Transnet can’t extend R2.5bn IT tender to Gupta-linked firm – Treasury

Transnet CEO Siyabonga Gama. Picture: Lindile Mbontsi
Transnet CEO Siyabonga Gama. Picture: Lindile Mbontsi

National Treasury has refused to grant Transnet permission to extend a R2.5 billion IT data services tender that was contentiously awarded to German company T-Systems.

According to a letter written by acting chief procurement officer, Willie Mathebula, Transnet chief executive, Siyabonga Gama, had, on February 13, requested an extension of the contract by 12 months .

Treasury had given Transnet a month-to-month extension of the contract on September 19 2017 for a maximum of eight months because Gama had launched a court application to set aside the state-owned enterprise’s board decision that awarded the tender to T-Systems instead of Gijima Holdings.

When the five-year tender was initially awarded to the Gupta-linked T-Systems on February 22 last year, the board’s acquisition and disposal committee (ADC) had defied Transnet’s management – as well as Treasury’s advice – not to do so because Gijima Holdings, owned by business mogul Robert Gumede, had scored the highest points.

T-Systems has been providing IT services to Transnet over the past seven years at a cost of about R500 million a year.

It is among many multinational companies that have been linked to the Gupta family’s state capture of state-owned enterprises.

City Press established T-Systems’ link to the Guptas through a data services contract that the company ceded to Zestilor, after inheriting it through its purchase of in 2009.

The cession contract – approved and signed by erstwhile Transnet chief executive Brian Molefe on December 1 2014 – benefited Zestilor.

Zestilor was owned by Zeenat Osmany, the wife of Gupta associate Salim Essa.

Mathebula wrote: “In your letter dated February 13 2018, you have indicated that Transnet has approached the high court for a declaratory order to enable Transnet to proceed with the award of the tender to Gijima. However, what is of concern is that you have also indicated that it is unlikely that this matter will be finalised before February 2019 or even longer in the event that any outcome of the court process is subjected to appeals.”

Mathebula warned Gama that an approval of another 12-month extension would mean this contract would have been extended by more than four years without it being subjected to an open bidding process.

“To this end, you are therefore requested to ensure that this matter is finalised without further delays and that Transnet complies with National Treasury’s letter of 19 September 2017 as no further extension will be granted,” he said.

“We therefore wish to advise you that any expenditure flowing from the Transnet contract with T-Systems with effect from June 1 2018 shall be regarded as irregular,” Mathebula added.

Meanwhile, Transnet’s tender evaluation members have circulated their concerns with the T-Systems tender and called on the Special Investigations Unit and the Judicial Commission on State Capture to investigate this matter.

“This [Treasury] directive cancels what we call the sweetheart unlawful fat cat IT data services contract extensions T-Systems has had after milking our state of almost R5 billion. The T-Systems Gupta link not only captured our Transnet board but some staff members in the IT divisions of Transnet.”

T-Systems, however, maintains that it was awarded the tender correctly and has submitted its affidavit to the high court to explain why Transnet’s original decision was both “correct and legally valid”.

T-Systems South Africa managing director Gert Schoonbee said early this week that T-Systems was awarded the contract based on its price, modernisation, service standards and, crucially, the low risk to Transnet’s IT system on which South Africa’s rail and port networks depended.

“Our case is very strong. While we would accept not winning a tender on competitive grounds, we must take steps to protect our reputation. By placing the verifiable facts on record before the court and the public, our key stakeholders can see exactly how, why and on what grounds we won the contract,”

Schoonbee said that T-Systems was awarded the contract after an exhaustive six-stage open tender process with nine bidders.

“On February 22 2017 Transnet decided to award the contract to T-Systems, informing it of this decision on March 3 2017 in a letter of intent. However, rival bidder Gijima, which had not made it to the final round, initiated a complaints process which then didn’t include T-Systems. Transnet reversed its decision and refused to consider the serious risks identified by Gartner, their own independent consultants,” he said.

Schoobee said that T-Systems would continue working with Transnet pending the court case.

Regarding Treasury’s directive, T-Systems spokesperson Thami Malinga said: “This is not a matter for T-Systems but is a matter between Transnet and National Treasury.”

Transnet had not responded to written questions by the time the article was published.

Sizwe sama Yende
City Press
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