Fin24

Medupi hush money claims

2012-05-27 15:58

Pretoria - Hush money: that's what the Medupi Power Station Joint Venture (MPSJV) is offering four emerging subcontractors in settlement of their claims for compensation for masonry work at this new Eskom power station in Limpopo. 

This is according to a furious Martin Nel of Baarata who, together with subcontractors Lezmin, TT61 and Zin-zi, has been financially ruined after subcontracts that should have put their businesses on a new growth path went awry.

Sake24 has previously reported that the four contractors reckoned that they had been bullied into unworkable contracts.

According to Nel, the companies’ labourers alone had cost Baarata more than R19m, while its total income from the contract was only around R9m.

MPSJV, a joint enterprise between Concor, Grinaker-LTA and Murray & Roberts (M&R), with M&R as leader, previously responded by saying that it had done what it could to help the contractors.

Meanwhile, an independent report that Eskom requested on the issue remains secret despite several requests from these subcontractors to see it.

According to Shakes Ndou, the owner of TT61, he and the other three subcontractors were suddenly told on Thursday to attend a settlement meeting on Friday morning. He borrowed money to travel from Pretoria to Lephalale for the meeting.

When he arrived, MPSJV made each one a separate settlement offer which, he says, was pathetic.

According to the written offer, which Sake24 has seen, the settlements are subject to the subcontractors halting legal action and not discussing the content with anyone other than their legal and financial representatives.

They are expressly forbidden to discuss the offers with other MPSJV subcontractors and therefore with each other – which would be regarded by the JV as a rejection of the offer.

Sake24 understands that during the settlement meeting they were expressly warned not to speak with the media.

Ndou said this would also mean that he would be prevented from further discussing the matter with President Jacob Zuma’s presidential hotline, which he had approached for assistance.

On Friday the MPSJV said the confidentiality clause was normal practice. Each of the four has rejected the offer.

Shamima Mulla, the owner of Zin-zi, said she is extremely disappointed. She reckons that MPSJV has tried to take advantage of the subcontractors’ desperate plight.

She cannot accept the meagre R54 000 offered while, for instance, she still owes construction funders Nurcha (Tusk) about R700 000, she said.

The subcontractors were also apparently told that the settlement amounts were not based on the independent report, and they were given no insight into how the amounts had been calculated.

On Friday the MPSJV declined to respond to enquiries because, it said, the offers had not been accepted yet. It claimed it had not seen the Eskom report either.

Nel says if the report showed that these subcontractors were at fault, Eskom would surely have said so.

The fact that the content is being withheld strengthens their suspicions that the report supports their claims.

Ndou says he and his colleagues will not be silenced like children with a “sucker”. They won’t rest before they get what is legally owing to them.

Every day one hears that government is helping small and emerging contractors through expenditure on infrastructure, he says. Medupi is currently the country's biggest project, but Eskom is sitting back and watching their ruin.

In contrast to the statement by the MPSJV, Eskom said it had discussed the contents of the report with the JV.

According to Eskom spokesperson Hilary Joffe, the utility has no formal relationship with the subcontractors and is under no obligation to share the findings with them.

Joffe initially told Sake24 that Eskom had been informed by the MPSJV that three of the subcontractors were prepared to settle, and that the fourth would accept independent arbitration by an outside party.

When Sake24 pointed out that this did not agree with what the contractors or the MPSJV had told our reporter, she changed the statement, saying that the MPSJV was prepared to settle with the subcontractors.

 - Sake24

For more business news in Afrikaans, go to Sake24.com.

Comments
  • brian.enslin - 2012-05-27 18:58

    The way I read this, the sub-contractors did not record all relevant delays and disruptions which resulted in standing time (subsequently loss of production, whil still incurring P&G and wage costs). If they had followed the contractual procedures for delays, as per the FIDIC contract under which they are probably operating, they could have mitigated their losses and claimed accordingly from the client (in this case MPSJV). Legally, the sub-contractors have NO claim against Eskom. Eskom in this case are 100% innocent! Which is unfortunate, I did get so excited when I saw this article, but alas it is a sad case of someone getting involved in something they do not fully understand.

      Thatcan - 2012-05-28 13:16

      A common problem is that a subcontractor over resourse. Let me explain. If there is enough work for 10 bricklayers for months based on available area, and the contractor either get instructed to bring 40 Bricklayers( paperwork is needed to verify instruction, or dicides this out of free will and then have to place 4 bricklayers in a 1 linear metre of brickwork , the contractor will not even achiev his breakeven because each bricklayer would have to lay 2 brick before moving to next layer. No tradesman would me able to acheive the breakeven if work area is so populated. Contempory records have to be kept by subcontractor as per relevant clause and verified by both subcontractor and main contractor. Thus meaning they have to sign on timesheet or on any other form of recordkeep. I am sure MR Strydom did to that. Common error for a common builder.

  • brian.enslin - 2012-05-27 19:03

    The way I read this, the sub-contractors did not record all relevant delays and disruptions which resulted in standing time (subsequently loss of production, whil still incurring P&G and wage costs). If they had followed the contractual procedures for delays, as per the FIDIC contract under which they are probably operating, they could have mitigated their losses and claimed accordingly from the client (in this case MPSJV). Legally, the sub-contractors have NO claim against Eskom. Eskom in this case are 100% innocent! Which is unfortunate, I did get so excited when I saw this article, but alas it is a sad case of someone getting involved in something they do not fully understand.

  • Koos - 2012-05-27 22:04

    All work with and for Eksdom is according to the NEC contract. In short it is there to protect Eksdom and screw the contractor.

      J.L.Strydom - 2012-05-28 07:30

      Hi Koos, The said contracts was according to Fiddic for two contractors and then some sort of small paper work compelation (for the other two) wich MPS JV now also claims to be "according to Fiddic"! According to me, the intentional misinterpretation of facts.

      Thatcan - 2012-05-28 12:52

      Johan, the contract is FIDIC. The Claims procedure is clear in Clause 20.1. A experienced contractor would know this. Guess you were not LMAO

      J.L.Strydom - 2012-05-28 14:08

      Hi Thatcan , Yes, you are correct, it is FIDIC, sorry for the stuttering mistake. :-)

      Thatcan - 2012-05-28 15:02

      J.L. Strydom, I will accept, if you accept you were caught with your pants down, and didn't listen to advice given as there must be successful subcontractors on Medupi, and all of them listened to same people that guided you. Correct me if I am wrong?

      J.L.Strydom - 2012-05-28 15:30

      Thatcan, was you maybe one of those giving advice to me? I did as advised and according to contract, again, the only mistake I made, was to believe the persons involved would admit to have received the dated “notices of intention to Claim” within the time frame. Unfortunately, I trusted the people involved to be ethical, and did not find it necessary to complete transmittal letters, except for the last Claim. Funny, when this was mentioned, I still could not get Tom Burcke to admit that he has received the ”Notice of Intention to claim”. So yes, I admit, I was caught with my pants down. I did not believe that there are Men (and woman) who would deliberately lie and/or just denying they ever said something or received something.

      Thatcan - 2012-05-28 16:21

      Johan, I think you are not understanding again. My mousepad may be affecting some of my posts below, but "was you maybe one of those giving advice to me" is also quite laughable with grammer you are using. The grammer used here reminds me of the PM on that Business unit, which I believe is your currect employer now, at least from what I heard. I am sure all ur " intention to claim" s was received, but the general Fidic contract requires a min of 28 days when the subcontractor maybe have became aware of additional costs and the notice of those costs. Your contract may vary to this. The info I had, was that last claim's notice for production was received no later than 4 months after you started working. You would have know about that cost at day one of your access on site. Well time barred, and it is well within the contract to reject any such claim. Thus, if you had your pants on, you would have placed your notice in the required timeframe. That is were YOU failed the contract, and not anybody suppossingly giving you advice. You, Johan is the root cause of your downfall, yet commited breach of contract especially in regards to the Confidentiality (?) Clause No 1.12, I think.. Again, you never used the remedies what the contract gives you and failed in many of your obligations. Pity you will never admit it...

      J.L.Strydom - 2012-05-28 18:15

      O yes, the confidentiality clauses. Why do any company who do ethical and transparent business, use confidentiality clauses?

      Thatcan - 2012-05-29 07:27

      Mr Strydom, Please indicate where the contract allows one claim/s to be substutited for another claim/s. The notice would then not correspondabce with the relative claim. if you claim was for production, the notice have to be for the same type of event. The 1.12 Clause is a standerd to the FIDIC contract and not placed there to be undermine anyone. If you claim the contract was invalid, then you have to proof that, and everybody adhered to their obligation except your recordkeeping and interpretation of it. But goodbye. I will not wste my time on substandard ideologies(?).

      Thatcan - 2012-05-29 14:54

      Johan, I see that you still dont understand. If you put in a notice for example for no access to works, you cant use it as a basis for a claim additional transport cost, or a loss of production as in your case. It is two different events in principle. It is quite funny you would blame somebody for making calculation error when your spreedsheet were riddles with double dipping sum calculations. Check it before you make fallious statements. Cheers

  • Lynne - 2012-05-28 05:36

    Maybe pushing inexperienced small businesses into large complex agreements is not the right way to empower them.

      J.L.Strydom - 2012-05-28 07:42

      Hi Lynne, I beleive by introducing small bussinesses to these complex agreements are the right way to empower them. By assisting them with interpretations and processes is real empowerment. Unfortunatly, in this specific case, and I beleive many others, the main contractors Abuse these contracts to reduce their Insufficiency costs. This is not empowerment.

  • J.L.Strydom - 2012-05-28 07:22

    The way I read this, not even half of the facts have been mentioned! Yes Brian, dated standing time delays have been recorded, with Notices of Intention to Claim, with estimate cost, with site instructions with number of employees standingand and reason for standing, signed of by relevant employees of MPS JV. The one thing that was not done, was getting a signed transmittal sheet from MPS JV. Now, their reason for not processing the claims, was that there was no proof that they received the claims in time. The proof I have is revised dated certificates from MPS JV with all numbered and dated claims with claim value and MPS JV calculated value. If the claims were not handed in in time (Remember, MPS JV have no Transmittal sheet to validate time baring claims), where did they get the information from for there revised payment advice? The sub contractors only went to the client to try and resolve the isues faster and without costly and time consuming arbitration. For myself, I fully understand the contract and how it reads, however, what I did not understand, was that there ARE people who do not admit to have received contractual corospondance (because there are no transmittal sheet). I also did not understand that there are people who would intentionaly take advantage/harm other contractors after seeing all corespondance. Johan Strydom

  • Martin - 2012-05-28 10:53

    do not price cheap to get tenders, price realistic, price for extra works or do them strictly as day works. the acceptance time to sign off scope changes and design changes in eskom is not the 21 days or whatever they stipulate in their contracts, they literally can take up to 6 months, and still get it wrong, meanwhile you get penalised with standing time, had insane delays on the komati job i was on, and as a planner getting pushed for deadlines when i have received no new drawing revisions, or because they are incompetent we needed consessions on everything, each taking millinia to approve and get to us, then taking flak for delaying the job,,,eskom, if i had drawings, and you stuck to your approval times on documents i would have closed in the year delay your previous subcontractors left you with by 9 months and finished with time to spare, eskom you are the common denominator in each of your projects..ps we are almost done with your medupi ESD and SDD ducting, lol but the bottle neck now lies with our client QC who are the slowest i have seen since your own. our work is 98% flawless, from the paperwork to the final product, You are clogging my yard up lol. As a rule i will not work directly with any government institution, and then to still fight to get the company's money at the end of it all.

  • Thatcan - 2012-05-28 12:46

    Hi Joha Joha johan, The subcontractor in this case stuffed up their pricing so bad that they could never survive. Mr Strydom priced on placing 650 Brick a day per bricklayer, but could never achieve this. Lezmin was called into a meeting asking them (Lezmin) to bring proof they could achieve the 650 priced for and where the contractarul notice was were they notified the engineer of this short fall. They Couldnt. What was quite surprising is that Mr strydom had a partner. A Mr "Themba" which was quite incidently married to an MPSJV employee. That they never decleared. The problem was that although Mr Strydom claimed to be a an experience contractor his operating like a amatuer, not completing contempory recors as required by Contract. He also price a bricklsayer at 50% more than what the PLA required, and thus when Lezmin couldnt achieve the 650 bricks priced at tender stage, and achieved only 150 Bricks per day per bricklayer, JLS needed someone to blame. Maybe construction isnt for people that what build but indeed can. Better luck next time Johan LOL. TT61 went down because he failed to pay SARS. Nobody to blame but himself

      J.L.Strydom - 2012-05-28 15:00

      Thatcan (or Shereze), I am not shy to say who I am, are you? Well, it seems as if you know me, therefore the teasing stuttering. It also seem as if you have certain information, but evidently not very accurate. Can you please specify the meeting you refer to? The only meetings I am aware of where the notices was requested, was a meeting with Mr Hermann Bohmer (Senior QS for MPS JV at that stage)and Mr Chris Brummel (Construction Executive for MPS JV at that stage) and a meeting with Mr Jonathan Ely(Commercial Executive for MPS JV) where Mr Bohmer and Tom Burcke (Commercial manager for MPS JV at that stage) was present. In the first meeting Mr Bohmer had the file with all notices. In the second meeting, the same file was not there and I showed Mr Ely our copies. Yes, it is so that Mr Themba Majola had a girlfriend working with MPS JV at that stage, they were however not married as you assume. Further, all relevant MPS JV employees were aware of this, including Mr Bohmer. Are you implicating that there may have been internal influence by her to appoint Lezmin?

      J.L.Strydom - 2012-05-28 15:03

      Before we appointed our BRICKLAYERS we requested the correct rate as per the PLA from Mr Bohmer. A rate was mentioned and we had to validate this rate with Mr Patrick Metswi (IR manager for MPS JV at that stage). The rate was confirmed and our bricklayers were appointed accordingly. After the new PLA was received, the difference was communicated to Mr Bohmer and, as agreed, a notice was compiled and delivered to MPS JV. The claim was processed and paid with the first payment certificate, but with the second certificate, the calculation of the claim was changed to a format requested and provided by MPS JV. After this was done, the calculations and format was suddenly wrong and still not resolved.

      Thatcan - 2012-05-28 15:27

      The PLA rate adjustment would have been paid in all certificates, but I am sure the fatal error here was that the contractor could never produce the extra over cost incurred by yourself except for the two different PLA's. Remember the PLA is not instruction to pay, but document to comply with the minimum rates as ascribed in the agreement. Read better before you assume...

      J.L.Strydom - 2012-05-28 15:54

      Hi Chris BRAMHALL, yes, my spelling is not my strong point, neither was my judgment of character. Please inform them, I would like to hear from them again and chat about their whereabouts. So, how are you doing? Chris, you were in the meeting with Herman, myself and Chris Cordier. The meeting was in Tom Burke’s Office. You even said you fully understand the claim and would come back with an answer. The file Herman had with him, had all the Notices of claims in it.

      J.L.Strydom - 2012-05-28 16:29

      As for the PLA claim, what more do you need than the two PLAs to validate your cost incurred? You have a PLA at Tender stage with a prescribed minimum wage, and a new PLA, with increased prescribed minimum rates. You calculate the hours worked and claim the difference of the two PLA rates as a cost incurred. Or how do you suggest you do it?

      Thatcan - 2012-05-28 16:40

      The PLA is not proof of cost. What is your proof that you received your pay from your company? Mmmm..... Just think about it, your claim for that specific production claim is timebarred if my info was correct and to my knowledge the PLA claims was paid, with the assumption that the PLA min wage was your actaul cost. Again the Contract QS paid you there which I wouldn't have paid if I was your QS... regardless what actions you took or where you ran for attention... The PLA is an compliance notification, not more nothing less...

      J.L.Strydom - 2012-05-28 16:41

      Ha-ha....evidently, Not Chris, you know some of it! You see, the deference between you and me are, I am not concerned to neither name names nor hide my name, in fact, I pray for the chance to stand in front of a judge and let a trustworthy and bias third party make a decision with the evidence in front of him. Unfortunately, I don't have the financial capacity anymore to create that chance.

      J.L.Strydom - 2012-05-28 17:40

      Now we are talking! The payslips is proof of costs, wasn’t that included in the claims? As a matter of fact, Lezmin had to give the summary of payment with payslips to MPS JV (in person Mr Tom Burke). This was hand delivered AND e-mail. The issue came when the fault on the description of the job categories was discovered. That was when the PLA at tender stage was seen as “none existing”. Also the information as issued by Herman Bohmer. Unfortunately Patrick already resigned and MPS JV could apparently not confirm with him. Therefore I compiled an explanation letter with the “meaning” of the relevant words (Not how I interpret them, but how the Oxford Dictionary describe them) to validate the claim. Some people understood and agreed with the claim, but, in my opinion, when other people realized the impact the fault was going to have on their costs, they did not understand or agree with the oxford explanation. The production loss claim was brought forward after the contract was cancelled as requested by Mr Tom Burke. Please read clause 16.4 and 19.6 of the applicable contract. I had 112 days to submit the claim. The accepted contract cancelation date was 25 May 2011. 112 days later would be 14 September 2011. The claim was submitted 18 August 2011, with a cover letter, explaining calculations and transmittal sheet. And you still state this claim was time barred.

      Thatcan - 2012-05-29 07:14

      The paysheets could be verification of the rate paid, but if contractor pays more than required minimum rate of PLA, that is the risk of the contractor. Firstly the paysheet before PLA increase would verify the old rate and the new paysheet the new rate. The crux is here that the proof of transfer. To info received the JV paid over a R1 Mil to pay all wages of Lezmin, R 1,2 Mil for zinzi, and well the Pamp had been bailed out the several hundered thousands. Lezmin would not have proof of that money being paid to it's employees. That is apperant from the last comment who incurred that cost. This is all irrelavant, as the PLA claim was paid from my understanding. The Value of the claim as list in Rapport was not for that, but rest it's case of the assumption of 600 or more bricks laid in a single day by a single bricklayer. Not one of the 4 contractors could proof that "measured mile" was acheivable by the contractor regardless what happen on site. The companies were unable to do work as they priced for, and this is where the subcontractor cant pin the fault on the JV as they to had inaduquate supervision, and lack of understanding how to identify Vo's and new rates. The Qs on the job had to go out with each of the subcontractor just to show them items, an reasonable contractor would have known to claim. That is development. The Increased turnover the companies had, was development that the Development enterprise required, not thr subcontractor inability to preform the Works.

      Thatcan - 2012-05-30 09:09

      Johan, Your reference to clause 16.4 and 19.6 refers. The claim for loss of profit as mentioned in 16.4 is not similar to the production loss claim submitted by yourself. If I recall, most contracts are remeasureable, incl yours. Thus you have been paid for work done by you. You are correct that you can submit a claim within a certain amount of days as specified in contract but in case of memory loss you had to proof that certain amount of quantities were actaully allocated exclusive for you. There was 5 contractors with a max of couple of hundred thousands rand of work as per the original scope of works(only certain areas, not all structure as you assume. The World bank requires a review the adjudication of works when it exceeds the original. The original was only BOP and one unit of auxcillary bays, not any other structures are mentioned in the contractors contracts. Scope of works section is of importance here. To sum up on 16.4, if you had exclusive rights to example R 500 K incl of profit, remember the onus is one you to proof that exclusive rights to works. The contract has a stipulated profit margin which for example is 10% thus 110% is R500 K, then the loss of profit value is calculated as follows 500 K -(( 100/110) x R500 k) = 45 K loss of profit. your reference to clause 19.4 is really don't not see you it affects you unless you rely on 19.1 a, b, c, d solely. I remind you that those have to be used in line with subsection (i - v). None of them occurred.

  • Mphikele Msimaka - 2013-08-08 21:00

    I think dis Medupi thing it need Gorvement nw bt y they are so qiute cause it's time nw,this Medupi is the biggest project in our country,Do someting PLS.

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