Uncategorized 5.12.2014 04:00 pm

Eskom turns on judge

FILE PICTURE: Power lines. Picture: Nardus Engelbrecht/SAPA

FILE PICTURE: Power lines. Picture: Nardus Engelbrecht/SAPA

Eskom has accused a judge who acted as an arbitrator in a dispute with one of its contractors of misconduct in an effort to set aside his award against the utility.

The accusation was in the South Gauteng High Court this week, where Eskom was taking the award on review.

The review application stems from a claim by an entity made up of Khum MK Investments and BIE Joint Venture – one of five entities on a panel that provided Eskom with quality control services.

Name change

Eskom had requested the contractor to change its status to that of a company, which it did early in 2010.

The company’s legal predecessor – Khum MK Investments and BIE International Engineers Joint Venture – was awarded the contract in 2009 after a competitive bidding process and was paid more than R1 billion between 2009 and 2013.

The contract was terminated by the end of last year after the company refused a request by Eskom to substantially lower its agreed-on tariffs.

The company then claimed outstanding payments.

Some payments were made, but before the legal process was concluded Eskom changed legal teams and its defence. It now argued it did not contract with the company but with the joint venture and the company therefore had no claim.

Arbitrator Judge Lewis Goldblatt directly dismissed this argument and ordered Eskom to pay R47.9 million.

For a review of the arbitration to succeed, Eskom has to show misconduct or gross irregularity in terms of the Arbitration Act.

Advocate André Gautschi SC, for Eskom, argued Goldblatt closed his mind to the evidence Eskom presented and favoured its opponent. He claimed Goldblatt expressed his bias during pre-arbitration discussions.

He said Goldblatt’s conduct amounted to bad faith and he deliberately ignored evidence that favoured Eskom.

He said Eskom did not get a fair hearing and the proceedings were therefore irregular.

Gautschi argued the company should not merely have substituted the joint venture – a new procurement process should have been followed.

Advocate Gerrit Pretorius SC, for Khum, shot back that Eskom was grasping at straws and had impugned the reputation of a well-respected judge to avoid its contractual responsibilities.

He said the change in legal status of the contractor was a minor change made at Eskom’s request.

“All that changed was the legal form. Eskom had a policy at the time that all contractors that were joint ventures should be changed to companies.”

He said quotations from the arbitration record were taken out of context in an effort to show bias on the side of Goldblatt.

Quality ‘improved’

Eskom knew all along about the change and it failed to call a witness from its finance department to testify, because he would have said so.

A director of Khum had earlier told Business a total of R295 million was still outstanding and Eskom had scaled down its quality management once the contract ended. She expressed concern about possible component failure at power stations.

Eskom executive for sustainability Dr Steve Lennon denied this. He said “if anything”, Eskom’s quality management had improved after the contract.

 

 

 

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