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Altron to challenge Tshwane broadband tender decision

Read time 3min 10sec

Altron has been granted leave to appeal the decision to set aside the City of Tshwane Municipal Broadband Network contract.

The long-running battle that has pitted the City of Tshwane (COT) against Thobela Telecoms, a special purpose vehicle, in which Altron Nexus is a minority shareholder, will now head to the Supreme Court of Appeal in Bloemfontein.

The case, which began in 2016, has seen the COT take the matter for judicial review after allegations of impropriety surfaced.

Altron yesterday announced to shareholders it had received a lifeline and will head to Bloemfontein to ask the court to set aside a high court judgement that set aside the multibillion-rand contract.

In a statement, the company said: “Shareholders are advised that Thobela Telecoms has been granted leave to appeal the decision directly to the Supreme Court of Appeal. Shareholders will be updated regarding the outcome of the appeal at an appropriate time.”

In July, Thobela Telecoms lost the court battle launched by the COT over the lucrative broadband project.

The COT subjected the multibillion-rand broadband contract to judicial review after discovering what it says were serious irregularities, which "taint the legality of the deal".

The incumbent administration in Tshwane, led by the Democratic Alliance, instituted an investigation into the procurement process of the deal after the auditor-general (AG) found the contract to be irregular.

The AG's report determined the value of the contract at R2.73 billion.

Solly Msimanga, who led the administration at the time, contended “the broadband contract and its procurement are riddled with irregularities and non-compliance".

“What we have discovered are serious irregularities which we believe taint the legality of the broadband deal. Crucial information was also withheld from councillors who voted on the project in April 2016.”

Before the broadband tender was approved, National Treasury raised concerns about the project in February 2017.

In April 2016, city officials had put forward a request to the council to approve the contract for broadband rollout for a period of 18 years, which includes three years to build the network and 15 years to operate it.

In terms of the request, the council was asked to approve the off-take amount of R278 million inclusive per annum for a period of 18 years. During the build period, the off-take amount will be paid pro-rata in line with the services made available from the network, said the city. The off-take may increase if the city procures additional services not covered by the current agreement.

The off-take amount was constituted as R153 million per annum, reprioritised from the current operational budget of the ICT department, and another R43 million taken from the budgets of the three departments, namely: ICT, metro police and electricity.

The city said it would fund the shortfall of R82 million per annum required from the 2016/17 financial year as follows: R40 million in the financial year 2016/17, increased by another R42 million in the next financial year.

Earlier this month, Altron suspended three senior executives at the unit that was involved in the Tshwane fiasco.

Without elaborating, the company said it had placed the three on precautionary suspension following an investigation that revealed potential internal irregularities.

The JSE-listed firm only told shareholders that after receiving information from a whistleblower in June 2018, Altron appointed independent investigators to look into alleged procurement irregularities among a few senior executives within Altron Nexus.

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