Controversial businessman Edwin Sodi and his partner Jeophrey Ramahlaleroa have been ordered to pay back nearly R40 million to Hollard Insurance following a botched R283m project to upgrade and build accommodation at a Free State prison.
NJR Projects, which Sodi and Ramahlaleroa co-founded and is now known as the G5 Group, was awarded the contract by the Development Bank of Southern Africa (DBSA) in 2018 and the company requested an advance payment. The DBSA, which operates as an infrastructure delivery division, agreed to pay the advance payment of R35m but required the G5 Group to provide an advance payment guarantee.
Failed Project and Guarantee
Hollard then issued the R23.06m guarantee in favour of DBSA, with clauses making provision for a recoupment period of 18 months and monthly recoupment of just over R1.28m. However, the G5 Group defaulted towards the payment of the advanced amount based on the guarantee and DBSA could only recover just under R11m and later issued a notice of default.
In addition, the state-owned development finance institution terminated its agreement with the G5 Group. DBSA sent a letter of demand to Hollard, stating that it was owed about R11.55m due to the G5 Group’s failure to make payment of the certified amount within seven calendar days.
Court Ruling and Order
The insurance company complained that the demand was premature as seven calendar days had not yet lapsed and that the demand for payment was non-compliant with the terms of the advance payment guarantee and therefore fatally defective. During the hearing of the matter at the Gauteng High Court, Johannesburg in July last year, it emerged that NJR Projects had been liquidated and that Hollard had been granted an order for payment against Ramahlaleroa and the remaining adjudication was only against Sodi.
In January, Gauteng High Court, Johannesburg Judge Nelisa Mali ordered Hollard to pay R11.55m including interest to DBSA. Furthermore, Sodi and his partner were ordered to pay back nearly R40 million to Hollard Insurance. The order also directed the controversial businessman to indemnify Hollard against all costs it incurred in opposing DBSA’s application.
Some key points to note about the court ruling include:
- The order for payment of nearly R40m includes interest
- Sodi and his partner must indemnify Hollard against all costs incurred
- NJR Projects had been liquidated prior to the court ruling
- The DBSA terminated its agreement with the G5 Group due to default
For more information on the Development Bank of Southern Africa and its role in infrastructure development, visit the South African Government website.</p)
