Mphaphuli Consulting’s efforts to prevent the Special Investigating Unit (SIU) from recovering R76 million from a Limpopo municipality overpaid for electricity services have been dealt a severe blow.  

The Constitutional Court has refused the engineering company direct access to apply for the reviewing and setting aside of the SIU report, which found Mphaphuli Consulting had overcharged the Fetakgomo Tubatse Local Municipality when it electrified Sekhukhune villages in 2013 as part of a transversal contract.

The Apex Court’s ruling essentially prevents the engineering company and its owner, Lufuno Mphaphuli, from filing frivolous lawsuits against the SIU and other law enforcement agencies that are trying to recover millions in taxpayers’ monies that they charged the Fetakgomo Tubatse Local Municipality. 

According to the SIU’s report handed over to President Cyril Ramaphosa, the Fetakgomo Tubatse Local Municipality participated in an existing contract between Mphaphuli Consulting and Vhembe District Municipality to electrify villages.

However, Mphaphuli Consulting, owned by businessman Lufuno Mphaphuli, altered the contract terms to increase the cost of services by more than R5000 per household compared to what it charged in the Vhembe District Municipality, resulting in an overpayment of R76 million.

The engineering company, a client of the Department of Mineral Resources and Energy (DMRE), charged more than R16 000 per household for the electrical services in the Fetakgomo Tubatse Local Municipality, even though its prices for the same services in the Vhembe District Municipality were fixed at R11 000 per household.

The contract’s initial value was approximately R168 million; however, it was amended twice to increase its value to more than R326.4 million. In response, the SIU filed a civil claim in the Limpopo High Court in 2017 to recoup the losses incurred by the municipality following the investigation’s findings.

In its ruling on 17 February, the Constitutional Court rejected Mphaphuli Consulting’s attempts to gain direct access, saying the matter had already been decided to the extent that the relief sought was substantially the same relief sought in the previous applications (High Court and SCA) is the same of this court.

SIU spokesperson Kaizer Kganyago said the unit was elated because the ruling barred Mphaphuli Consulting from filing frivolous lawsuits against it. 

“The Constitutional Court concluded that no case has been made for direct access on the remaining issues. The judgment permanently blocks Mphaphuli Consulting from litigating the same issues with the same parties at any South African court. SIU welcomes the Constitutional Court’s decision, which reinforces its mandate to investigate the electrification of villages under Greater Tubatse Municipality and paves the way for a civil claim against the engineering company to recover approximately R76 million from Mphaphuli Consulting engineering,” Kganyago said.

Prior to the apex Court ruling, Mphaphuli Consulting’s attempts to block the unit from taking punitive measures against the company were dismissed with costs by the Limpopo High Court and subsequently by the Supreme Court of Appeal.

Mphaphuli, the owner of the engineering company, has maintained his innocence despite the Constitutional Court’s ruling against Mphaphuli Consulting. Speaking to African Times about the ruling, Mphaphuli claimed the SIU had defamed him by releasing a “misleading statement ” about him and his company.

“These guys are misleading the public. What they stated there has nothing to do with what the court decided. The ConCourt just said they are refusing me direct access because they regarded my matter as res judicata. Res judicata because they previously said that, actually, my matter does not engage their jurisdiction. That is all they said, so what the SIU is saying is very much defamatory. The sad part is that you guys, as the journalists, are not asking these guys questions. You owe them 76 million from Mphaphuli. You should ask yourself, SIU, if you normally do these preservation orders to people, why are they not doing that to Mphaphuli? Yes, you ask them that. Why are they not doing that to Mphaphuli? And also, if I am corrupt or fraudulent, how did I do it? Why are there no police around it? Those are the questions you should be asking,” said Mphaphuli.

He added that the SIU had no case against him because Mphaphuli Consulting neither contravened the Municipal Finance Management Act (MFMA) nor engaged in tender irregularities. Mphaphuli implied that the Fetakgomo Tubatse Local Municipality had no issues with him, hence it was not party to the SIU’s litigations.

“If somebody is arrested, they need to have contravened that act, but here you as journalists let them go away. How can they say they want to recover R76 million from me, but the municipality is not with them? It is not a co-plaintiff. Whose money are they trying to recover? Just ask anyone, any municipal manager. Just check section 32 of the MFMA; it explains what happens under circumstances of unauthorised expenditure, irregular expenditure, or fruitless and wasteful expenditure. It explains who the accountable people are. It lists political bearers, accounting officers, or officials, and it explains that people need to go report to the police. The MEC [Basikopo Makamu) must be informed and all those things. What you guys were supposed to be asking is, who it is in the municipality who allowed me to overcharge. They say I overcharged. There needs to be somebody who allowed me to overcharge; I could not have done it by magic. This is just common sense. What (US President Donald) Trump is calling for, common sense. Who allowed me to overcharge?” Mphaphuli added.

Moreover, he said that the Fetakgomo Tubatse Local Municipality and Ramaphosa did not oppose his taking the SIU report on review, spoke to his innocence.

“You must remember when I went for this review of the report, the municipality did not oppose it. The president also did not oppose it. Have you seen the report? You must go to page 13 of the report; it says limitations where the SIU, themselves, are denouncing the report, saying that they cannot confirm the accuracy of the report. It is them saying that. They are defaming because there is no basis.”