Pretoria - Minister of International Relations and Co-operation Dr Naledi Pandor has lost a court bid to protect her department from incurring wasteful and fruitless expenditure stemming from a controversial multimillion rand land acquisition deal in New York.
Pandor had approached the High Court, South Africa, with a view to extricating the department from a contract it entered into with Simeka Group (Pty) Ltd, which formed a joint venture with Gupta-linked Regiments Capital. In court papers, Pandor is cited as the first applicant while her director-general and the department were named as the first and second respondents respectively.
Other respondents were Simeka-Regiments Joint Venture, Lamascene (Pty) Ltd and Serendipity Investments SA LLC.
The joint venture Regiments exited the project after the department raised concerns regarding the corruption allegations involving the company on October 11, 2017. The companies were contracted to design, construct, operate, maintain and finance a suitable office and accommodation for a diplomatic mission of South Africans in Manhattan. The successful bidder was essentially required to identify and procure land in New York for accommodation and offices for South African diplomats.
“The bidder would also have to design and develop the facilities as per the specifications of the department, maintain the property and act as the landlord,” said the court papers.
The legal move by Pandor was also seeking to nullify the awarding of the tender and to have companies involved in the project repay an amount of $9 million (about R130.68m) already disbursed by the department. She also wanted the court to set aside the Project Preparation Agreement concluded between the department and Lamascene (Pty) Ltd pursuant to the awarding of the tender to Simeka-Regiments JV. Lamascene was appointed by the joint venture as “a corporate vehicle on the South African end to execute the project on behalf of the department”.
On the other end, in the US, “and under the laws of Deleware, the Joint Venture incorporated Serendipity SA Investments LLC as the special purpose vehicle that would execute the project in the US”.
In court papers in correspondence dated October 16, 2017, the National Treasury advised the department that the appointment of Simeka was an irregularity. That was after the department had contributed $9m after Serendipity had identified the “project site” on March 28, 2017. “In terms of the Project Preparation Agreement, on March 31, 2017, the department provided Lemascene with $9m, of which an amount of $5m was to be paid for the deposit for the purchase of the land and the balance of $4m was to be used for preparatory work to be effected,” the court papers stated.
The department sought legal advice from senior counsel on February 7, 2018, regarding the deal.
On February 25, the counsel told the department the tender process was flawed and irregular. The court blasted the department for delays in launching a legal bid to review its decision on the tender awarding. “The conduct of the department is unacceptable. This is apparent from the fact that the National Treasury on January 26, 2018, actually placed the department on terms to take action in light of the irregularity they had determined. The department, in my view, was dogmatic when it did not heed the advice of the irregularity provided on October 16, 2017. In fact, it proceeded ahead as though the pronouncement by the National Treasury had not been made and that the department was correct in awarding the tender to Simeka,” the court said.
It found that the department “has failed to be open, responsive, forthright and accountable, as a State organ ought to be, which seeks a self-review”.
“In reality, what the department sought of this self-review was redemption from the stance that in awarding the tender to Simeka resulted in fruitless and wasteful expenditure. Thus, in my view, the only avenue opened to the department to avoid a fruitless and wasteful declaration was to seek the form of a self-review,” the court said.
The department’s assertion that there were undertones of corruption on the part of Simeka due to its links with Regiments were said to be unsubstantiated.
“Lastly, it is evident Simeka is the innocent party, having complied with its obligations in good faith. Simeka is now at the short end of the stick, due to the department seeking to avoid a declaration that it is responsible for fruitless and wasteful expenditure,” the court said.
The ruling was made following outrage expressed by MPs in February, calling for those implicated in the controversial R118m New York Pilot Project to face the music.
Pandor had placed the department’s director-general Kgabo Mahoai on precautionary suspension following the alleged purchase of the non-existent land.
Her spokesperson Lunga Ngqengelele said the department would comment on the judgment at a later stage “if necessary”.
Pretoria News