Johannesburg — THE Gauteng provincial government will fork out R117,5m to cancel its motorsport contracts - with zero return to the city's economy.

Economic development MEC Firoz Cachalia said yesterday the province had no choice but to agree to the settlement to avoid "costly litigation and reputation risk".

The contracts were terminated as part of the provincial government's reviewing of contracts to align them with new priorities.

Cachalia claimed about R796m would be saved from the cancellation of the contracts.

In the 2008-09 and 2009-10 financial years, R285m was spent on the motorsport programme; R141m will be spent in the next financial year, including the settlement.

Cachalia said he did not think it was a good decision to enter into the contracts in the first place. The y were signed in 2008 during Paul Mashatile 's tenure as MEC for economic development, but a final decision was taken by the provincial executive council of which Cachalia was part .

Most of the contracts were signed by former head of department Sibusiso Xaba.

A report by Bowman Gilfillan attorneys says some of the contracts were "incredibly punitive" and one- sided in favour of the motorsport bodies involved.

The department will pay R115m to FGSport, which holds the rights to the SBK World Superbike Championship and the Superstars Series; and R2,5m to Selwyn Nathan, a motorsport events consultant. The World Superbike Championship and the Superstars Series will be held for the last time in Gauteng this year.

Contracts with the BMW Sauber Formula One team, which could have cost the government R105m over three years, and the A1 Grand Prix, which could have cost R125m, were terminated amicably.

Cachalia said a study on the spin-offs of hosting such events was speculative. Treasury regulations were also not followed when the Gauteng Motorsport Company, an entity that ran the motorsport programme, was formed.

Cachalia said he had instituted a forensic investigation of the contracts. The probe would be based on the findings of the auditor-general and the recommendations of Gauteng legislature's standing committee on public accounts, which suggested that he take action.

He said the investigation was not a fishing expedition to find dirt to use against political opponents.

"I don't function that way ... I tackle issues," he said. "I play the ball, not the man."