Two more people have been arrested by the City of Joburg for alleged fraud.
On Wednesday, two employees of Setheo Engineering were arrested and charged for fraud.
In a late statement, Setheo dismissed the allegations against its employees and criticism of its performance as “frivolous”.
Setheo Engineering was awarded a contract
by City Power in 2015 for the construction of a
new substation in Eldorado Park, at a cost of
R126 million.
Joburg mayor Herman Mashaba said: “This is the same company that colluded with the two City Power officials who were suspended in June for forwarding a payment of almost R66 million, without evidence of any physical work done at the substation, to Setheo.”
He said the case was brought to his attention earlier this year when certain employees of subcontractors connected to the construction project protested against Setheo and threatened to burn the substation down. Community leaders of Eldorado Park and surroundings prevented the attempted destruction of the substation, which is used to supply electricity to Eldorado Park and surrounding areas.
“The latest arrests follow my oversight visit with all stakeholders, including representatives from Setheo Engineering, to the substation in late June. During this visit, I instructed City Power officials to request the bank to verify the authenticity of the bank guarantee Setheo Engineering had submitted to council, which totalled just over R14 million,” he said.
Setheo fired back, saying it has a contract with City Power and not with the City of Joburg.
“The allegations being made by the mayor are that a forward payment of almost R66 million was made to Setheo Engineering without evidence of any physical work done at the substation. This cannot be further from the truth and devised with the sole purpose of misleading the public and in the process score some cheap political points. Thankfully the courts deal with facts and not the fertile figment of some politician’s imagination,” the company said in statement.
However, Mashaba insists that an investigation by the bank revealed that the bank guarantee was fraudulent.
“It further revealed, among other things, that Setheo Engineering holds no accounts with that bank; that the account number mentioned in the guarantee does not exist; and that the bank logo was copied and pasted,” he said.
Setheo said City Power did its own verification process of the value of work carried out by Setheo Engineering.
“City Power came to a conclusion that the value of works to date is R116 million and the verification process also confirmed that Setheo was indeed paid R66 million to date inclusive of the R12600000 advance payment,” the company said.
“It baffles any known logic why the
mayor continually alleges that R66 million was paid to Setheo without evidence of work done,” the company said.
Setheo further said: “City Power owes Setheo in excess of R50 million on the issue of the guarantee, and we feel it is the client who is trying to evade paying us on technicality.”
In July this year, the high court in Joburg dismissed an application by Setheo to interdict Mashaba from posting negative comments on its contract with City Power on social media.
Setheo said the social media postings were defamatory to the company and that the mayor had not consulted it about the alleged fraud.
The application for the interdict was dismissed by Judge Johann van der Westhuizen, who found the company’s arguments did not have merit.