Firm accuses SIU of being ‘hired gun’ in R326m contract dispute

An electrical engineering company has given the Special Investigating Unit (SIU) an ultimatum to withdraw its court application that aims to cancel its R326 million contract with a Limpopo municipality or face a lawsuit.

Mphaphuli Consulting chief executive officer Lufuno Mphaphuli, has accused the SIU of being a “hired gun” after it went to the Polokwane High Court to stop the remainder of the company’s R326 million Operation Mabone Project contract to electrify 55 rural villages in the Fetakgomo Tubatse Local Municipality in Burgersfort.

The SIU went to court in 2017 after former executive mayor Maudu Phokane and municipal manager Nontuthuko Busane asked the unit to investigate Mphaphuli Consulting under a 2014 Presidential Proclamation which did not involve the company but aimed to investigate maladministration at the municipality.

This is why Mphaphuli is questioning and disputing the SIU’s litigation.

Before the SIU’s court action, Mphaphuli had been fighting the municipality over non-payment of work done and the last straw was in 2016 when he had the municipality’s assets and bank accounts attached to force the payment of R41 million.

The municipality subsequently failed in its attempts to appeal and overturn the order issued in the Polokwane High Court.

City Press has seen a letter that Mphaphuli’s lawyer, Sizwe Snail ka Mtuze, has written to the state attorney who represents the SIU.

“We respectfully submit that our client is being litigated against in bad faith by the SIU and not based upon any valid claim in law but because of a vendetta that it has against our client for being previously successful in the litigation against the municipality for having failed to pay for services rendered,” Mtuze said.

“Our client instructs us that in an interview conducted on August 1 2017 a certain Mr J le Roux of the SIU disclosed that in actual fact the investigation was triggered by a request by the mayor and the municipal manager on March 10 2017. It is clear that the investigation was not based upon any proclamation but mala fide intentions of the mayor and municipal manager.

“It is disappointing to note that an important office such as the SIU, which was created to combat serious crimes relating to corruption and maladministration, is being used for personal vendettas,” Mtuze wrote, adding that Mphaphuli had incurred losses of “good name” and “reputation”.

However, SIU spokesperson Nazreen Pandor denied that the unit was a hired gun.

She said it acted according to the terms of the Presidential Proclamation and was investigating claims that Mphaphuli Consulting had overcharged the municipality by R70 million.

Despite this pending legal dispute between the SIU and Mphaphuli Consulting, the municipality appointed Eskom to finish the work and the power utility will spend R167 million to electrify 8 430 households in eight villages.

This is too risky, Mphaphuli said, as his company’s contract was not lawfully cancelled.

“This raises a lot of questions. If the contract between the municipality and my company is cancelled lawfully, why is the SIU going to court to have it cancelled? Secondly, if the SIU fails in court, is the municipality aware of the financial implications in terms of damages?” he asked.

Pandor said the municipality was better placed to answer why it terminated the contract and appointed Eskom pending the outcome of the SIU application.

“The SIU has taken the said company to court on behalf of the municipality because its services were obtained irregularly and our findings uncovered that there was overcharging involved. The case is still ongoing and it involves more than R70 million.

“The investigation into the affairs of the Fetakgomo Tubatse District Municipality is ongoing. Hence the investigation of Mphaphuli Consulting and its involvement with this municipality,” Pandor said.

Fetakgomo Tubatse spokesperson, Rachidi Ngoato, said Eskom had already finished work at Koppie village to the tune of R5.4 million and next in line was Dibakwane village.

“The Mphaphuli Consulting matter was in no way close to the Presidential Proclamation but on alleged maladministration and irregular spending,” Ngoato said.

However, City Press has seen the SIU’s letter to Mphaphuli which states that the investigation was based on the 2014 proclamation. Limpopo premier, Stanley Mathabatha, placed the cash-strapped municipality under administration last November.


Has the Special Investigating Unit overstepped its authority by taking Mphaphuli Consulting to court?

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