Top law firm in conflict claim

2018-05-28 10:26
Former police officer Keith Keating. (File, Jan Gerber, News24)

Former police officer Keith Keating. (File, Jan Gerber, News24)

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One of the Big Five law firms in South Africa is in the middle of a major conflict of interest claim, centred on a police forensics corruption investigation, which the firm conducted on behalf of the State Information Technology Agency (Sita).

In recent months, the findings of a probe – conducted by Bowmans (formerly Bowman Gilfillan) – have been made public after shocking revelations emerged at various hearings by the Standing Committee on Public Accounts (Scopa). In these hearings, it was alleged that the law firm had found evidence of widespread corruption in police tenders amounting to R5.1bn.

In all the Scopa hearings, Bowmans was named as the law firm that conducted the forensic investigations.

After hearing the evidence, Scopa allegedly ordered that the company accused of the corruption, Forensic Data Analysts (FDA), owned by former police officer Keith Keating, stop being paid.

In response, FDA switched off two vital police systems in April. In doing so, the company was accused of sabotage and the police set up contingency plans for the justice system to carry on functioning.

FDA shut down the police’s Firearm Permit System and the Property Control and Exhibit Management (PCEM) system.

The two systems, and a system called the VA-Amis Proprietary Solution – supplied by Keating’s other company, Investigative Software Solutions – were all switched off, leaving the police’s capacity to handle forensic evidence and firearm controls, as well as their ability to do in-depth tracking for investigations, compromised.

This has led to numerous court cases between FDA, the police and Sita, which are currently still ongoing.

In a recent press briefing, Sita chief executive Setumo Mohapi said the agency had uncovered information during investigations which raised red flags about the contracts it had with FDA, and went as far as saying that some documents appeared to have been forged.

He said that once Sita had concluded court processes, it would attempt to recoup money from the company.

'We have questions'

"We have a case against everything. The January investigations were specifically on FDA and related companies. In every one of them we have questions," he said.

It has since emerged, however, that there is a serious question about whether Bowmans has acted ethically in conducting the forensic investigation into FDA and, in particular, the PCEM contract.

The ethical question was raised after it emerged that Bowmans was the same law firm which compiled the contracts and gave the legal opinion on PCEM when the tender was first awarded to a company known as Unisys Africa in 2009. Unisys, in turn, subcontracted FDA to supply the software for the system.

News24 understands that Unisys Africa was a client of Bowmans, at least between February 2009 and October 2010, which was hired to do all the legal compliance work on the PCEM contract.

This included drafting the PCEM contract between Unisys and the SAPS, drafting the subcontractor agreement between Unisys Africa and FDA, as well as providing an official legal opinion for Unisys regarding the contract structure and legality of the contract, and contract negotiations between the SAPS and Unisys.

News24 has seen a 12-page copy of the official legal opinion on the contract done by Bowmans for Unisys Africa, titled "Tender for PCEM system for South African Police Service".

The legal opinion introduces the tender, indicating that it was in June 2008 that Unisys Africa submitted a bid to Sita for the PCEM system for the police.

"On February 2, 2009, the national commissioner of the SAPS sent a letter to Unisys Africa, in which he stated that he had approved Sita’s recommendation to award it the contract for R262 million," the document said.

But it appeared that negotiations between the SAPS and Unisys Africa were suspended for a short period over a pricing dispute, as well as some of the conditions of the original bid.

Bowmans was asked to provide a legal opinion on these disputes.

Clear conflict of interest

In 2012, Unisys Africa was taken over by the Bytes Technology Group, which took over the tender. The law firm that negotiated the merger between the two companies was Bowmans.

Bytes confirmed to News24 that Bowmans acted on behalf of Unisys during the PCEM tender negotiations.

"After Bytes acquired Unisys Africa in 2012, Bowmans acted for Unisys in the merger filing," said Zipporah Maubane, group executive for marketing and communications at Altron, which is part of the Bytes group.

"Bytes did not utilise the services of external legal counsel during this process. Prior to Bytes’ acquisition of Unisys Africa, Bowmans was involved in drafting the PCEM agreement between Unisys and SAPS."

Keating confirmed to News24 that Bowmans was involved in the legal work in drafting the original PCEM contract. He said it was a clear conflict of interest. "Furthermore, Bowmans was involved in the search and seizure at the offices of FDA in December 2017. This is subject to a legal challenge that is before the courts on June 18."

He said this was the subject of a criminal complaint.

Keating sent News24 a letter, which FDA wrote to Bowmans in February this year, titled "Ethics, governance, compliance and risk concerns relating to investigation by Bowmans".

The purpose of the letter was to raise concerns with the Bowmans board of directors, as well the company secretary and relevant board committees, in respect of conduct by Bowmans employees, for an internal investigation and appropriate intervention to take place.

In the letter, FDA said it had not been approached to give its version of events, and it referred to the alleged presence of Bowmans staff at the search and seizure of FDA’s offices.

The potential conflict of interest was also referred to: "Conflicts of interests possibly having arisen, one of which relates to the investigation into irregularities due to procurement on a Unisys contract Schedule D."

'Reprimanded to do the right thing'

In the letter, Keating cautioned Bowmans, referencing what happened to entities, such as KPMG, which had faced a backlash over their work for the Guptas and the so-called SA Revenue Service (SARS) rogue unit report.

"Bowmans is reprimanded to do the right thing, as opposed to being accountable only to its paymasters," Keating wrote.

The law firm responded, acknowledging receipt of the letter and advising that it would consider the issues raised.

In response to queries, Sita’s Mohapi said that for the agency’s vision to be realised, corruption must be rooted out. He said Sita had conducted various forensic investigations, which included work from its own internal forensic audit division and service providers.

"Bowmans is but one of the service providers," he said.

Mohapi said the PCEM contract was between the SAPS and FDA, and that it was Sita’s internal forensic investigation which uncovered the part played by Sita employees. He said that, as the procuring agent for PCEM, it was not assisted by Bowmans.

"Bowmans confirmed a conflict of interest on the PCEM contract," Mohapi said, adding that the aspersions cast on Sita and attempts to thwart its investigations had been profound and shocking.

"It included a failed attempt to insert malicious code into the PCEM system. During the course of the Sita investigations over the past two years, there have been malicious allegations about those leading the investigations, threats and suspicious break-ins, among others," said Mohapi.

He said the agency was rooting out corruption in Sita and that there had been several resignations, dismissals, criminal matters registered and restriction letters to National Treasury.

Neil van Vuuren, group risk manager at Bowmans, said the firm would not comment about client matters.

Read more on:    bowmans  |  sita  |  sars  |  scopa  |  police  |  corruption  |  courts

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