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