CEO launches court bid to set aside Gupta-linked tender, while pre­ferred bid­der Gi­jima calls for a crim­i­nal probe into the con­tract

CityPress - - Front Page - SIZWE SAMA YENDE busi­ness@city­

Transnet CEO Siyabonga Gama has launched a court ap­pli­ca­tion to set aside the board’s de­ci­sion to award a R2.5 bil­lion tender to the Gupta-linked Ger­man in­for­ma­tion tech­nol­ogy (IT) com­pany T-Sys­tems. Gama’s af­fi­davit, filed in the Pre­to­ria High Court on Oc­to­ber 23, ex­poses how the board’s ac­qui­si­tion and dis­posal com­mit­tee (ADC) de­fied Transnet’s man­age­ment – as well as Na­tional Trea­sury’s ad­vice – by ced­ing its IT data ser­vices tender to the Ger­man com­pany on Fe­bru­ary 22.

The five-year tender could have been awarded to busi­ness mogul Robert Gumede’s Gi­jima Hold­ings, which scored the high­est points.

Gi­jima’s chief oper­at­ing of­fi­cer, Ma­phum Nx­u­malo, said the com­pany thanked Na­tional Trea­sury for its in­ter­ven­tion to stop waste­ful ex­pen­di­ture.

“We are dis­mayed and dis­il­lu­sioned that ma­jor Ger­man-owned com­pa­nies have been in­volved in state cap­ture and cor­rup­tion with im­punity, while local com­pa­nies are cheated of con­tracts,” Nx­u­malo said.

“It is as­tound­ing that the board of Transnet de­cided to ig­nore the eval­u­a­tion team’s re­sults and man­age­ment’s rec­om­men­da­tion. We are con­fi­dent that Gi­jima and Transnet will suc­ceed in re­scind­ing the un­law­ful award­ing of the con­tract to T-Sys­tems, which, for the past eight years, con­tin­ues to charge Transnet more than R500 mil­lion an­nu­ally against Gi­jima’s price, which is less than R300 mil­lion per an­num.”

Nx­u­malo called for a crim­i­nal and foren­sic probe into T-Sys­tems’ con­tract and the un­law­ful tender award.

T-Sys­tems has been pro­vid­ing IT ser­vices to Transnet over the past seven years, at a cost of about

R500 mil­lion a year. It is among many multi­na­tional com­pa­nies that have been linked to the Gupta fam­ily’s state cap­ture of South Africa’s state-owned en­ter­prises.

City Press es­tab­lished T-Sys­tems’ link to the Gup­tas through a data ser­vices con­tract that the com­pany ceded to Zestilor, af­ter in­her­it­ing it through its pur­chase of in 2009.

The ces­sion con­tract – ap­proved and signed by erst­while Transnet CEO Brian Molefe on De­cem­ber 1 2014 – ben­e­fited Zestilor. Zestilor was owned by Zeenat Os­many, the wife of Gupta as­so­ci­ate Salim Essa.

Gama wants the court to de­clare the board’s ac­tion “in­valid and un­law­ful” and wants the tender to be re­viewed and set aside.

Transnet spokesper­son Mo­lat­wane Likhethe did not an­swer ques­tions about who had sat on the ADC and given the go-ahead. “Given that the mat­ter has now es­ca­lated to a le­gal process, Transnet would like to re­serve its com­ment on this mat­ter,” Likhethe said.

“Transnet would, how­ever, like to clar­ify that the ap­pli­ca­tion for the declara­tory or­der in the High Court was purely a gov­er­nance process that has to hap­pen be­fore the com­pany can im­ple­ment any of the Na­tional Trea­sury’s di­rec­tives.”

Gama said in court papers that T-Sys­tems and Gi­jima, as the re­main­ing two bid­ders, sub­mit­ted their best and fi­nal of­fers on Au­gust 17 2016.

He said Gi­jima scored the high­est points over­all for price and pref­er­ence, but Transnet’s cross-func­tional eval­u­a­tion team com­piled a risk as­sess­ment re­port on Oc­to­ber 5 2016, high­light­ing a num­ber of risks that were preva­lent within Gi­jima’s fi­nal of­fer.

“The team re­solved that the risks iden­ti­fied were too ma­te­rial for the tender to be awarded to Gi­jima,” Gama said.

How­ever, he added, af­ter de­lib­er­a­tions by of­fi­cials in le­gal ser­vices, sup­ply chain man­age­ment and the IT chief in­for­ma­tion of­fi­cer – and af­ter meet­ing Gi­jima rep­re­sen­ta­tives about the risks – it was de­cided that the tender be awarded to Gumede’s com­pany.

“The group chief fi­nan­cial of­fi­cer then sub­mit­ted a me­moran­dum rec­om­mend­ing that Gi­jima be awarded the con­tract, given that the risks as­sessed had been mit­i­gated,” said Gama.

“ADC, a sub-com­mit­tee of the Transnet board, dif­fered with the of­fi­cer and, in­stead, rec­om­mended to the board that the con­tract be awarded to T-Sys­tems and not Gi­jima.”

Transnet in­formed T-Sys­tems on March 2 2017 that it was the suc­cess­ful bid­der and is­sued a let­ter of in­tent, while Gi­jima was told its bid was un­suc­cess­ful.

Gi­jima lodged a com­plaint with Transnet’s pro­cure­ment om­buds­man, but since the board was im­pli­cated, the om­bud re­quested Na­tional Trea­sury to in­ves­ti­gate.

Solly Tshi­tangano, the chief di­rec­tor of gov­er­nance, mon­i­tor­ing and com­pli­ance at Na­tional Trea­sury, warned Gama in a let­ter dated July 18 that Transnet’s board had an obli­ga­tion to award the tender to the pre­ferred bid­der, Gi­jima.

On Tues­day, T-Sys­tems filed a no­tice of in­ten­tion to op­pose Gama’s ap­pli­ca­tion. T-Sys­tems spokesper­son Tham­sanqa Malinga con­firmed re­ceiv­ing writ­ten ques­tions but did not re­spond.

It is as­tound­ing that the board of Transnet de­cided to ig­nore the eval­u­a­tion team’s re­sults and man­age­ment’s rec­om­men­da­tion. We are con­fi­dent that Gi­jima and Transnet will suc­ceed in re­scind­ing the un­law­ful award­ing of the con­tract to T-Sys­tems


MONEY FOR NOTH­ING In­dia’s main op­po­si­tion Congress Party mem­bers hold mock bills of dis­con­tin­ued cur­rency dur­ing a protest on the first an­niver­sary of the de­mon­eti­sa­tion ex­er­cise in New Delhi on Wed­nes­day. Last year, In­dian Prime Min­is­ter Naren­dra Modi an­nounced the de­mon­eti­sa­tion of 500 and 1 000 ru­pee notes, which made up 86% of the coun­try’s cur­rency, al­legedly to cur­tail the shadow econ­omy and crack down on the use of il­licit and coun­ter­feit cash

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