine of the complainants.

This too had a 30-day deadline.

Payment was to be within 15 days of receipt of the surveyor’s report.

"Any dispute between the parties shall not affect the department’s obligation to effect payment of the audited amounts within the stipulated timeframes. Should any of the complainants dispute the audit report regarding amounts due and payable, such dispute may be referred for arbitration. The arbiter must be appointed by the chairperson of the Johannesburg Bar Council," she said.

Read more on:    public protector  |  busisiwe mkhwebane  |  pretoria  |  housing

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