Fraud and corruption-accused businessman Edwin Sodi and his partner Jeophrey Ramahlaleroa must return nearly R40m 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.

According to The Mercury, the DBSA agreed to pay the advance payment of R35m but required the G5 Group to provide an advance payment 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 on 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 days.

Hollard complained the demand was premature as seven calendar days had not yet lapsed and that the demand was non-compliant with terms of the advance payment guarantee and therefore fatally defective.

The insurer also maintained the advance payment of R23.06m had been made and that the amount had been fully recovered.

DBSA said Hollard had a claim of nearly R40m against NJR Projects, Ramahlaleroa and Sodi.

According to The Mercury, the bank also indicated that the R40m was inclusive of the R11.55m claimed by DBSA from Hollard in terms of the guarantee.

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 Hollard had been granted an order for payment against Ramahlaleroa and the remaining adjudication was only against Sodi.

Hollard also sought an order for payment of about R40m, including interest, against NJR Projects, Ramahlaleroa and Sodi as well as one directing the businessman to indemnify Hollard against all costs incurred in opposing DBSA’s application.

In January, Gauteng High Court (Pretoria) Judge Nelisa Mali ordered Hollard to pay R11.55m, including interest, to DBSA.

Sodi and Ramahlaleroa must pay Hollard nearly R40m including interest at 12.5% per annum. Hollard’s claim of about R28.3m against NJR Projects was postponed sine die - this relates to the performance guarantee granted to the company now being claimed due to its failure to complete the project.

Last Tuesday, Judge Mali dismissed Hollard and Sodi’s applications for leave to appeal the two adverse orders forcing them to pay R11.55 million (by Hollard to DBSA) and about R40m (by Sodi and Ramahlaleroa to Hollard).

In its application for leave to appeal, Hollard had argued there had been fraud but the judge rejected its arguments.

Full report in The Mercury

Judgment