Telkom has won a R1.7 billion lawsuit brought against it by local telecoms solution provider Bihati Solutions, after the North Gauteng High Court recently ruled in Telkom's favour.
“On Friday, 7 December 2010, the North Gauteng High Court granted an order in favour of Telkom in respect of an application where Telkom sought to review and set aside a decision to make an award to six service providers,” explains Telkom.
“The application related to an award made under the construction services tender (RFP 101/2007). The court also dismissed an application by Bihati to compel Telkom to be bound by its original decision to continue with its award, with costs in favour of Telkom,” the telco continues.
The lawsuit stems from Bihati's allegations of irregularities relating to the tender process for the implementation of wireless and wire-line infrastructure ahead of the 2010 Fifa Soccer World Cup.
Six companies were part of the process and Bihati was expected to get R1.7 billion from the deal, which had a total value of R2.7 billion.
Telkom explained that at the time the company's board made a conditional award to the six winning bidders for the tender.
However, it was hit with queries from the public protector during the negotiation phase. “We also received a letter from the legal representative of some of the unsuccessful bidders,” the company said at the time.
Telkom said the legal notices and queries put the process on hold, while it consulted its legal counsel. “The issues that were considered included the validity period of the tender and the date of the award in light thereof.”
At the time, Bihati's chief marketing officer, Malikhanye Mabena, noted that Telkom had decided to bring the losing bidders back into the tender process, which would likely see Bihati sidelined from the tender process.
The company subsequently initiated legal action to re-coup the costs of the capital outlay it had invested in preparation for the execution of the project.
Final ruling
The court ruled that, once Telkom was advised that its tender process was irregular because it did not comply with the prescribed tender procedure, the company was duty-bound to approach a court to set aside its own irregular administrative act.
“Telkom was under a duty not to submit itself to an unlawful contract and was obliged to ignore the awarding of the tenders and resist any attempt to enforce them,” states the court ruling.
“The applicant was entitled to bring an application to review and set aside the award of the tenders and/or apply for a declarator that the award of the tenders was null and void and of no force and effect,” it continues.
Additionally, the court found Bihati had failed to prove financial losses due to the complications and lengthy tender process and, therefore, ruled in favour of Telkom.
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