R97m Tshwane flats scam

20/06/2012 This photograph shows the D-block of the dilapidated Schubart Park building in the city, which has been closed down by the municipality after it was declared unsuitable for human habitation. The block has been completely stripped of metal objects including window frames and door handles. Residents were removed last year following a violent stad-off with SAPS and the Tshwane Metro Police. Picture: Matlhodi Madibana

20/06/2012 This photograph shows the D-block of the dilapidated Schubart Park building in the city, which has been closed down by the municipality after it was declared unsuitable for human habitation. The block has been completely stripped of metal objects including window frames and door handles. Residents were removed last year following a violent stad-off with SAPS and the Tshwane Metro Police. Picture: Matlhodi Madibana

Published Dec 19, 2014

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Johannesburg -

The City of Tshwane has launched a court action to nullify its own R97 million tender awarded for the building of residential units for former residents of Schubart Park.

The city turned to the high court seeking an urgent interdict against Moholoholo Development Projects (Pty) Ltd.

It wants to restrain the company from transferring its property to any third party or further encumbering it, pending the declaration of the tender - awarded by the council in 2012 - as invalid.

This is to avoid a situation where the city is left with the empty vessel against which it will not be able to recover anything, municipal manager Jason Ngobeni said in court papers.

The order was granted.

But Moholoholo intends opposing the second part of the application that seeks to set aside the decision to award it the tender - and for the money to be paid back.

In the founding affidavit, Ngobeni said respondent Moholoholo unlawfully and in an irregular manner procured a tender for the purchase of buildings.

The contractor unlawfully and fraudulently received payment of R97m, he added.

The company was an empty vessel, Ngobeni said, from which the city would not be able to recover the money, as its only asset was immovable property in Clarina for which the city had paid millions.

The city said the company’s bid should not have passed the first stage as it was not accompanied by audited financial statements.

The available budget was R40m, but the bidder’s proposed selling price was R168m and thus should have been disqualified.

The location of the property was crucial to the tender - it had to be within the city centre to accommodate former Schubart Park residents. However, the property offered by Moholoholo was in Clarina, north of the city.

In addition, the company could not guarantee that it would be able to transfer the property to the city as it was registered in the name of an insolvent company.

“At the outset, I accept that certain city officials are involved in tender irregularities and fraud,” Ngobeni said.

“The officials are conduits of the fraud committed (against) the city. An internal investigation is ongoing.

“To avoid compromising that investigation, I do not intend to put blame on any particular city official at this stage.

“I do however disclose to the court the details of those officials who dealt with the matter.”

The names disclosed in the court papers include Dawid Cornelius Maree, Fredericus Franciscus Muller, Andrew Mphantji Chiloane and the registrar of deeds.

The matter has its roots in a tender advertised in 2012 in which the City of Tshwane intended to purchase residential property that complied with various specifications.

The property had to be zoned for residential use with bulk services and be able to accommodate a minimum of 350 residential units.

Ngobeni said no lease agreement existed between the city and Moholoholo, but money was paid. Investigations revealed serious irregularities in the tender process, he said.

Ngobeni submitted that the company was also implicated in irregularities related to the city’s integrated housing construction project in Ga-Rankuwa Unit 10.

The city also found that there were similarities between the published scope of work and proposals made by Moholoholo - as if the bid was tailor-made for the applicant.

Despite all this, in March 2012 the bid evaluation committee accepted the company’s proposal, having adjudicated the tender on the terms the city was looking for. These included a property within the city centre and at a budget of R40m.

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Pretoria News

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