JOHANNESBURG – Controversial businessman Edwin Sodi and his partner, Jeophrey Ramahlaleroa, are required to return nearly R40 million to Hollard Insurance following a failed R283 million project to upgrade and build accommodation at a Free State prison.
The case stems from a 2018 contract awarded to NJR Projects (now known as the G5 Group), co-founded by Sodi and Ramahlaleroa, by the Development Bank of Southern Africa (DBSA). DBSA, acting as an implementing agent for the National Department of Public Works and Infrastructure, tasked NJR Projects with upgrading and constructing additional accommodation at the Department of Correctional Services in Parys, Free State.
After NJR Projects requested an advance payment, DBSA agreed to pay R35 million, contingent upon the G5 Group providing an advance payment guarantee. Hollard subsequently issued a R23.06 million guarantee in favor of DBSA, which included clauses for an 18-month recoupment period and monthly recoupments of just over R1.28 million.
However, the G5 Group defaulted on the advanced amount, leading DBSA to recover just under R11 million before issuing a notice of default and ultimately terminating the agreement with the G5 Group. DBSA then demanded approximately R11.55 million from Hollard due to the G5 Group’s failure to make payment.
Hollard contested the demand, arguing it was premature and non-compliant with the terms of the advance payment guarantee, while also asserting that the advance payment had been fully recovered. DBSA maintained that Hollard had a claim of nearly R40 million against NJR Projects, Ramahlaleroa, and Sodi, inclusive of the R11.55 million claimed by DBSA from Hollard under the guarantee.
During the Gauteng High Court, Johannesburg hearing in July of last year, it was revealed that NJR Projects had been liquidated. Hollard had already been granted an order for payment against Ramahlaleroa, leaving the adjudication primarily against Sodi.
Hollard sought an order for payment of approximately R40 million, including interest, against NJR Projects, Ramahlaleroa, and Sodi. They also sought an order directing Sodi to indemnify Hollard against all costs incurred in opposing DBSA’s application.
In January, Judge Nelisa Mali of the Gauteng High Court, Johannesburg, ordered Hollard to pay R11.55 million, including interest, to DBSA, despite Hollard's unsubstantiated claims of fraud on the part of DBSA and G5 Group. Sodi and Ramahlaleroa were ordered to pay Hollard nearly R40 million, including interest at 12.5% per annum.
Hollard’s claim of approximately R28.3 million against NJR Projects was postponed sine die (indefinitely), relating to the performance guarantee granted to the company. This claim stems from the company’s failure to complete the construction project, which forced DBSA to terminate the contract.
Last Tuesday, Judge Mali dismissed Hollard and Sodi’s applications for leave to appeal the two adverse orders, which compel Hollard to pay R11.55 million to DBSA and Sodi and Ramahlaleroa to pay approximately R40 million to Hollard.
Hollard argued fraud in its application for leave to appeal, but the judge rejected these arguments. “That premise is unsustainable. No factual foundation was laid to substantiate fraud, nor was any evidence adduced to support collusion between DBSA and the contractor. In the absence of proof, the allegation cannot sustain a reasonable prospect of success on appeal,” Judge Mali stated.
In related developments, the City of Tshwane has initiated steps to have Sodi's companies, Blackhead Consulting and NJR Projects, blacklisted by the National Treasury for their role in the delayed upgrade of the Rooiwal Waste Water Treatment Plant.
Additionally, Sodi remains embroiled in a long-running fraud, corruption, and money laundering case before the Free State High Court, pertaining to the R255 million tender for the removal of asbestos roofs in houses in the province.
Sodi’s legal representatives did not respond to requests for comment on Wednesday.
