Minister of Public Works and Infrastructure Patricia de Lille.
- Government is putting a system in place to prevent overpayment to private landlords.
- The government has managed to recover over R273 million after renegotiating leases, says Minister Patricia de Lille.
- The Auditor-General of South Africa has previously flagged month-to-month leases by government departments as irregular expenditure.
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Renegotiating leases with landlords that are overcharging government has saved it R273 million so far, according to Public Works and Infrastructure Minister Patricia De Lille.
The minister and other department officials on Wednesday briefed the portfolio committee on public works and infrastructure on steps being taken to improve governance. They also gave an update on legal cases the department is involved in.
De Lille explained that the Auditor-General of South Africa had flagged month-to-month leases as a source of irregular expenditure. As a result, the department had brought month-to-month leases to an end – reducing them from over 1 817 to 122 – by putting in place “better systems”.
Government has also tried to recover funds from landlords that overcharged it.
“Through the renegotiation of the overcharges by the private landlords, we have been able to save more than R273 million, that has been recovered, and the process is ongoing.”
De Lille said that she is requesting a system where all invoices for leases can be posted on a single entry-point or platform for all those involved in payments can see the amounts due to landlords. This will help avoid overpayment or unauthorised payments to certain landlords. This new system could also possibly help curb litigation related to leases, especially month-to-month leases, she added.
“It was a big fight, but the landlords have come to accept that we are no longer going to pay on a month-to-month basis because it is irregular expenditure,” said De Lille.
De Lille said 10 landlords in the country account for 80% of the R5 billion spent on leases every year by government departments. The department has also established a team to engage with these 10 “big” landlords to resolve disputes around payments.
The department has also appointed an independent senior advocate, on the recommendation of the State Attorney, to review all its cases and determine which ones are worth pursuing in court or settling. As at March this year, there are 315 litigation cases involving its regional offices and head office. There are 71 dormant cases, and only 38 finalised or closed cases.
This is coming at a legal cost, and a budget of R19 million has been allocated for the 2022/23 year to deal with legal matters. As at 30 July, roughly R9.5 million had already been spent on recovery.
Legal advisor to the Department of Public Works and Infrastructure (DPWI) Christopher Makgoba noted that the number of dormant cases is high, at 71. Many times, cases become dormant because the State Attorney has a plethora of matters to deal with. There are capacity constraints within the office of the State Attorney which means cases can’t be finalised when they are still “fresh”.
Sometimes cases become dormant when there are no witnesses because the person in question has retired or resigned. In some instances, a plaintiff’s company has been deregistered by the Companies and Intellectual Property Commission (CIPC), which also stalls the process as they have lost their legal personality status and can’t be sued.
In some instances when the case can go either way because the merits of each party are matched, the State Attorney or counsel would rather leave it and wait for it to “die”. “That approach is fine at court level, but for auditing and accounting purposes, it is not moving and still a contingent liability,” said Makgoba.
The work of the senior counsel – which will begin on 1 September – is critical in whittling down the cases – especially those involving leases, De Lille stressed. “This new person, who is to start on 1 September, will assist us to deal with dormant and old litigation cases that have been in system, some since 2013.”
Another means of reducing dormant cases is to possibly have the State Attorney approach the applicant’s attorneys to withdraw the matter with no cost implications on each party, explained Makgoba.
It is also recommended the DPWI look to use alternative dispute resolution methods – to reduce old cases and save costs and time.
De Lille echoed views that alternative dispute resolutions can assist in reducing cases against the department.