Esorfranki wins court appeal over corrupt pipeline tender

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Roy Cokayne

Esorfranki, the listed civil engineering group, has successfully appealed against a North Gauteng High Court judgment on its application to review a corrupt R217 million pipeline tender in the Mopani district municipality.

The appeal court overturned a 2012 judgment by Judge Elias Matojane that the Tlong Re Trading SMN joint venture should continue carrying out the tender despite his ruling that the process was unlawful.

Cycad Pipelines, another bidder, was party to the appeal.

The tender involved the construction of concrete reservoirs and a welded steel bulk pipeline between the Nandoni dam in Thohoyandou and the Nsami water treatment works in Giyani in Limpopo. It was awarded to Tlong Re Trading SMN joint venture, comprising Tlong Re Yeng Trading and Base Major Construction.

Judge Matojane found the joint venture’s submission did not comply with bid specifications, the joint venture was guilty of fronting, and the municipality’s decision was motivated by bias and bad faith.

These findings were based on, among other things, the fact that the joint venture failed to comply with the required construction grading; failed to submit some of the required information; and members of the joint venture made false representations in their submission.

The high court had found the joint venture was used as a front because Tlong Re Yeng was established only after publication of the tender invitation and a week before it was submitted; it had no assets, employees or income; it did not conduct business when the tender was submitted; it did not exist at the address given in the tender documentation, which was a residential house with a few pieces of furniture; and Tlong Re Yeng’s sole member was an employee at an unrelated business.

The Supreme Court of Appeal set aside with costs the order of the high court to allow the continuation of the contract and declared the contract entered into between the municipality and the joint venture void.

It added that the first high court order that the award was unlawful was undermined by its order that the joint venture should continue the work.

The Mopani municipality was ordered to approach the Department of Water Affairs within seven days to request the department to, among other things, take steps to determine the extent of the works necessary to perform remedial work and complete the construction of the pipeline and other works as contemplated in the tender for the purposes of publishing a tender. The department was ordered to manage the new tender process in its entirety.

The Supreme Court of Appeal ruled that Esorfranki acted reasonably and was justified in launching the review application and there was no reason for it to be deprived of costs

It ordered the Mopani municipality, the joint venture, Tlong Re Yeng Trading and Base Major Construction to jointly pay the costs of the review application by Cycad Pipelines.

Esorfranki’s appeal against the high court order that it pay the costs of the municipality’s lawyer was dismissed.


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