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Home Affairs Minister Dr Aaron Motsoaledi wants two IT firms blacklisted for suing department over cancelled contract

Home Affairs Minister Dr Aaron Motsoaledi. Photo: Jacques Naude

Home Affairs Minister Dr Aaron Motsoaledi. Photo: Jacques Naude

Published Dec 27, 2021


DURBAN - Home Affairs Minister Dr Aaron Motsoaledi intends to blacklist two companies from doing business with the government after the cancellation of a R1.5 billion Electronic Document Management System contract.

This is not vindictiveness but a warning to individuals and companies who believe that they can receive millions in public funds via spurious litigation, the minister said.

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New Dawn and Valor IT litigated against the department for R602 million and R28 million respectively, from 2010 – challenging the cancellation of the contract.

Motsoaledi welcomed the Constitutional Court judgment dismissing the application and said the matter started when the department wanted to digitise its records.

In terms of the law, the State Information Technology Agency SOC Ltd (Sita) had to issue a tender looking for a service provider on behalf of the department.

The tender had initially been awarded to three companies – New Dawn, Valor IT and Ideco.

“But before any contract could be signed or service level agreement could be finalised, the National Treasury warned that there was no money for such a huge tender. As a consequence, the department could not go ahead with this contract.

It said that Ideco understood the position of the government and “let matters rest there”.

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Motsoaledi said, “New Dawn and Valor IT somehow decided they were entitled to state money in this regard and litigated against the department for R602 million and R28 million respectively”.

Last week, the Constitutional Court dismissed the application on the grounds that it “lacks reasonable prospects of success. Consequently, it has decided that the leave to appeal must be refused with costs”.

“Because of litigation by these two companies, the department's audited contingent liability shot up to R2.1 billion in the 2019/20 financial year,” the department said.

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Contingent liability in Home Affairs is the amount that companies and individuals claim by way of litigation either for contracts, as is the case in this matter, or for immigration or civic matters.

The department said as long as a public institution had contingent liability on its books, the Auditor-General would flag it each year as a risk. The department said if it cannot successfully defend litigation and the money becomes payable, the budget of the department would be severely impacted.

However, the department said in this case, it “vigorously defended the matter and contended that there was no contract signed”.

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Motsoaledi said, "It baffles the mind that the two companies could pursue the state for this huge amount of money, going right up to the Constitutional Court, despite knowing that they had never provided any service to the department.

“We are aware that it is the constitutional right of individuals and companies to utilise the various courts of the country in pursuit of justice. However, we believe it is sheer opportunism, bordering on theft and corruption, for anybody to demand state money when they did not provide any services. We strongly discourage this kind of behaviour.”

Motsoaledi has instructed the department to pursue legal costs against New Dawn and Valor IT, which date back to 2010 when the initial claim was filed.

He intends to write a letter to the National Treasury to request that these two companies be blacklisted.

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