Africa-Press – South-Africa. The Supreme Court of Appeal (SCA) has declared a controversial contract to build a new multibillion-rand diplomatic headquarters for SA’s diplomats in New York unlawful some seven years after it was reached.
The court ruled that the award of a tender by the Department of International Relations and Cooperation (Dirco) to a joint venture of the Simeka Group and Regiments Capital in May 2016 was invalid.
The ambitious project – which included buying land in Manhattan and then designing and building a modern office and residential complex – was expected to cost around $159 million in total (R3 billion at current exchange rates).
Dirco had paid $9 million towards a deposit for the land by mid-2018 when the project fell apart.
No money for you
What scuppered the plan was a refusal by National Treasury to release any more funds due to the role played by Regiments Capital, an entity linked to the Gupta family, in the joint venture.
While Regiments opted to quit the project, Treasury had seen enough and refused to proceed with just the Simeka Group.
In late 2018, Dirco instituted an application to have its own tender declared invalid so that it could get its deposit back.
But the department lost its initial bid to set the contract aside in 2021, with the North Gauteng High Court in the Pretoria ruling in that it took too long to institute its court action.
The department then sought to appeal the ruling. The matter was argued in August last year.
In its judgment handed down on Wednesday, the SCA agreed with Dirco that the tender was unlawful, saying it included “unexplained egregious material deviations”.
The court found the joint venture never submitted any financial statements for Regiments Capital and couldn’t show proof of its ability to raise the funds required.
As for the delay in bringing the application, which tripped the department up before the high court two years ago, the SCA gave Dirco a pass, saying that bureaucratic machinery is “notorious for moving slowly”.
While Dirco had initially asked for its $9 million deposit to be paid back with interest, the parties later agreed to postpone relief. This is an indication that they may come to an agreement on costs behind closed doors.
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