R900m housing tender stopped

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Published Oct 26, 2015


Durban - A Pietermaritzburg businessman has been granted an urgent interdict stopping the Department of Human Settlements and the Kokstad Municipality from signing a housing contract with seven construction companies and paying out R90 million, arguing it was a corrupt deal.

Michael Revie, the owner of Beekman Construction, said in papers before the Pietermaritzburg High Court on Friday that his company was among the winning bids for the R900 million Shayamoya Housing Project in Kokstad.

However, he recently learnt that other contractors were awarded this tender, allegedly without submitting bids.

He provided the court with copies of the winning companies’ letters of award, which he had obtained from an employee at the Human Settlements Department, who felt these awards were “highly irregular and probably the product of corruption”.

No one from the Department, the Kokstad Municipality, the KwaZulu-Natal Premier’s office or the seven construction companies, who were all cited as respondents, was present in court on Friday when Judge Trevor Gorven granted an interim order.

This order stopped the award of the tender and the R90m payment, that was supposed to be made last week, pending a review of the award that is to be brought within 30 days. The respondents have until later this week to show the court why this order should not be made final.

When the Daily News contacted the department for a response, Human Settlements MEC, Ravigasen Pillay, replied yesterday saying their initial investigation found Revie was “misled by a scam”.

“The so-called letters of appointment are fake. We will provide more detail at the court hearing (later this week),” Pillay said.

Anitha Chetty, Revie’s attorney, had also submitted an affidavit to the court explaining her difficulty in trying to serve some of these seven companies with Revie’s urgent application court papers. Some of them, she said, did not have contact details listed or correct contact details listed.

These companies had registered addresses in KwaZulu-Natal, the Free State, Gauteng and Limpopo.

According to Revie, he issued a tender for the construction of houses in the Shayamoya area in the Kokstad Municipality in 2012.

The project was titled Shayamoya Rural Housing Project Kokstad and was apparently awarded to various contractors, including Revie.

He said the department later informed the successful tenderers that the tender was being recalled because of a lack of funds and would be re-advertised.

However, last week Revie learnt from a colleague that the project was going ahead and the colleague’s company was one of the companies awarded a contract.

“This came as a big surprise to me. I have kept track of all housing tenders and paid particular attention to this tender as (I) had been a successful tenderer. I had not come across any advertisement of a new tender. I was not contacted by (the department or the municipality) and should have been informed if the project was going to be re-advertised for tender,” his affidavit read.

He contacted the department and spoke to an employee who was willing to provide him with information, but insisted on remaining anonymous, “fearful of being regarded as a whistle-blower and being physically harmed”.

This employee, Revie said, told him the seven companies were awarded the tender without it being re-advertised.

According to the letters of award he obtained, these companies were each to build 1 000 houses of 40 square metres at a cost of about R158 800 each.

Revie pointed out that the department’s housing policy states the housing subsidy for such a house is R110 947.

He said he learnt that all the successful awardees were to meet last Thursday to sign the contract with the department and the municipality.

He said R90m, 10% of the contract price, was also to be paid, with the site handover which was expected to have taken place either last Friday or today.

Revie was advised by the department employee that “it appeared the transaction had all the hallmarks of a corrupt relationship”.

Revie also argued that such a tender could not be lawfully awarded unless there was a proper tender process.

Pillay said their legal counsel was not in court on Friday as they were not given adequate notice, but would be later this week.

His office said the tender for phase three of the housing project was awarded about four months ago to the successful bidder.

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