16 September 2008

South Africa: Gauteng Sues Hospital Builders

Johannesburg — THE Gauteng public transport, roads and works department yesterday decided legal actions needed to be taken against a joint venture of contractors to recover losses suffered after the companies failed to complete building the Jabulani hospital in Soweto, the provincial government said yesterday.

The R334m tender was awarded to the Ilima joint venture, which comprised Ilima Projects, Yikusasa Building Contractors SA, TTR General Building Construction and Motheo Construction, in July 2006 and it was to be completed this May.

"During 2007 the partners of Ilima venture began bickering among themselves, resulting in the withdrawal of three partners from the joint venture, leaving Ilima Projects being the only contractor left on the project," the government said yesterday.

The government said the departure of the other partners compromised the project, and it was clear that the deadline would not be met. After the public transport, roads and works department had sought legal advice, the joint venture contract was cancelled and a new contract was offered to Ilima Projects to complete the work, in an effort to minimise delays and possible cost escalation.

However, a forensic investigation commissioned last month revealed that Ilima Projects' "financial position was not healthy and its taxes were also not up to date", the government said. The contract was then cancelled.

"The department will be taking legal action against the Ilima joint venture to recover losses suffered."

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