Tribunal tears into municipality's deals with developers

A Special Tribunal judge has ruled against the eThekwini Municipality, stating that the involvement of three private developers in its Human Settlements Infill Housing Programme (IHP) was unlawful and unconstitutional. The court was hearing a case brought forth by the Special Investigating Unit, which sought an accounting of the profits allegedly earned from the housing scheme and an end to the developers' participation.

In 2000, the municipality aimed to develop vacant sites in the Phoenix area for affordable housing, intending to sell these homes to income-earning households. The municipality advertised a tender in 2002, requiring developers to meet specific criteria, including providing evidence of funding, a history of references, and the ability to secure funding for the entire project. The beneficiaries were to receive good value for their money.

Three developers were appointed to the IHP in 2002 – Madupha Business Enterprise CC, Ready Homes CC, and Woodglaze Trading (Pty) Ltd. Madupha and Ready Homes were added to the programme without a proper public advertisement, evaluation, or bidding process. Woodglaze was added later after one of the original contractors failed to perform their duties.

In 2017, the municipality attempted to revoke Woodglaze's contract due to supply chain management concerns but ultimately decided to continue the partnership. In 2021, the municipality renewed its contract with Woodglaze without conducting a review of the IHP or Woodglaze's continued involvement.

The Special Tribunal found that the developers' appointments and continued participation in the IHP were unlawful and unconstitutional, as they did not comply with the constitutional and statutory procurement framework. The judge emphasized that a blanket order to return the profits would be inappropriate, as the court did not have sufficient evidence.