Cape Town - An “amicable” settlement has been reached between the City of Cape Town and the professional team appointed to design and build Cape Town Stadium, with the city paying R52 million less on the contracted amount of R637m.
But mayor Patricia de Lille may have to explain why she released a statement about the agreement, just hours after the matter was discussed confidentially during a closed session of Wednesday’s council meeting.
The details of the settlement agreement were placed on the “green” agenda, meaning that it was a confidential matter that could not be discussed with the media or the public present.
Speaker Dirk Smit moved the item to the start of the meeting and the public and media galleries were asked to leave the chamber for almost half an hour so that councillors could deal with the matter.
However, just a few hours later, the mayor’s spokesperson released a media statement with details of the settlement agreement.
ANC councillor Tony Ehrenreich, speaking from the council chamber, said the mayor had violated council rules by putting a confidential matter into the public domain, via the media.
“This is an official complaint in terms of the rules of the House. The mayor is out of order.”
He said later in a statement that the mayor had pushed the item through council to hide something.
“This supposed confidential agreement between the city and the professional services hides many irregularities, which includes a real danger that the professional services company had also been guilty of collusion - and this must be investigated.
“By releasing confidential information to the media, the mayor’s conduct is also in violation of the rules of council. The extent of her public statement is clearly an attempt at damage control for inappropriate behaviour of the City of Cape Town, with professional services.”
Smit said he could not decide if the mayor was out of order or not, as he had not seen the media release. But he did confirm that he had made an earlier ruling that the document was confidential. “I can give you my assurance that I will investigate the matter.”
According to the statement, the completion of the stadium had to meet a “pressing deadline and severe cost escalation”. The city entered into individual contracts with the professional team, which would have amounted to almost R640m.
De Lille said it was agreed that the city would pay a professional fee of R585m including disbursements for the stadium and its surrounds. This fee was 16 percent less than originally negotiated between the parties.
“The city is pleased that the dispute has been settled with the various disciplines constituting the professional team. The settlement is in the city’s interests and avoided the long, costly and risky process which would have confronted both parties through the arbitration appeal and the courts.”
She said the final construction cost of the stadium, as determined by the professional team’s quantity surveyor, was R3.64 billion.
The team also agreed to support the city and its legal team in quantifying the cost of the bid rigging by construction companies involved in the construction of the stadium.
The Competition Commission found that 15 construction companies were involved in price fixing and tender collusion for the World Cup stadium tenders. Two of these companies, Group Five and Wilson Bayly Holmes-Ovcon (WBHO), were responsible for building the Cape Town Stadium. Although the companies involved paid a combined R1.5bn in fines, the city is lodging a civil claim to recoup some of its costs.
“The city is determined to claw back damages... from the construction companies and is currently preparing a claim against the construction companies involved,” said De Lille.
She added that the agreement did not prevent the city from pursuing additional claims in terms of its professional indemnity insurance policy.
Deputy city manager Mike Marsden has said design changes to the stadium made the construction more costly. The city had been advised it could claim on insurance for design changes made during construction.
Cape Argus