The Free State Department of Roads claims it has reached “mutually agreeable settlements” with all but one of the contractors owed hundreds of millions of rand for work completed on 23 road rehabilitation contracts in the province.

However, Makhoseni Msibi, the head of the Free State Transport Department, said yesterday that it was not in a position to disclose some confidential information, including the settlement amounts between the parties, because this was a “matter between the department and the contractors”.

Msibi said the department would like to respect the privacy of the companies and not expose the financial position of the contractors to the public.

“We hope that the process to find a solution to this matter will be given an opportunity as the matter is almost near finality,” he said.

Listed construction company Sanyati has an outstanding claim against the department of at least R43 million on one contract. Together with other outstanding KwaZulu-Natal and Limpopo provincial governments claims, Sanyati was owed a total of R79 million.

This has resulted in Sanyati Civil Engineering & Construction, its main operating subsidiary, being placed in liquidation. A proposed business rescue plan was rejected by 96% of creditors and its business rescue proceedings will now be terminated.

Sanyati was not included in recent meetings with the department on the settlement of outstanding claims.

Basil Read confirmed this month that it had an outstanding claim of R155 million for two road projects in the province and had not yet reached any settlement.

Raubex previously confirmed that it was initially owed almost R150m by the department but 25% of this amount had been paid in November last year.

Wilson Bayly Holmes-Ovcon also has outstanding claims against the department but the value of these claims is not known.

Msibi yesterday issued a general statement about the 23 contracts and did not respond to specific questions about alleged corruption and financial irregularities on these contracts, including allegations that some contractors had received upfront payments but had never been on the site.

The National Treasury, which has intervened to address financial management weaknesses in Gauteng, Limpopo and the Free State, failed to respond to specific questions about the alleged irregularities and corruption at the Free State department.

Msibi said the department and contractors had been in constant engagements in a bid to find a solution to the challenges surrounding the projects.

He said in May this year that the Development Bank of Southern Africa and the SA National Roads Agency were requested, with the full knowledge of the contractors, to conduct quality assessments on the roads that were built.

The department commissioned and received a report on a rigorous road quality evaluation and, using this report as a basis, commenced negotiations at the end of May by providing written offers to the first group of contractors, who had “partly reciprocated as expected”, Msibi said.

On 6 June, he said it had made further written offers to the second group of contractors, who had “not even begun with the construction work but had only submitted designs”.

“Most of the contractors rejected the department’s offers and the latter (department) provided them with an opportunity to engage with the technical teams of the department before 8 June in preparation for their (contractors) final responses.”

Msibi said a second round of negotiations between the department and contractors took place on 4 July and “mutually agreeable settlements were reached by both parties on conditions that are also known to contractors”. However, he admitted one contractor could not agree to the offer.

Source: Business Report