Johannesburg - The department of trade and industry has cancelled the controversial R153m contract for a new electronic management system which was ordered by the Companies and Intellectual Properties Registration Office (Cipro).
More than R90m of the contract - which was signed with an unknown empowerment group called ValorIT - has already been paid, even though delivery is three months in arrears, because of "resources limitations within ValorIT".
The cancellation follows a forensic investigation carried out by the Accounting Standards Board, which uncovered serious irregularities in the awarding of the contract.
Though the report was not released, it led among other things to the suspension of Cipro CEO Keith Sendwe and information head Michael Twum-Darko.
Sendwe and Twum-Darko allegedly interfered with the tender process to ensure that the contract would be awarded to ValorIT, even though the offer from the better-known Faritec was only R60m.
ValorIT has already instituted legal proceedings in the Northern Gauteng High Court to confirm the validity of the contract. The department will oppose the application, but has not yet submitted any legal documents.
However, the cancellation raises serious questions about when Cipro will finally be able to cope with its work load.
Over the past year, clients have been finding it increasingly difficult to carry out basic functions like the reservation of names for new businesses because of inadequate information technology infrastructure.
In addition, Cipro will change into a commission with a substantially greater work load when the new Companies Act comes into operation in October.
Another tender process is expected for the outstanding work.
A parliamentary reply by Trade and Industry Minister Rob Davies
showed that nearly R94.7m has already been paid to ValorIT. The lion's share of these payments were approved by Twum-Darko before his suspension. The last payment of R1.44m was made on April 29 for among other things project management and "personal leadership training".