High Court sets aside infamous 2010 Human Settlements contract

Staff reporter

Bloemfontein – The Free State High court has set aside the agreements and decisions between Department of Human Settlements and Cembrick (material supplier).

This judgment relates to Cembrick only after receiving R69 million from the department.

In 2010, Human Settlement entered into contracts with 106 companies including building contractors and materiel suppliers.

The National Treasury allocated over R1 ,3 billion to the Free State Province as a “Human Settlements Development Grant” for the 2010/2011 financial year. This allocation was meant for low-cost housing.

A further amount of R 119,309,000 was rolled over from the previous financial year thus bringing the total allocation to about R1 .42 billion for this program2.

The department took the matter to court after 14 years and among others, it argued no proper procurement process was followed.

Furthermore, when it developed this recovery plan, the department knew that the payments based on these agreements were unlawful this because the National Department of Human Settlements had informed it so.

The Department contended that the payments were unlawful because :

• there were no contracts in place with the suppliers;
• no proper procurement process had been followed; and
• the payments were not authorized by neither the National Department of Human Settlements nor the Treasury.

These notwithstanding the Department continued to make payments to the building contractors and material supplier.

According to the affidavit by Nthimose Mokhesi, Mosebetsi Zwane, his then head of department Mpho Mokoena and other senior officials concocted the scheme after the then human settlements minister Tokyo Sexwale threatened to shift the funds to other provinces because the Free State, and three other provinces, were underspending.

The province had spent only 10% of the R1.3-billion allocated by the National Treasury for RDP houses by October 2010.

Zwane and Mokoena, apparently afraid of losing the funds, came up with a plan to accelerate spending. This was rejected by Sexwale’s department, which warned the payments were “unlawful and must stop”.

Mokoena has since been sentenced to 15 years wholly suspended.

Delivering judgement, Judge Molitsoane with acting Judge Majosi ordered.

1. The agreements listed as Annexure 2 to the Notice of Motion (the agreements) relating to Cembrick and the decision(s) taken by the Free State Department of Human Settlements to make the payments listed in Annexure 3 relating to Cembrick in the Notice of Motion are declared invalid and unlawful.
2. The agreements and decisions are reviewed and set aside.
3. The order of invalidity referred to above does not have the effect of divesting any of the parties any rights it would have been entitled to under the agreements, but for the declaration of invalidity.
4. The respondent shall pay the costs of the application which costs shall include the costs of two counsels on scale C.Details of how the department spent almost R1-billion in five months are in a damning affidavit by department head Nthimotse Mokhesi filed in the High Court in Bloemfontein last month.

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