News / South Africa

Gosebo Mathope
3 minute read
9 Mar 2018
5:28 pm

CoJ in court battle over ‘illegal’ cell mast contract

Gosebo Mathope

The City 'has been cheated out of tens of millions of rands in royalties' after a 2013 contract was 'illegally altered'.

Cellphone Mast. Midrand Reporter.

The City of Joburg (CoJ) has launched a forensic investigation into the circumstances surrounding a contentious cellphone mast contract signed between Johannesburg Property Company (JPC) and Altivex 75.

Andrew Steward, strategic advisor to MMC for Economic Development Leah Knott, said the City is currently in the process of taking criminal and disciplinary action against one current and one former employee.

In a press statement, Steward said the City suspects tens of million of rands due in royalties never reached its coffers. CoJ is contending that a contract that was entered into in 2013 between Altivex 75 – which required the service provider to conduct an analysis of the cell mast industry and produce a master plan for regulating cell mast applications involving City-owned street poles – was altered and illegally executed.

The City is also arguing that Altivex 75 was never mandated by the contract to process applications from cell mast companies on behalf of the City.

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“The dispute is with regards to the issuing of way leaves, they are currently challenging Johannesburg Roads Agency (JRA) in court. The desired outcome will be the forensic investigation to be wrapped up so we can determine the extend of wrongdoing. We need a full and complete understanding of who is involved.

“Another thing to remember is that the current situation has huge repercussions, where Vumatel has a monopoly on the cellphone mast sector in the City, using the City’s technology infrastructure. We are meant to create a free and fair playing ground for all companies involved,” Steward told The Citizen.

The press statement claimed that the agreement did not in any way allow Altivex 75 to install aerial fibre or cede rights contained in the original contract. It is further claimed that the proposed master plan was never produced. Owing to this, the City said it notified Altivex 75 of their breach of contract in April 2017.

In turn, the City is claiming that Altivex ceded their contract to Fibrehoods Ltd, who in turn ceded the contract to Vumatel Ltd. The City is claiming the three companies are all subsidiaries of a company called Waterfall Group.  When Vumatel claimed that Waterfall Group’s shareholding in all three companies has been bought out, the City demanded proof, which it says it still has not seen.

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The City believes two employees, one from JPC and another one from City Power, issued fraudulent letters stating that Fibrehoods/Vumatel have a valid agreement with the City that allows them to roll out aerial fibre citywide. It is claimed these letters were used to convince Johannesburg Roads Agency (JRA) to issue way leaves on demand.

To resolve the impasse, the City said it wrote to Fibrehoods/Vumatel in August 2017 informing them their contract was not valid and in violation of the Municipal Finance Management Act (MFMA) and the City’s supply chain management policy. It also requested a full mapping of all aerial fibre laid to date and a rectification plan from the service provider.

The City is claiming that after extensive engagement with City Power and JPC, Fibrehoods / Vumatel, the mapping of the aerial fibre was not produced and this resulted in Fibrehoods litigating against JRA – “Despite the obvious connection between Altivex 75, Fibrehoods and Vumatel; both Fibrehoods and Vumatel plead ignorance of the illegality of their Altivex 75 contract,” the City said in the statement.

MMC Knott said the outcome of this case is that the City is not receiving any payments for aerial fibre from any of the thre companies in question “which constitutes unjustified enrichment on the part of Altivex 75.” 

Steward told The Citizen that Group Forensic and Investigative Services (GFIS) is currently pursuing the matter and “in terms of the bribery allegations it will be premature to speculate whether the employees were bribed.”

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100 suspended, 12 resign, 7 dismissed from City of Joburg

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