R90 million contract awarded by Telkom did not follow tender process

2014-07-29 12:29

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Telkom awarded a R91.1 million advisory contract to Bain & Company last year without following an open bidding process.

This was according to a document seen by Bloomberg News.

The March 24 letter, a response by Telkom’s deputy information officer Anton Klopper to a request under the Promotion of Access to Information Act, showed that there was no record of a published or archived competitive process that led to the selection of Bain, the Boston-based management consulting firm.

Companies that count the government as a shareholder should procure goods and services in a process “that is fair, transparent, equitable, competitive and cost effective” to comply with the Public Finance Management Act, according to Claire Barclay, a Johannesburg-based lawyer at DLA Cliffe Dekker Hofmeyr.

Telkom, which is about 40% owned by the state, would fall under that category, she said.

Pynee Chetty, a Telkom spokesperson, declined to comment on contractual arrangements with the company’s suppliers.

Cheryl Krauss, a spokesperson for Bain in New York, didn’t respond to calls and emails seeking comment.

CEO Sipho Maseko hired Bain to advise on Telkom’s broadband and mobile strategy as he sought to stem years of sliding sales amid shrinking demand for landline services. Bain was picked within days of the CEO’s arrival at Telkom on April 1 2013, he told Bloomberg in an interview in Johannesburg last December.

Maseko regularly visited Bain’s Johannesburg offices in the 10-month period between leaving his previous employer Vodacom and joining Telkom, the CEO said in the interview.

He said he also had meetings with McKinsey & Company, Boston Consulting Group, Accenture and Delta Partners.

Maseko didn’t seek formal proposals from other consultancy firms, according to people with knowledge of the matter. They asked not to be named because the deliberations are private.

Recent tenders Telkom has conducted include contracts for video-on-demand and audit services, according to the company’s website.

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