---

The defendants have deliberately disseminated false accusations against the plaintiffs through media statements, annual statutory reports, across social media platforms, including the second plaintiff's (Lufuno Mphaphuli) name and photographs, and on radio platforms on almost all major SABC radio stations in the country. - Mphaphuli's lawyers

---

Sizwe sama Yende

---

An owner of an electrical engineering company has filed an unprecedented R1.8 billion lawsuit against a Limpopo municipality and the Special Investigating Unit (SIU) stemming from the cancellation of his R326.5 million about six years ago.

Lufuno Mphaphuli, who owns Mphaphuli Consulting (Pty) Ltd, claims in his papers filed in the Polokwane High Court on Wednesday that the SIU had damaged his reputation and cost his company future contracts through driving a wrong narrative in the media accusing him of having overcharged the Fetakgomo Tubatse Local Municipality, seating in Burgersfort, an amount of R76 million.

In a 174-page bundle, Mphaphuli’s lawyers argue: “In summary, the harm inflicted upon the plaintiffs (Lufuno Mphaphuli and Mphaphuli Consulting) extends beyond mere reputational damage. It strikes at the very heart of their professional identity, financial stability, and future opportunities, casting a long shadow over their personal and professional lives. The unwarranted and baseless accusations, propelled by the SIU and magnified by the media, have not only damaged their standing in the industry but have also infringed upon their constitutional rights to dignity and a good name.”

SIU spokesperson, Kaizer Kganyago, said he could not comment because the matter was before court.

NATIONAL DEPARTMENT APPROVED THE PROJECT AND FUNDING

The municipality awarded Mphaphuli the contract to electrify 20 000 households on January 26 2012. At that time, the pace at which the municipality was electrifying households was very slow, averaging less than 1 000 households annually.

It turned out that Mphaphuli had a solution to fasttrack the project and made a submission to the National Planning Commission.
When the municipality awarded Mphaphuli Consulting (Pty) Ltd the contract, it went through the scrutiny of the National Treasury and the then Department of Energy (now Department of Mineral Resources and Energy) before approval.

Mphaphuli’s charge of R16 000 per household was benchmarked on Eskom’s charges in the municipal area and the Department of Energy, as the funder of the project through the National Electrification Programme (INEP), approved the charge. “On or around 5 August 2013, the Municipality submitted a funding application to the [Department of Energy].This application showed the project electrification costing at R16,320 per household, with R16,000 per household required from the department grant funding and the balance of R320 per household to be funded from the municipality's own revenue sources,” the lawyers said.

“The National Treasury’s approval for the pledging application enabled the municipality to secure this DMRE funding for Operation Mabone by pledging its future INEP allocations as stipulated in the approval letter.”

THE BEGINNING OF STRIFE

Along the way, the municipality began withholding payments due to Mphaphuli. It may seem that the straw that broke the camel’s back was Mphaphuli’s litigation in the Polokwane High Court in December 2016.

The municipality was forced to pay him R41 million for work done, and it then failed to reverse the payment when it approached the Supreme Court of Appeal (SCA) on March 6 2017. Mphaphuli claimed again and was paid an outstanding amount of R9.7 million in 2022 after instituting a civil claim.

The municipality’s mayor and manager asked the SIU four days after the SCA fiasco, on March 10 2017, to include Mphaphuli Consulting in its investigation of the municipality, which was approved by a Presidential proclamation in 2014, for financial years before Mphaphuli was appointed. 
The proclamation was, notably, issued on the defunct Greater Tubatse Local Municipality, not the amalgamated Greater Tubatse and Fetakgomo municipalities which existed as from August 2016.

“The request for the investigation came from [the municipality] and not directly from the President as required under the Special Investigating Units and Special Tribunals Act (SIU Act),” Mphaphuli’s lawyers argued. “This raises a question about the SIU’s jurisdiction and mandate to investigate a matter involving a municipality that no longer exists, based on a request from an entity not explicitly authorised to initiate such an investigation under the SIU Act.”

The SIU submitted its report to President Cyril Ramaphosa on September 10 2019, but Mphaphuli was not given a chance to respond to the allegations against him.  The SIU has since instituted a R76 million civil claim against Mphaphuli for charging R16 000 per houseshold, which the SIU believes was exorbitant. However, none of the municipality's or national departments' officials who approved Mphaphuli's 'inflated' charges has been tied to the lawsuit.

PROCLAMATION DID NOT INCLUDE MPHAPHULI

The SIU cannot investigate matters or entities that fall outside the scope of the proclamation, Mphaphuli’s lawyers argue.

“The defendants have deliberately disseminated false accusations against the plaintiffs through media statements, annual statutory reports, across social media platforms, including the second plaintiff's (Lufuno Mphaphuli) name and photographs, and on radio platforms on almost all major SABC radio stations in the country,” say the lawyers.

“This dissemination of false accusations, without a judicial verdict, constitutes a direct attack on the plaintiffs' professional dignity, ethical standing, and reputational integrity, infringing upon their rights to dignity, privacy, and fama (reputation). The propagation of false, damaging statements in annual financial statements eroded trust, breached obligations around candour/fair dealing, and necessitates redress for reputational harm and disregard of the First Plaintiff's rights.”

STATE FAILED TO SAFEGUARD PLAINTIFFS’ CONSTITUTIONAL RIGHTS

Mphaphuli’s lawyers said that the plaintiffs anchored their claims on the constitutional obligations of the state, particularly the duty to respect, protect, promote and fulfil the rights enshrined in the Bill of Rights, as stipulated in section 72 of the Constitution.

“They contend that the state has failed to uphold its constitutional mandate to safeguard their rights under section 7(2) of the Constitution, thereby intertwining contractual, reputational, and constitutional dimensions in this matter. Based on their established standing, the llaintiffs seek legal relief, including declarations of rights infringed, compensation for damages, and injunctive relief to prevent further harm.”

They broke down the claim R1.8 billion claim as follows:

•    R480 million as compensation to Mphaphuli Consulting for lost income from 2017 to 2024, attributable to the deefendants' actionable conduct;
•    R780 million to Mphaphuli Consulting as compensation for projected future income losses from 2024 onwards, up to Lufuno Mphaphuli’s intended retirement at the age of 70;
•    R49.9 million Mphaphuli Consulting representing the anticipated profit margin of 15% from the contractual agreement valued at R326.5 million, which was lost due to the defendants’ breaches of the contract;
•    Reputational damages to the sum of R50 million suffered as a result of the defendants' defamation and dissemination of false narratives against the plaintiffs globally;
•    Non-patrimonial losses to the sum of R50 million including, but not limited to, emotional distress, mental anguish, and harm to personal dignity, experienced by the Lufuno Mphaphuli due to the defendants' conduct;
•    Goodwill and future business valuation impact consideration to the sum of R400 million  reflecting the adverse impact on Mphaphuli Consulting’s business valuation and goodwill, particularly concerning the potential for international expansion and the intended future sale of the company by Lufuno Mphaphuli at retirement. 
*This story has been updated