Black law firm in tiff with EY over Transnet tender

Johannesburg- A war of words has broken out between black law firm Dlamini Incorporated and Ernst & Young (EY) over a lucrative Transnet tender.

Dlamini Inc has since approached the Joburg High Court imploring it to set aside the decision by EY to sack it as a sub-contractor and pay it R10-million in damages.

The feud stems from a tender awarded to EY by Transnet in 2018 “for the provision of transaction services to prepare and conclude a joint development partnership for the development and operation of natural gas networks”.

The three-year contract was worth R95-million.

EY was appointed to do the job after it shrugged off stiff competition from KPMG, Absa, PwC, Rebel Group, J Maynard and Barbican Advisory Service.

EY’s consortium also had American multinational law Covington & Burling and Dlamini Inc to advise on the legalities of the deal. However, no sooner had the parties started working together, did conflict emerge between Covington and Dlamini Inc, with the latter feeling
Covington was not taking its input seriously. Convington was the lead law firm in the transaction.

The deterioration in the relationship is demonstrated by several e-mail exchanges between the two firms, which Sunday World has seen.

On February 26 2018, Covington’s Donovan Ben dispatched an e-mail to Dlamini Inc’s boss, Nthabiseng Dlamini. “We were brought into this project by EY because we have extensive international experience on LNG [liquefied natural gas] and gas pipeline projects … your firm does not have our level of experience on this specific type of project but has other skills and experience that we do not have,” the e-mail reads in part.

Dlamini retorted the following day in a fiery e-mail.

“I need to remind you that you cannot dictate what our experience is and where and when can we have an opinion on the mandate before us. To punt the idea that you are bigger, therefore, better is lame, and if this is the attitude that you are bringing in this project, we have a problem.”

EY later terminated Dlamini’s mandate.  Dlamini Inc’s clientele includes the likes of Royal Bafokeng nation, the Industrial Development Group, the City of Johannesburg and Trans-Tropical Development (Ghana). In her court papers, Dlamini alleges EY just used the company to meet the empowerment criteria for the tender.

“EY was awarded B-BBBEE preference points for partnering with the applicant [Dlamini Inc]. As it turns out, this appears to have been a partnership in form rather than in substance,” Nthabiseng’s affidavit reads in part.

Jabulani Sithole from Transnet in his replying affidavit said Dlamini Inc was not entitled to be treated in accordance with Transnet’s supplier development policies.

“The applicant was to be a QSE [qualifying small enterprise] or EME [exempt micro enterprise] subcontractor. Following the removal of the applicant, EY appointed Shandu Incorporated – black-owned firm … in this regard, it is submitted that the objects of B-BBEE have not been undermined in any way and the requirement for 20% subcontracting continues to be complied with.”

Dlamini declined to comment, while EY had not responded at the time of going to print.

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Kabelo Khumalo

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