EXCLUSIVE: Gordhan orders Masutha to cancel R378m IT tender

2016-05-20 15:46
Finance Minister Pravin Gordhan. (Photo: GCIS)

Finance Minister Pravin Gordhan. (Photo: GCIS)

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Johannesburg - Finance Minister Pravin Gordhan has told Justice and Correctional Services Minister Michael Masutha to cancel a controversial multi-million rand prisons tender awarded to an ANC benefactor.

In a hard-hitting letter, a copy of which was given to News24, Gordhan “advises” Masutha to restrict Integritron Integrated Solutions (IIS) and its associate companies from doing business with government.

Last month, News24 revealed that South Africa's new tender czar Kenneth Brown had instructed the department of correctional services (DCS) to cancel an "irregular" R378 million tender awarded to IIS.

IIS is part of the SA Security Solutions and Technologies (Sasstec) group of companies that has benefited from government tenders.

Gordhan’s letter, dated April 11, states the National Treasury concluded its review of the bid process to see if the DCS complied with supply chain management laws during the bidding process. 

"The review revealed that Integritron Integrated Solutions was irregularly appointed," he said. 

Gordhan’s grounds included a "false declaration" by the bidder, a lack of capacity and ability to execute the contract, and a "fronting relationship" between the main contractor and sub-contractor.

"In view of the above, the accounting officer and members of the bid committee failed to comply with certain provisions of the Public Finance Management Act, Treasury Regulations, instruction notes and preferential procurement regulations, 2011," he wrote. 

Gordhan advised Masutha to ensure the contract is cancelled, that Integritron and its associates are restricted from conducting  business with government, and to bring a disciplinary case against bid committee members and the accounting officer. 

The Sasstec group approached the High Court in Pretoria at the beginning of May. It wanted to interdict Gordhan, Masutha and Solly Tshitangano from implementing recommendations in National Treasury's report on the tender. Tshitangano is chief director for governance monitoring and compliance in the office of the chief procurement officer (CPO).

It also wanted to interdict them from implementing Gordhan’s instruction in his letter and defaming it by mentioning its name and the alleged irregularities publicly or in the media. 

Claudio Bollo, the lawyer for Sasstec, told News24 the matter was struck off the urgent roll, but was still pending on the normal roll. 

Documents obtained by News24 show how DCS national commissioner Zach Modise defied requests by the newly-established CPO’s office to review the awarding of a contract for an inmate management system to IIS. 

Another Sasstec company, SA Fence and Gate, has been awarded government tenders worth billions by Eskom, DCS, and the Passenger Rail Agency of SA (Prasa).

SA Fence and Gate is an ANC donor and member of the party's Progressive Business Forum (PBF).

Sasstec is partly owned by politically-connected businessman Moya Nape and ex-home affairs chief IT director, Patrick Monyeki. The group’s biggest shareholders are CEO Geoff Greyling and his family.

Despite numerous deficiencies with its tender to the DCS, IIS's bid was the only one considered by the department when it awarded the lucrative contract for an integrated inmate management system.

The successful bidder would have to supply and maintain an electronic record of all the country's prisoners, called an inmate management system.

Greyling told News24 previously that IIS did not receive any information from the CPO, and was not given an opportunity to defend its position. 

He said IIS would not be able to comment on the contract due to "confidentiality limitations" in the contract with the DCS. 

He said that from 2011 to 2015, the group was awarded three contracts in the public sector worth more than R50m. 

These were for the DCS for security fencing around 27 prisons in February 2012, for eight Prasa depots, and the inmate management system contract with the DCS. 

He said that in the same time, the group was not awarded any contracts from Eskom in excess of R50m. In that five-year period it submitted unsuccessful tenders worth at least R15 billion in the public sector. 

Greyling denied using the ANC’s PBF to help it win tenders. 

“To our best knowledge, it is not possible to leverage PBF membership in this manner. We are one PBF member of at least 6000 businesses," he said.

“When this is considered in context, it is clear that our position hardly constitutes 'state capture' as is implied in the media." 

Read more on:    treasury  |  michael masutha  |  pravin ­gordhan  |  government

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