Limpopo municipality slapped with record R500m lawsuit

Fetakgomo Tubatse Local Municipality logo.
Fetakgomo Tubatse Local Municipality logo.

An engineer has slapped a Limpopo municipality with a record half a billion rand claim in damages for cancelling a contract following breaches by the municipality that include withholding payments for work done.

Lufuno Mphaphuli, the owner of Mphaphuli Consulting Engineers, also accused the Fetakgomo Tubatse Local Municipality in Burgersfort of costing him future contracts with other municipalities after asking the Special Investigating Unit (SIU) to investigate his company without a Presidential Proclamation.

The R506.5 million claim, filed in the Polokwane High Court last week, follows litigations – mainly concerning non-payment for work done – the company has successfully instituted against the municipality since it was appointed in 2014 for the R326.4 million project to electrify 20 000 households in 35 villages.

The project, dubbed Operation Mabone, had the full support of the then Department of Energy and National Treasury but some time along the way, when Mphaphuli allegedly ignored veiled overtures to bankroll individual ANC politicians and officials in the Sekhukhune region, he fell out of favour and concerted attempts were then made to kick his company out. 

For advising the municipality to appoint Eskom because they say my contract is invalid means that they have become the judiciary.
Lufuno Mphaphuli

The municipality’s former mayor, Johannes Phokane, is on record telling a local radio station in 2017 that the “project was too big to be given to one man”.

Mphaphuli’s company had implemented a similar project in Thulamela Local Municipality where 13 000 houses were electrified before the Fetakgomo Tubatse administration asked him to assist with speedy electricity connections in the municipality’s villages.

Municipal officials started frustrating Mphaphuli by withholding payments for work done. 

The last straw appears to have been an incident in 2017 when Mphaphuli approached the Polokwane High Court to demand a R41.2 million payment for work done that the municipality was withholding.

The court ruled in Mphaphuli’s favour and he had to attach the municipality’s two investment accounts before he was paid. 

The municipality’s application in the Supreme Court of Appeal failed. 

Former municipal manager, Johannes Mohlala, tried cancelling Mphaphuli’s contract without a council resolution and after failing, he and Phokane asked the SIU – which has a proclamation to investigate the municipality for maladministration – to also set its sights on the company. 

The SIU has since applied to the Polokwane High Court to cancel Mphaphuli’s contract but before the case was concluded, the municipality appointed Eskom and other service providers to finish off the remainder of the households in the engineering company’s contract, which is still valid. 

READ: Bankrupt municipality appoints Eskom to electrify villages without following bidding processes

The SIU also claimed that the company overcharged by R71 million on the project.

According to Mphaphuli’s court papers Fetakgomo Tubatse Municipality’s conduct and the SIU’s investigation has cost the company electrification contracts in KwaZulu-Natal’s Mtubatuba, Jozini, Nongoma and Abaqulusi worth R1.5 billion where the company would make a profit of about R281.3 million.

“Due to the negative, damaging, unlawful mistruths spread by the first defendant (Fetakgomo Tubatse) relating to the parties’ professional relationship, the first plaintiff’s (Mphaphuli Consulting) business operations and prospects have been hampered,” reads the papers.

“The plaintiff’s ability to conduct further business with potential clients is impaired or negatively affected as a result of the circumstances of this case as the narrative created by the defendants in the public domain for the past two years is that the plaintiffs are potentially corrupt, regardless of the lengths the plaintiffs are willing to go to clear their names and litigate successfully against the defendants.”

The municipality’s spokesperson, Thabiso Mokwena, did not respond to the matter since it was brought to him on February 13.

SIU spokesperson, Kaizer Kganyago, indicated that the corruption-busting unit had not yet received Mphaphuli’s papers.

Mphaphuli wants the court to order that:

• Fetakgomo Tubatse pay contractual damages in the amount of R72.8 million;

• The municipality pays consequential damages of R22.4 million and VAT;

• Fetakgomo Tubatse and the SIU pay a combined loss of revenue in the KZN projects amounting to R281.3 million;

• Both the municipality and SIU pay Mphaphuli Engineering R100 million suffered to its right to goodwill, dignitas (earned reputation, moral standing, ethical worth and respect) and fama (reputation); and

• Payment of R30 million to Mphaphuli for the damage suffered to his right to dignitas and fama.

Mphaphuli said that it seemed that the SIU’s powers were unbridled.

“For advising the municipality to appoint Eskom because they say my contract is invalid means that they have become the judiciary. There’s no ombud to watch over them and in my case they don’t even have a proclamation to investigate me and my company. They’re basically guiding me into liquidation. The SIU’s powers need to be looked at,” Mphaphuli said.

The SA National Civic Organisation chairperson in Sekhukhune, Jackson Tjatji, said that many villages were still not electrified since Mphaphuli Engineering was stopped from continuing with its work.

“Communities were happy with the company’s work. Our plea is that politicians must stop interfering with the project and Mphaphuli must come and finish his work,” Tjatji said.

“Whenever we ask why the municipality stopped the company, we don’t get any answer,” he said.

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