The Independent Electoral Commission (IEC) is in for a potentially messy legal wrangle with property developer Abland over its attempts to set aside the remaining six years of its controversial lease with the property development firm.
IEC deputy chairperson Terry Tselane will be filing an affidavit to the Johannesburg high court seeking to set aside the remainder of the lease, saying former chairperson Pansy Tlakula unlawfully committed the body to nearly R83-million in expenditure that was not procedurally fair, transparent or competitive.
But two sources close to the IEC have called for a cost-benefit analysis of the legal action.
A file has been opened with the court, according to the IEC’s lawyers, who made the affidavit available to the Mail & Guardian, and the court documents will filed by the end of October.
The public protector found in August 2013 that the awarding of a R320-million lease contract of the IEC’s head office at Riverside Office Park to Abland was irregular, with most of the blame falling on Tlakula and her staff. Tlakula also came under fire for failing to declare her separate business relationship with Thaba Mufamadi, chairperson of Manaka Property Investments, which owns a stake in the Riverside Office Park Trust.
A subsequent treasury report made similar findings and Tlakula resigned in September 2014 when it became clear that the next step was her removal from her position, sanctioned by Parliament.
The lease was for 10 years, four of which have already passed.
Potential procedural problem
Tselane’s affidavit is brought on behalf of the organisation, but concerns have been raised from those close to the IEC that this responsibility should fall with the current chief electoral officer, Mosotho Moepya, who is also the organisation’s accounting officer.
“There may be a procedural problem with what they are doing,” said a source close to the IEC, who declined to be named.
The IEC is not responding to certain questions on the matter while it is before the court, and therefore sub judice.
Tselane wants the court to invalidate the controversial lease and allow the IEC to being a new procurement process for its headquarters. But Tselane was careful to protect Abland’s interests too, saying the company should not suffer loss as a result of an invalidation of the lease, which was incorrectly awarded to the company thanks to the IEC’s own bungling.
But that’s where attempts to cancel the lease could become messy, as many of the costlier refurbishments required by the IEC were not paid for up front but rather “rentalised” over the life of the contract agreement with Abland.
Abland confirmed this to the M&G: “The IEC did rentalise a portion of their tenant installation and immovable assets over the duration of the lease,” a company spokesperson said on Friday.
“All those expenses were rentalised, so that means over 10 years you pay it back with interest instead of paying it all back in one shot,” explained a second source close to the IEC. “What they really should have done is go to treasury and say, ‘Can we do cost-benefit analysis?’ … or they may incur further wasteful expenditure.”
‘Two wrongs don’t make a right’
The Democratic Alliance’s (DA) Mike Moriarty, who has long served on the IEC’s political liaison committee (PLC), said his party would monitor the developments.
“We’ll take it up at the PLC just to ensure that due diligence has been followed and you don’t end up throwing good money after bad,” he told the M&G. “This may be another wrong, and two wrongs don’t make a right.”
While a group of small parties, led initially by the United Democratic Movement’s Bantu Holomisa, took legal action to remove Tlakula from office, the DA and ANC initially advocated for a more cautious route and stability within the IEC over Tlakula’s removal.
However, a lawyer familiar with the details of the lease agreement said Tselane’s affidavit, which was brought under the Promotion of Administrative Justice Act (Paja), could very well succeed and was based on good grounds.
“I think they have a good case. It seems pretty obvious to me that it was an unlawful administrative decision and it should be set aside,” said the legal source, who declined being named. “Paja has certain grounds in terms of which you can set aside a decision which amounts to unlawful action.”
They pointed out that according to the treasury report, the executive committee members at the IEC relied on a factually incorrect schedule summarising all the tender bids for the lease deal. According to the tender criteria, Khwela City Property may well have been the preferred bidder, a fact which prompted the company to take its own legal action against the IEC.
The lawyer said two prescripts under Paja applied to this case.
“When the process itself was carried out it didn’t comply with the applicable procurement prescripts,” said the lawyer. “Secondly, if the decision taken was so unreasonable that no reasonable person would take it, it can be set aside by a court.”
Tlakula and her lawyers were not immediately available for comment.
Abland said it was still studying the application. “Abland and Riverside Office Park Trust have received the application brought by the electoral commission,” the company told the M&G. “They are currently reviewing its contents with their legal advisors and will respond according to the required legal timeline.”
The IEC’s lawyers say the matter will likely be heard in court in the first term of 2015.