See More

Cipro at a loss to explain IT tender

May 18 2010 15:06

Related Articles

Cipro chief suspended over probe

Cipro exec put on special leave

Cipro woes smack bean counters

Ramos 'heir' faces tender charges

Telkom refutes tender allegations

Nyanda tender: Transnet axes two


Cape Town - The troubled Companies and Intellectual Property Registration Office (Cipro) was hard-pressed to tell MPs on Tuesday why it gave a major tender and advance payments of millions to a three-month-old company with no track record.

Cipro chief financial officer Pieter van Vuuren told parliament's public accounts committee Scopa it was not clear how successful bidder Valor IT obtained additional information that gave it a firm advantage over other companies.

"It is something we hoped would be clarified through the investigation," he told MPs.

Cipro's decision to award a R153m contract to two-man outfit Valor IT to develop a content management system is being probed by the department of trade and industry and several law enforcement agencies.

Auditor general Terence Nombembe found that Cipro failed to follow the proper procurement process, did not take into account the financial sustainability of the company and appeared to have furnished it with confidential business information not given to other bidders.

Officials from the AG's office told Scopa the two unsuccessful bidders complained that they were not given the same information, which was contained in an internal document.

Cipro failed to explain how this happened, they said.

Officials from the State Information Technology Agency (Sita) conceded that Valor IT was registered to do business with government, despite the fact that it had not submitted company results for the required two years.

Forensic investigation opens can of worms

"We didn't go into that. The instruction was more based on technology, BEE and price," said Velaphi Zikalala, Sita's general manager for strategic sourcing.

He was rebuked by Scopa chairperson Themba Godi who said Sita had failed to apply an actual requirement, treating it merely as an optional extra.

Pressed by MPs, Van Vuuren conceded that despite Cipro being in a good position to perform this background check itself, it did not do so.

"Cipro didn't do it. We didn't check whether it had submitted annual returns." Scopa members told Van Vuuren they were astounded that Cipro chose to pay Valor IT R56m in advance to develop software that had still not been put into use, and was now paying the licence fees for the unused material.

Acting CEO Lungile Dukwana said this was done because the entity was told that "without payment, development of the electronic content system would not start".

Valor IT's contract was not suspended pending the outcome of the departmental investigation, which Trade and Industry Minister Rob Davies said had cost R1m so far and had confirmed that fraud and corruption had taken place.

"It has been one million well spent," he said.  "A system that is supposed to deal with white-collar crime is now the subject of an investigation; it is a huge problem." Davies also questioned the handover of R56m in "record time" and said the forensic investigation had disclosed a host of problems.

He had earlier pledged to announce steps to address the transgressions on Tuesday, but said investigators had requested until the end of the month to complete their work.

Cipro CEO Keith Sendwe had been suspended as part of the probe into tender-rigging.

-  Sapa

sita  |  cipro  |  rob davies


Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Add your comment
Comment 0 characters remaining

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

Government’s decision to withhold payment to municipalities in debt to Eskom is:

Previous results · Suggest a vote