Constitutional Court Dismisses Appeal Bid by Mphaphuli Consulting

An SIU investigation revealed that Mphaphuli Consulting, owned by Lufuno Mphaphuli, allegedly overcharged the municipality by at least R73 million.

The Special Investigating Unit (SIU) has expressed approval of a recent Constitutional Court judgment that dismissed an application by Mphaphuli Consulting to appeal a High Court order. This order was related to the SIU's report on Operation Mabone, which the engineering company sought to have reviewed and set aside.

In 2013, the Greater Tubatse Local Municipality, now known as Fetakgomo Tubatse Municipality, entered into a contract with Mphaphuli Consulting to connect at least 13,000 houses to the electrical grid, at a cost of approximately R168.8 million. However, the project scope was expanded, and the contract was amended twice to cover 19,000 houses, raising the total cost to about R326 million.

An SIU investigation revealed that Mphaphuli Consulting, owned by Lufuno Mphaphuli, allegedly overcharged the municipality by at least R73 million. The investigation found that the municipality had "piggybacked on an existing contract" between Mphaphuli Consulting and Vhembe District Municipality but altered the terms, resulting in a price increase of more than R5,000 per house compared to the Vhembe contract. This led to an overpayment of approximately R76 million.

The Constitutional Court's judgment dated June 3, 2024, stated, "The application for condonation and application for leave to appeal does not engage its jurisdiction. Consequently, leave to appeal must be refused with costs, and the Court need not decide the application for condonation."

The SIU welcomed this decision, as it confirms the unit's authority to investigate the electrification project under Greater Tubatse Municipality and clears the way for a civil claim against Mphaphuli Consulting to recover around R76 million. This claim will proceed in the Limpopo High Court.

The SIU's investigation concluded that the pricing modifications in the contract with Mphaphuli Consulting led to significant financial losses for the municipality. In response to the SIU's findings, Mphaphuli Consulting filed an application to review and set aside the SIU report and sought to halt all legal actions arising from the investigation. However, this application was dismissed by the Limpopo High Court in March 2022 and the Supreme Court of Appeal in August 2023, both with costs.

With the Constitutional Court's dismissal, the SIU is now set to pursue the legal fees owed by Mphaphuli Consulting for the court proceedings and related legal processes.

This judgment marks a significant step forward in holding the company accountable and recovering the financial losses incurred by the municipality, reinforcing the SIU's mandate to combat corruption and fraud.