The City of Tshwane on Thursday said it has approached the North Gauteng High Court to set aside the “so-called Tshwane Broadband contract” with Thobela Telecoms on the grounds that the previous administration entered into the contract unlawfully.
At a press conference at Tshwane House in Pretoria, Tshwane MMC for Corporate and Shared Services, Councillor Cilliers Brink, said the Broadband contract and its procurement “is riddled with irregularities and non-compliance committed by the previous administration”.
Brink was joined by the Tshwane Finance Councillor Mare-Lise Fourie.
In November last year, the Auditor-General (AG) found the deal to be irregular and determined its value at R2.736-billion. The AG finding prompted the new administration, led by Mayor Solly Msimanga, to investigate the procurement of the deal.
Msimanga, a member of the Democratic Alliance, runs the City with a coalition with other parties that include the Economic Freedom Fighters. The African National Congress-led administration was ousted by voters in August last year.
Brink said the Tshwane Broadband is the third in a list of major, multi-year contracts concluded by the previous City government, which the Msimanga administration seeks to set aside because “we contend they are manifestly unlawful …”
The deal binds the City in an 18-year relationship with an ICT service provider to build a broadband network, which would later become a commercial outfit. The tender price (excluding VAT) was R2.736-billion.
“An assessment of the deal’s terms and conditions confirm that it exposes the City to severe, one-sided liability and does not offer value for ratepayers’ money,” said Brink.
“One of the many questions which now stand to be decided is: did the City, councillors, and members of the public know what they were getting into when the deal was approved?”
Last year in April the Tshwane Metro Council voted in favour of Broadband. Council approval is required for all obligations binding a municipality beyond three financial years.
However, Brink said: “Based on copies of correspondence obtained, Council was not properly informed or did not properly consider the objections or concerns raised by the National Treasury, the Gauteng Provincial Treasury and the Department of Telecommunications and Postal Services”.
Brink said the concerns included the absence of feasibility studies to demonstrate full costs and benefits, as well as options of service modality since the project financing structure resembles a “private–public partnership”.
Ideally, ICT infrastructure should be directed at technologies that are future proof and scalable to avoid future costs.
“The AG finding confirmed some of our suspicion and a new cohort of senior managers embarked upon a cumbersome investigation into how the Broadband deal was concluded,” said Brink.
He said the AG deemed the tender irregular as a result of the non-compliance.
“What we have discovered, and will now present to Court, are serious irregularities which we believe taint the legality of the Broadband deal.”
Brink said when the majority of councillors voted to approve the deal in April 2016, they did not have the necessary information to make this determination. “We also believe that crucial information was withheld from them”.
He said subjecting the Broadband deal to judicial review is crucial, not only to the City’s financial recovery but its duty as a constitutional agent not to submit to an unlawful contract.