High Court Dismisses MTN's Exception in SIU's R10 Million Phone Procurement Case

The KwaZulu-Natal High Court in Durban has delivered a decisive judgment in a case involving mobile communications giant, MTN, and South Africa’s Special Investigating Unit (SIU). In a dispute focused on the lawfulness of a R10 million transaction for 10,000 cell phones meant for the Limpopo Department of Health, the court ruled in favor of the SIU, indicating a strong stance on the integrity of public procurement processes.

Specifically, the suit alleges that MTN's unsolicited proposal and subsequent agreement during the height of the COVID-19 pandemic did not conform to the standards of the Public Finance Management Act (PFMA). The phones, which were supposed to support mass COVID-19 screenings, did not reach their intended destination. Out of the 10,000 phones, 9588 were never distributed as planned, raising serious concerns about the transaction’s adherence to regulatory guidelines.

MTN's challenge in court has been struck down as Judge K. Pillay dismissed its exception on February 21, 2024. MTN had claimed that the SIU's case details were insufficient to establish a legal issue, but the court disagreed. According to the judgment, the SIU must show that the process was flawed by irregularities rather than directly pointing out unlawful actions by MTN. This aligns with similar cases, such as the Allpay Consolidated Investment Holdings precedent, which underscores the importance of revising or annulling contracts when they are found invalid to ensure accountability in the use of public funds.

The outcome of this court ruling may have far-reaching implications. It sets a clear message that unsolicited proposals, which can circumvent standard procurement processes, must still abide by the rigors of the law. By upholding this standard, the judgment reinforces that adherence to lawful procurement practices is compulsory, particularly in transactions that involve taxpayer money.

With MTN being represented by Advocate P. Mokoena SC and Werksmans Attorneys, and the SIU's legal team consisting of Advocate LG Nkosi-Thomas SC and Advocate TM Makola, supported by the Office of the State Attorneys in Pretoria, the case exhibits the gravitas and complexity expected in high-profile legal battles.

This ongoing legal challenge emphasizes the role of entities like the SIU in asserting the necessity for transparent and accountable procurement within South African government departments. The case against MTN signals a continued effort to ensure that public spending is conducted lawfully, particularly in times of crisis such as the COVID-19 pandemic.