T-Systems ends court battle with Transnet over R500 million-a-year tender

German multinational company T-Systems has ended its court bid to force Transnet to change its decision to award a highly contested multibillion-rand IT data services tender to its competitor, Gijima Holdings.

T-Systems has been challenging Transnet’s board since 2016, after the state-owned enterprise (SOE) changed its mind about awarding the German company the R500 million-a-year tender on February 22 of that year.

The contract was held by government-owned IT company Arivia.kom until T-Systems bought the company in 2009.

Since then, T-Systems has been providing the service to Transnet.

Transnet’s acquisitions and disposals committee – chaired by Gupta-linked Stanley Shane at that time – awarded the tender to T-Systems, despite recommendations by Transnet management and advice from Treasury not to do so.

Gijima Holdings, owned by business mogul Robert Gumede, had scored the highest points in technical and pricing, and deserved to be awarded the tender in terms of the Public Finance Management Act.

Although Transnet’s cross-functional evaluation team highlighted a number of risks that were prevalent within Gijima’s final offer, the SOE’s officials in legal services and in supply chain management, along with the IT chief information officer, expressed their collective satisfaction with Gijima’s presentation to mitigate the risks.

As a result, they decided that the tender be awarded to Gumede’s company.

In trying to rectify the acquisitions and disposals committee’s mistake, former Transnet CEO Siyabonga Gama approached the Pretoria High Court to set aside the decision to award the tender to T-Systems.

Gama’s action led to T-Systems opposing the application.

This week, T-Systems spokesperson Thamsanqa Malinga said: “We have instructed our lawyers to that effect [to withdraw the court’s challenge against Transnet].”

The company’s managing director, Dineo Molefe, said that T-Systems agreed to “cooperate” with Transnet following extensive consultation and backing by its shareholders.

Molefe, however, added that T-Systems’ decision was “under no circumstances to be construed as T-Systems withdrawing what it has said in various affidavits that have been filed on its behalf in the pending court proceedings …”

She said that, in a letter dated September 21, the new Transnet board had affirmed the previous board’s decision to award the tender to Gijima.

“The new Transnet board requested T-Systems to withdraw its opposition on the basis that a prolonged litigation was not in the interest of all parties,” Molefe said.

Gijima delighted

Maphum Nxumalo, Gijima’s chief operating officer, said the IT services company was grateful for Molefe’s sound leadership.

“We further thank the new board of Transnet and management for the decisive guidance from National Treasury.” he said.

“Transnet, and indeed South Africa, has freed itself from previously compromised Transnet board members, who initially took the controversial decision to award the contract to T-Systems.

“Gijima has accepted T-Systems’ election to withdraw its opposition and has agreed with both Transnet and T-Systems that each party will be liable for its own legal costs expended to date,” Nxumalo said.

He said that Gijima, as the new successful IT outsource service provider, would, inter alia, focus on value add by enhancing services to be delivered to Transnet and, in particular, on introducing cost-saving solutions.

“I am delighted and thankful that this legal impasse is now behind us,” added Nxumalo.

“The Transnet application to the High Court for a declaratory order to award the five-year IT data outsource contract shall no longer be opposed by T-Systems … We have been ready since 2016 to move on site at Transnet to deliver and bring innovation, including cost savings, through Gijima’s provision of top-drawer ICT services.

“Gijima’s strength is evident through its 2 000-strong ... highly skilled staff members.”

The Gupta link

After buying Arivia.kom, T-Systems ceded its contract to Zestilor – a company that was owned by Zeenat Osmany, the wife of Gupta associate Salim Essa.

The cession agreement is one of a number of deals that Gupta-linked companies sealed over the past few years to cash in on multibillion-rand tenders at Transnet and Eskom.

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