Esorfranki distances itself from graft claim

Esorfranki was “gravely concerned” at the potential implication for the group of the passing reference to corruption in a high court judgment related to the R864 million Western Aqueduct project in eThekwini, the listed construction and engineering group said yesterday. However, Esorfranki stressed that the remarks made by the court in the judgment relating to “corruption” had no bearing on the conduct of the joint venture between Esorfranki Pipelines and Cycad Pipelines, which “accordingly distances itself from these remarks”. The judgment, handed down in the KwaZulu-Natal High Court by Judge Daya Pillay in September, set aside the awarding of the Western Aqueduct tender to the Esorfranki and Cycad Pipelines joint venture and ordered the eThekwini municipality to start the tender process afresh.

However, Judge Pillay said in the reasons for his judgment, which became available last week, that the actions of eThekwini officials in awarding the tender to Esorfranki and Cycad Pipelines had amounted to “gross negligence, sheer incompetence or lack of capacity”. “Having found that the officials were intransigent and they acted in bad faith, corruption cannot be ruled out,” the judge added. Esorfranki added yesterday that independent legal opinion had confirmed that no allegation was made about corruption in any of the court papers by the applicants, namely rival bidders Sanyati and Group Five; the applicants’ case was not premised on any suggestion of “corruption”; and the question of “corruption” was not raised in argument by the applicants’ counsel or by the court in hearing this argument.

The company said that the eThekwini municipality, together with Esorfranki and Cycad Pipelines, had applied for leave to appeal against the whole of the judgment and the order for costs. It added that it was common cause between all parties that the tender notice issued by the eThekwini municipality had conflicted with a section of the Preferential Procurement Policy Framework Act. The court had found this non-compliance of the original tender notice was fundamental and could not be cured and had ordered that the contract be set aside on the basis of this contravention. Judge Pillay said this case typified how not to conduct procurement. He said the illegality and consequent procedural and substantive irregularities were precisely of the sort that the prescriptive constitutional and statutory framework sought to prohibit.

Judge Pillay added that even if the tenders submitted by Sanyati and Group Five were not the best bids on criteria other than price, which might disqualify them again if they tendered afresh, all the tenderers, the administration and the community deserved a fair procedure. “A fair procedure is not only one that ensures transparency and competitiveness but also one that is free of the slightest whiff of corruption,” he said. Judge Pillay said that the impact of awarding a tender unlawfully was that “it cannot shake off the stench of corruption that accompanies it”, however well-meaning the officials awarding it might be. In addition to setting aside the tender award, Judge Pillay ordered the eThekwini municipality to endeavour to recover the costs of the action “from officials who acted unlawfully or committed misconduct so that taxpayers are not penalised”. Esorfranki fell 5c to R1.40.