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Davies to cancel Cipro tender

May 18 2010 17:13 Troye Lund

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Johannesburg - Minister of Trade and Industry Rob Davies told parliament on Tuesday he intends to cancel an allegedly fraudulent R154m contract awarded by the Companies and Intellectual Property Registration Office (Cipro) for a new IT system. He will also lay criminal charges against the officials concerned.

Addressing the public accounts committee (Scopa), Davies confirmed Cipro CEO Keith Sendwe and CIO Michael Twum-Darko have been told lawyers are preparing a criminal case against them for their role in manipulating Cipro systems to ensure that a little-known company - ValorIT - had privileged access to information.

Despite ValorIT's bid being R90m more than competing bidders, it won the tender after what allegedly appeared to be a manipulation of tender committee score sheets.

While Scopa MPs slammed the department of public enterprises as well as Cipro for a "cavalier approach to procurement", Davies also disclosed that a forensic audit he had commissioned into this contract had confirmed "a pattern of relationships" between Sendwe, Twun-Darko, ValorIT and a sub-contractor, Mantra Consulting. Mantra consulting recently won a high court order against ValorIT.

No checks carried out

During more than four hours of intense interrogation by MPs on Scopa, it was also disclosed how absolutely no background checks were performed on ValorIT, its track record or its financial status and ability to deliver on such a contract.

Furthermore, 10 days after being awarded the contract, Cipro paid it R56m. Although this was questioned by some executives, Twum-Darko is alleged to have insisted the payment be made after explaining that it was for a box of CDs containing software.

"Just that alone should have raised a red flag, with a supplier being paid a record amount of money [about a third of the total contract value] in record time," Davies said.

He assured parliament steps were being taken to ensure the money stayed in the country.

Davies said he noticed things were going wrong at Cipro at the end of 2009 and, when he was not satisfied with the answers he was being given by Cipro, he decided to look into the matter more thoroughly.

While the findings of the forensic report - which apparently showed much more than expected – will not be made public by Davies, he promised Scopa that all additional information gleaned from MPs would be acted upon.

 - Fin24.com

cipro  |  rob davies
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