Cape may write off R4.4m debtComment on this story
Cape Town - The provincial government is expected to write off a R4.4 million debt owed by two construction companies that were awarded contracts to upgrade the Valkenberg Hospital admissions unit and the Western Cape Nursing College but failed to complete the work.
The contracts date back to previous administrations when Marthinus van Schalkwyk was premier and partly during Ebrahim Rasool’s term.
Briefing the provincial standing committee on public accounts last week, about the possibility of retrieving the debt, departmental head Professor Craig Househam said legal opinions were still outstanding and there was little hope of recovering the money.
Explaining the processes involved in the awarding of the contracts, Househam said that while funds were allocated within the health budget vote for infrastructure, the implementing agent “by decision of the provincial government is the department of Public Works”.
He said this meant the Health Department delivered briefs for facilities that either needed upgrading, renovating or were built as new and the Department of Public Works handled the process to its conclusion.
Househam conceded that it was an anomalous situation because he held the budget and as the accounting officer he was responsible.
He said cash flow and capacity of the contractors to fulfil a contract were some of the big issues. The contractors were put on notice, the contracts were terminated and new contractors had to be appointed to complete the project.
Asked by ANC MPL Siyazi Tyamtyam about any undue pressure placed on the administration around the awarding of contracts, Househam said he had never been asked to influence processes or pressured by politicians into awarding contracts in his 13 years with the department.
“I’ve been the head of Department of Health since 2002 and I’ve never been put under direct pressure in this provincial government to interfere in the contract process. If I had I would have refused,” he said.
Househam said in the case of Valkenberg, the company Peverett was the contractor and Hope of Africa the guarantor.
A summons was drafted in September 2007 for a claim of R1m but the matter was still with legal advisory services that were to provide an opinion on the matter.
The second project is the Western Cape Nurses College upgrade which was awarded to Zacon.
Househam said from the beginning there were concerns about the capacity of the contractor to fulfil the needs of the contract and after several attempts by Public Works to support Zacon it was decided to terminate the contract.
The company and its owner’s estate were eventually sequestrated.