Mpumalanga Housing Department Faces R470 Million Asset Seizure After RDP Contractor Wins Court Order
- A construction company has secured a court order to seize R470 million worth of assets from the Mpumalanga Department of Human Settlements
- XJR Construction says it was paid R103 000 per RDP house instead of the official government subsidy of R164 000 per unit since 2014
- The writ of execution was granted against Mpumalanga Human Settlements MEC Speedy Mashilo and Human Settlements Minister Thembi Simelane
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MPUMALANGA - A construction company that has been building RDP houses in Mpumalanga since 2014 has gone to court and won, securing a R470 million warrant of execution against the provincial Department of Human Settlements.
XJR Construction says it spent more than a decade building government-subsidised homes but was consistently paid far less than what the official housing subsidy allows, and the department ignored legal summons repeatedly before the matter ended up before a judge.
The writ of execution was granted in the Mpumalanga High Court on Monday against MEC Speedy Mashilo and national Human Settlements Minister Thembi Simelane.
What XJR Construction is claiming
The company says the numbers tell a clear story. For every RDP house it built, it received R103 000 from the provincial department. The problem is that the official government subsidy for each unit is R164 000, leaving a gap of R61 000 per house.
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Over thousands of homes built across more than ten years, that shortfall adds up to an enormous amount of money. XJR Construction also claims that the provincial department was receiving the full R164 000 subsidy per unit from the national government, meaning the difference between what was paid out and what was received was never passed on to the builder.
When it comes to how RDP housing works, the government does not build these homes directly. Instead, it awards tenders to private construction companies, which must meet strict requirements including registration with the Construction Industry Development Board and the National Home Builders Registration Council.
Once awarded a contract, the company builds the homes and gets paid according to the agreed subsidy amount. If the provincial department was pocketing the difference between the national subsidy and what it paid XJR, that would be a serious breach of the system designed to deliver housing to South Africa's most vulnerable citizens.
Department now rushing to court
Despite being served with summons on multiple occasions over the past three years, the department only sprang into action after the court order was granted.
It has now filed an urgent application asking the court to throw out the judgement and stop the asset attachment from going ahead. The department's argument is that building costs differ between provinces, though it did not expand on how that justifies the gap between the subsidy received and the amount paid to the contractor.
The matter was set to be heard in court on Tuesday.
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