The Free State roads department has entered into verbal in-principle settlements with a number of contractors, owed hundreds of millions of rand, despite having insufficient funds to immediately pay the full amounts.
Listed construction companies, including Wilson Bayly Holmes-Ovcon (WBHO), Basil Read, Raubex and Sanyati, have outstanding claims against the department for work completed on 23 road rehabilitation projects in the province awarded in early 2010.
The department said last week that it had reached “mutually agreeable settlements” with all but one of the unpaid contractors.
Contractors owed money by the department said they had been given the impression the department would be unable to immediately pay the full amount. Contractors would be paid a pro rata amount, based on the funds available to the department and the settlement amounts outstanding, with the balance paid in installments.
It is believed the department is working with the National Treasury to find a way to pay the contractors.
Zolile Walaza, a spokesman for the Free State police, roads and transport department, said on Friday that the department was still involved in negotiations with individual contractors and was therefore unable to divulge any information on the financial situation.
Makhoseni Msibi, the head of the Free State Transport Department, said last week that it hoped the process to find a solution to this matter “will be given an opportunity as the matter is almost near finality”.
Basil Read Holdings chief executive Marius Heyns said on Friday that the firm had an in-principle verbal settlement agreement reached earlier this month but denied a final settlement had been agreed.
Heyns said the agreement had been put in writing and submitted to the department for approval by its executive committee, but he had not yet received confirmation that it had been accepted. He said the offer and in-principle agreement with the department involved the payment of R155 million to the group for work done on two projects.
The group’s original claim was for R175m but it had made a discounted offer to the department. “We have taken a knock on the profit and on the interest on the amount owing, which was already written off in our previous financial year.
But he believed this was a better solution than going the legal route, involving lengthy court proceedings, and “to show some goodwill”.
“We want something in writing that they owe us the money. It becomes very frustrating because we have got commitments and have paid all our subcontractors and suppliers. It’s unfair,” he said.
Heyns said there were about 130 jobs losses relating to the two contracts because workers had to be laid off when work on the projects stopped.
WBHO chief executive Louwtjie Nel said it had a verbal agreement and wanted to see the final written agreement before commenting on it.
Nel said WBHO had various positive meetings “at the right levels” with the Treasury and the department in an effort to resolve the matter. He confirmed WHBO had also made a discounted offer in an attempt to reach a settlement.
Nel declined to disclose either the original amount owing or the value of its discounted settlement offer for amounts owing on its six projects.
Attempts to obtain comment from Raubex, which was initially owed about R150m, were unsuccessful.
Sanyati, which is owed at least R43m on one project and whose main operating subsidiary is now in liquidation, said earlier this month that it was excluded from the most recent discussions with the department on the settlement of claims.