Controversial businessman Edwin Sodi must pay back almost R40 million over a failed Department of Correctional Services accommodation upgrade tender.
Image: FILE
Controversial fraud and corruption-accused businessman Edwin Sodi and his partner Jeophrey Ramahlaleroa must return nearly R40 million to Hollard Insurance following a botched R283m project to upgrade and build accommodation at a Free State prison.
NJR Projects, which Sodi and Ramahlaleroa co-founded and is now known as the G5 Group, was awarded the contract by the Development Bank of Southern Africa (DBSA) in 2018 and the company requested an advance payment.
DBSA also operates as an infrastructure delivery division, which is an implementing agent for the National Department of Public Works and Infrastructure in various infrastructure projects and in this project, its role was to appoint a company to upgrade and construct additional accommodation at the Department of Correctional Services in Parys in the Free State.
The financial institution agreed to pay the advance payment of R35m but required the G5 Group to provide an advance payment guarantee.
Hollard then issued the R23.06m guarantee in favour of DBSA, with clauses making provision for a recoupment period of 18 months and monthly recoupment of just over R1.28m.
However, the G5 Group defaulted towards the payment of the advanced amount based on the guarantee and DBSA could only recover just under R11m and later issued a notice of default.
In addition, the state-owned development finance institution terminated its agreement with the G5 Group. DBSA sent a letter of demand to Hollard, stating that it was owed about R11.55m due to the G5 Group’s failure to make payment of the certified amount within seven calendar days.
In response, Hollard complained that the demand was premature as seven calendar days had not yet lapsed and that the demand for payment was non-compliant with the terms of the advance payment guarantee and therefore fatally defective.
The insurance company also maintained that the advance payment of R23.06m had been made and that the amount had been fully recovered. DBSA stated that Hollard had a claim of nearly R40m against NJR Projects, Ramahlaleroa and Sodi.
The financial institution also indicated that the R40m was inclusive of the R11.55m claimed by DBSA from Hollard in terms of the guarantee.
During the hearing of the matter at the Gauteng High Court, Johannesburg in July last year, it emerged that NJR Projects had been liquidated and that Hollard had been granted an order for payment against Ramahlaleroa and the remaining adjudication was only against Sodi.
Hollard also sought an order for payment of about R40m including interest against NJR Projects, Ramahlaleroa and Sodi as well as one directing the controversial businessman to indemnify Hollard against all costs it incurred in opposing DBSA’s application.
In January, Gauteng High Court, Johannesburg Judge Nelisa Mali ordered Hollard to pay R11.55m including interest to DBSA.
This was despite Hollard having claimed there was fraud on DBSA and G5 Group’s part but it did not produce any evidence of fraud. Sodi and Ramahlaleroa must pay Hollard nearly R40m including interest at 12.5% per annum.
Hollard’s claim of about R28.3m against NJR Projects was postponed sine die (indefinitely) and this relates to the performance guarantee granted to the company now being claimed due to its failure to complete the construction project and DBSA being forced to terminate its contract.
Last Tuesday, Judge Mali dismissed Hollard and Sodi’s applications for leave to appeal the two adverse orders forcing them to pay R11.55 million (by Hollard to DBSA) and about R40m (by Sodi and Ramahlaleroa to Hollard).
In its application for leave to appeal, Hollard had argued that there had been fraud but the judge rejected its arguments.
“That premise is unsustainable. No factual foundation was laid to substantiate fraud, nor was any evidence adduced to support collusion between DBSA and the contractor. In the absence of proof, the allegation cannot sustain a reasonable prospect of success on appeal,” Judge Mali found.
The City of Tshwane has also initiated moves to have Sodi's companies, Blackhead Consulting and NJR Projects, blacklisted by the National Treasury for their role in the failure to complete the upgrade the Rooiwal Waste Water Treatment Plan timeously.
Before the Free State High Court, Sodi is among several accused in the long-running fraud, corruption and money laundering case relating to the R255-million tender to remove asbestos roofs in houses in the province.
Sodi’s legal representatives did not respond to requests for comment on Wednesday.