Contractors fight back in SIU’s R2.2bn water lawsuit

Community members fill water buckets from a communal tap in a village outside Senwabarwana in Limpopo. Picture: Leon Sadiki
Community members fill water buckets from a communal tap in a village outside Senwabarwana in Limpopo. Picture: Leon Sadiki

Two of the companies named in the Special Investigating Unit’s R2.2 billion lawsuit will defend themselves against the court action, but say they have yet to receive any summons.

In court papers filed on Monday, the SIU wants three companies – LTE Consulting, Khato Civils and South Zambezi – to repay the state the R2.2 billion they were paid by the water and sanitation department for the Giyani water project.

Former president Jacob Zuma asked the SIU to investigate the project following a series of reports in City Press that exposed widespread wrongdoing.

In the papers before the Polokwane High Court, the SIU also asked the court to declare the 2014 contract unconstitutional, unlawful, invalid and null and void.

Now Khato Civils and South Zambezi – companies to which LTE ceded the massive tenders – are set to challenge the SIU in court, saying they completed 95% of the work.

In August 2014, the Lepelle Northern Water board appointed LTE, on a turnkey basis, to refurbish Giyani’s water and waste water treatment plants for R92 million. The water entity later piled more projects on to the company, bringing the total value of the contracts first to R502 million, and later to R2.2 billion. LTE, which didn’t have the capacity to carry out either the engineering or the construction, ceded all the contracts to Khatho Civils and South Zambezi.

Following a series of reports in City Press about irregularities in the project, in 2016 Zuma appointed the SIU to investigate these irregularities, including the misappropriation of funds.

Responding through a statement, Khato Civil’s chief executive Mongezi Mnyani said: 

We cannot wait to have our day in court. We believe this is the greatest opportunity, once and for all, to set the record straight and clear our name.

Khatho Civils and South Zambezi, he said, were appointed by LTE Consulting to conduct designs and carry out the construction of water valves the laying of 325km water pipeline.

“For the record, Khato Civils involvement in this project is a subcontractor who was duly appointed by the main turnkey developer, LTE, who was appointed by Lepelle Northern Water. Khato Civils believes that all matters or queries relating to the validity or lack thereof, of the contract is a matter to be addressed by the water and sanitation department, Lepelle Northern Water and LTE,” Mnyani said.

“Khato Civils was merely subcontracted by LTE to perform the work based on our capacity, track record and experience to perform works of this nature as a grade 9 [Construction Industry Development Board] maximum grading.”

Mnyani said the company was appointed in 2014, and no one had ever questioned the quality of its work.

“In terms of the work that has been done, which to date represents 95% completion, over a three-year period, there has never been questions or doubts over the quality of works nor value for money,” he said.

“Our work has been world-class, quality work that has been certified by several independent project engineers from the water and sanitation department, Lepelle Northern Water, Ernest & Young (Later Fumile Consulting) and LTE.”

All invoices submitted, he said, were approved by engineers after verifying the quantity and quality of the work.

“All our payments have been subjected to the rigorous evaluation and vetting process highlighted above before any payment was made to Khato Civils,” he said.

Last month City Press reported that Khato Civils had stopped work on the project, claiming that the department had not paid it since the beginning of the year. This has resulted in the project incurring significant delays. The company has not returned to the site, said Mnyani, adding that he was a victim of the water and sanitation department.

“Throughout this project, Khato Civils has experienced serious breach of contractual provisions through extreme late payments by the water and sanitation department and Lepelle Northern Water, which eventually led to our withdrawal from the project and retrenchment of over 500 employees on September 30 2018,” he said.

“This unfortunate decision also affected over 20 local subcontractors in Giyani area who were subcontracted and paid 40% of the R2.2 billion contract. What remains to Khato Civils was value for materials used, labour, plant and diesel, 10% retention fees held by Lepelle Northern Water, 5% implementing agency fees paid to Lepelle Northern Water, 15% project management and engineering fees paid to LTE, 14% (15%) for VAT paid to Sars.”

If the SIU had any legally sound grounds to cancel the contract, it should have done so in the past four years, said Mnyani, adding that the department of monitoring and evaluation had been monitoring the project on a quarterly basis.

“The parliamentary portfolio committee on water and sanitation paid the project a visit and they expressed satisfaction with it,” he said.

Water and sanitation department spokesperson Sputnik Ratau declined to respond to allegations made by witnesses to the SIU that the department’s infrastructure deputy director-general Zandile Mathe was responsible for handing over all the work to LTE without following tender regulations.

Lepelle Northern Water chief executive Phineas Legodi directed all media queries to the department.

LTE Consulting’s chief executive Thulani Majola said the SIU was yet to serve them with the summons.

Sipho Masondo
City Press
p:+27 11 713 9001  e:

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