A legal battle is looming between Lepelle Northern Water (LNW) and Isiphethu Engineering after the Limpopo water utility terminated the company’s Giyani water project contract allegedly at the best of board chairperson Dr Nndweleni Mphephu and the contractor over a payment dispute. 

According to a termination letter sent to Isiphethu Engineering and seen by African Times, Lepelle Northern Water Chief Executive Officer Dr Cornelius Ruiters claimed the consulting engineering company’s contract had lapsed four years ago even though he had signed at least four contract extension letters given to the company since 2021.  

In April 2020, Lepelle Northern Water awarded Isiphethu a seven-month contract worth R30 million to render civil engineering management services for the Giyani Bulk Water Supply Drought Relief, which sought to supply water from the Nandoni Dam in Thohoyandou to Giyani.

This was part of the national government’s intervention to rescue the R4.1 billion Giyani Water Project following years of delays attributed to alleged corruption, fraud and maladministration. The contract was awarded during the tenure of former Lepelle Northern Water CEO Phineas Kgahliso Legodi. 

In November 2020, the water utility’s acting CEO, Ahuiwi Netshidaulu, said in a letter that Lepelle Northern Water had “decided to extend the aforesaid contract without additional costs for a period of 16 months and [the] project to be completed by end of June 2021”.

A year later, in November 2021, the water utility extended the contract by five months, ending in March 2022, and to the tune of R19.6 million. 

“The new additional professional services fees on the project is approved to an amount of R19, 613 197, 77 excluding VAT. This means your purchase order for the Giyani Water Services RM 08 project is adjusted to a total of R29 792 , 39 VAT (R34 261 906,75 including VAT of 15%). LNW also has a pleasure to inform you of an approved extension of time until the 30th March 2022,” said a letter signed by then-acting LNW CEO Dr Pulane Molokwane. 

In April 2023, Lepelle Northern Water’s bid adjudication committee approved the “adjustment of the purchase order and extension of time for Isiphethu Engineering”, and revised the contract sum to R61.8 million. Dr Ruiters was among the signatories of the contract extension. 

In a letter signed by Dr Ruiters, Lepelle Northern Water further extended Isiphethu Engineering’s contract in June 2023 to March 2025.  

“Pursuant to the request made on the letter dated 20 November 2023, LNW hereby grants the Extension of Time from 12 December 2023 to 31 March 2025 aligning the fees adjusted budget memo approved to bring the project to completion,” Dr Ruiters said in the letter dated December 11, 2023. 

However, in a bizarre turn of events, Lepelle Northern Water sent Isiphethui Engineers a termination letter claiming that the contract had actually lapsed way back in 2020. In the letter, Dr Ruiters said the “purported extensions” made in the past had been “irregular and invalid”. 

“Kindly be advised that we have noted some irregularities relating to your contract. We hereby advise that your contract was terminated on 14 November 2020, by effluxion of time. Furthermore, be advised that the purported extensions made after 14 November 2020 are invalid, unlawful and unenforceable primarily because the contract had lapsed,” said Dr Ruiters in the letter. 

The termination letter demanded that Isiphethu Engineering hand over all drawings, reports, data packs and design documents and ensure a smooth handover process. 

“The performance fee shall be withheld by LNW in terms of the contract. LNW reserves the right to recover any losses through professional indemnity. Please consider this letter as a formal notification of the contract termination wherein LNW reserves its right to exhaust other remedies available to it in law,” he added. 

In response, on 9 September 2024, Isiphethu Engineering, through its lawyers, Molepo Inc. Attorneys, rejected the termination, stating that the “purported termination letter does not comply with the provisions of the Service Level Agreement.”

“Our client further denies that the agreement has “terminated by effluxion of time on 14 November 2020 and further that the extensions granted by yourselves beyond 14 November 2020 invalid, unlawful and unenforceable primarily because the contract has lapsed.” Your allegation is absurd and without any sense and substance as the purpose of the extension was to extend the life of the contract.”

“Our clients are perturbed by the fact that the valid extensions granted herein were motivated for and signed by the author of the abortive termination letter, Dr Cornelius Ruiters. Our client is severely disturbed by this malicious and delinquent conduct, and it frowns at it with the contempt it deserves,” said Molepo Attorneys’ N Masenamela, on Isiphethu’s behalf. 

He said Isipehthu planned to apply for an interdict against the Giyani Project should Lepelle Northern Water proceed with its illegal termination. Masenamela added that they would cite Dr Ruiters in his personal capacity if the matter ended up in court. 

“Additional to what is stated hereinabove, our client will apply for an interdict against the continuation of the project in any way, shape or form for as long as the dispute exists, and they intend to exercise their lien over the information and documents currently in their possession in respect of the project. We confirm that should the dispute not be resolved, and the need arise to proceed with the arbitration in accordance with clause 7, Dr C Ruiters will be cited in his personal capacity in the proceedings.”

“In conclusion, we confirm that the actions of the bid adjudication committee and the CEO in granting the extensions constitute administrative actions which are valid and lawful, and which remain extant and enforceable until or unless they are set aside by a competent court,” added Masenamela. 

Sources within Lepelle Northern Water said the “irregular” termination of Isiphethu Engineering’s letter had divided the board and senior management. They accused Dr Ruiters of wanting the entire management to take a fall for the “mess” they had nothing to do with. 

“This is the biggest blunder ever. How do you cancel a contract which you extended yourself? You issue the extension with your own signature, and the blessings of your own exco and the board. Subsequent to that, you come back and nullify your own extensions simply because of the pressure from the chairperson of the board and a contractor. It is widely known that the chairperson of the board has a close relationship with that contractor.”

“It is so embarrassing to us as an organization that after the intervention that the national government did to rescue a project that had literally collapsed the money spent could not be accounted for. We still cannot account for it; we have now shot ourselves in the foot by caving into an irregular, unjustifiable pressure to terminate the services of Isiphethu engineers because of a dispute between them and a contractor,” said a source within Lepelle Northern Water. 

Another source claimed that the contractor wanted Isiphethu to authorize and backdate a questionable payment certificate, a demand allegedly supported by Dr. Ruiters and Dr. Mphethu. 

“What the contractor wants Isiphethu to authorize is irregular and possibly fraudulent; worse, it compromises all parties, including us, Lepelle. We are now fielding calls from the national government, including the Presidency, to explain this nonsense. What we don’t understand is that our CEO, whom we thought was the right man and above reproach, is now at the centre of this mess. The question is, what is his interest in this matter?”

“When he was asked to explain it, he was close to tears, claiming he was misled. At some point, he claimed the termination letter was fraudulent, and his signature was forged, but we are not buying his story. Was he promised a handsome kickback, which may have clouded his judgement? That remains a mystery. Only the man himself can answer that question. Why are we now asked to take the fall to save him and the contractor? The way they are so selfish,” said the source.  

A source within the Department of Water and Sanitation said they were keenly interested in monitoring developments within Lepelle Northern Water. He said they were disappointed with the latest developments, given the progress made since the appointment of a rescue team.

In April, African Times reported that the Giyani project had made notable progress after a 10-year delay. The source said they had heard rumours that Lepelle Northern Water was considering offering Isiphethu Engineers a settlement. 

“There must be consequence management, and someone has to take responsibility. We now have to respond to questions from the highest office because what we thought had been remedied is now rearing its ugly head again. We are told now that Lepelle wants to give the engineers a golden handshake so they can walk away. Our question is, where will that money come from because it’s not budgeted for, and what would be the justification to the AG?”

“Of course, we know there is a long-standing dispute between the engineers and this particular contractor dating back to when the engineers were brought in as part of the rescue team. We don’t know what gives this contractor so much influence and power over Lepelle?” said a Department of Water and Sanitation source. 

African Times sent detailed questions to Lepelle Northern Water, Dr Ruiters and Dr Mphethu through the water utility’s spokesperson Joe Makhafola, for comment. He referred them to Lepelle Northern Water’s lawyer, Modise Mabule, of Modise Mabule Attorneys, who said his clients could not comment because the matter is “subjudi ce”.  

“We act on behalf of Lepelle Northern Water who is our client herein and any further correspondence should be directed to ourselves going forward. Please be advised that the matter in question is still subjudi ce, and as such, we are unable to provide you with a response at this time. We appreciate your understanding and we will keep you updated on the progress of the matter,” said Mabule, on Lepelle Northern Water’s behalf. 

When approached for comment, Isiphethu’s Director of Engineering, Kensington Muchawonweyi, said the engineering company decided not to comment because the matter is subjudi ce. He added that they “reserved the rights to comment later should it become necessary”.

Lepelle Northern Water is no stranger to controversy. Its former CEO, Legodi, and six others were charged with fraud and corruption when awarding a multimillion waste management tender.

He was released on bail with businessman Matome Sefalafala, Lepelle Northern Water’s bid evaluation committee chairperson Ngwako Moseamedi, Gumani Ngangashe, Vusi Mhlongo and Mpho Chokolo.

The Commercial Crimes Court later withdrew the case against the suspects, citing lack of evidence. The Special Investigating Unit (SIU) also raided the water utility’s headquarters in Polokwane and left with dozens of documents and computer hard drives.