Robert Gumede owns JSE-listed Gijima. File photo: Simphiwe Mbokazi

Johannesburg - Nearly R360 million later, the government is having to contend with an old, paper-based land registration system because the multimillion-rand contract awarded to Gijima for a digital system has collapsed.

The Department of Rural Development and Land Reform confirmed this week that it had stopped negotiating with the JSE-listed company for an amicable termination of the contract when the Special Investigating Unit (SIU) told it of its court application to have the deal set aside.

The investigating unit will also look to recover money paid over to the company since it was awarded the contract in 2010, making a protracted court case a likelihood.

The Sunday Independent reported last month that the SIU had asked the North Gauteng High Court to declare the contract invalid and set it aside.

This was after the investigating body found evidence suggesting there had been irregularities in the tender process.

Among other allegations, bid documents were manipulated and the company that scored the highest points was not awarded the contract.

The department conceded this week that the recent development regarding the contract would stop the project in its tracks.

Deadlines for the completion of the project had been missed, although extensions had been granted.

The department said it was planning to readvertise the tender by April.

It is contending with theirregular and wasteful expenditure it has incurred through the project.

“The implications are quite serious, depending on the duration of the court process,” the department said yesterday. “If the matter drags on for years, by the time the matter is concluded the department may have to start the project from scratch.

“(This would mean) that whatever resources have been expended to date will constitute fruitless and wasteful expenditure.

“The costs may have doubled, if not tripled, by that time.

“In the meantime, the department must and will continue having to contend with the current archaic, paper-based land registration system until the matter is resolved.”

The department said it would not oppose the SIU’s application.

The department has been listed as third respondent in the court application. It said it was finalising its responding affidavit.

“It is the prerogative of the SIU to approach the courts if there is evidence that there was mishandling of the tender adjudication process. That is why the president was requested to sign the proclamation giving the SIU power to investigate the project and in particular the process of awarding the tender,” it said.

According to the department, the adjudicating process was the responsibility of the State Information and Technology Agency.

The SIU, in its application, noted that negotiations about an out-of-court settlement between Gijima and the department were under way, and called for them to be stopped.

“The department and Gijima were in negotiations to find an amicable settlement between the parties when the SIU informed the department that it intends to approach the courts to declare the contract invalid, null and void. The negotiations unfortunately stopped at that point,” said the department.

Gijima, which is owned by billionaire businessman and political donor Robert Gumede, this week declined to comment further on the matter.

“We are in a closed period and in discussion with various parties. So to comment any further than we have done since last week would be inappropriate at this specific time,” the company said.

In 2010, Gijima was awarded a contract to convert 500 million pages of deeds records in the department’s offices across the country into microfilms.

This was to ensure the government had electronic copies.

Since the contract was awarded, the e-Cadastre system remains non-functional despite the department paying out money to Gijima and its subcontractors.

According to the SIU affidavit, Gijima became the highest-scoring bidder after a bid by one of the four qualifying bidders had seemingly been manipulated.

The SIU produced evidence of discrepancies during the adjudication process but did not say who was responsible for price manipulations.

It further raised further questions about Gijima’s performance after it was awarded the tender, with its pricing structured in such a manner that it increased the original price by more than R100m.

While the company agreed to “work back” the money, to date it had only “worked back” R9.2m of a total of R111m.

Sunday Independent