Siemens Energy (Pty) Ltd and Others v City of Cape Town and Others

Siemens Energy (Pty) Ltd submitted two declarations of interest forms to the City of Cape Town – one in June 2021 as part of a tender offer for switchgear equipment, and one in October 2021 as an annual supplier update. On both forms, Siemens Energy declared that none of its directors had a spousal relationship with a person in the service of the state. This was incorrect: the second applicant's wife was employed at the CSIR, and the third applicant's husband was an eye surgeon providing services at Helen Joseph Hospital. The applicants explained that the non-disclosures resulted from a mistaken interpretation that 'state' referred only to local government, and a bona fide oversight regarding the non-executive director. The City initiated steps under its Supply Chain Management Policy, finding the applicants had committed an abuse of the SCM system by misrepresenting information. The City restricted the applicants for twelve months, wholly suspended.

• Whether the review on the merits was ripe for hearing
• Whether the review on sanction was moot
• Whether the City's decision that the applicants committed an abuse of the SCM system should be reviewed and set aside under PAJA and the principle of legality
• Whether the City's decision to restrict the applicants and list them on the Register of Tender and Contract Defaulters should be reviewed and set aside
• Whether clause 1.1.5 of the SCM Policy required misrepresentation to be intentional and/or material to constitute 'abuse'
• Whether the City Manager failed to exercise his discretion regarding the sanction imposed on the directors

The application was dismissed with costs, including the costs of two counsel on Scale C from 12 April 2024.

Under the City of Cape Town's Supply Chain Management Policy, the definition of 'abuse' in clause 1.1.5 – 'misrepresentation on information submitted for the purposes of procuring a contract with the City' – is unqualified and does not require the misrepresentation to be intentional or material. Negligent misrepresentation suffices to constitute abuse. The purpose of the provision is to ensure bidders provide accurate information to enable the City to detect and prevent corruption and nepotism in public procurement, and an interpretation requiring intent or materiality would undermine effective enforcement. Additionally, a High Court review will not succeed where the applicant has failed to demonstrate actual or inevitable prejudice, and the matter is not ripe for adjudication or has become moot.

The court noted that the SCM policy was subsequently amended in January 2023 to expressly include false declarations of interest as conduct tantamount to abuse, but that the reasons for this amendment were not before the court and did not affect the validity of the policy as applied at the time of the impugned decisions. The court also observed that even if it were wrong on the merits, the matter would still fall to be dismissed on the basis of mootness and ripeness, as the sanction had no practical effect and 19 months had passed since its imposition.

This case clarifies the interpretation of 'abuse' in municipal supply chain management policies and confirms that strict liability applies to misrepresentations in procurement declarations. It affirms the principle that courts will not entertain abstract challenges or grant pre-emptive relief based on hypothetical future prejudice. The judgment reinforces the Constitutional imperatives in section 217 of the Constitution requiring procurement systems that are fair, equitable, transparent, competitive, and cost-effective, and confirms that municipalities may adopt strict compliance measures to combat corruption and nepotism in public procurement.