The agency sought the intervention of the North Gauteng High Court in scrapping the contract to provide “physical guarding and extensive investigative services” at Sita’s head office in Pretoria.
Sita launched an internal investigation into The iFirm’s contract and found that the agreement was invalid due to the agency's failure to undertake a public tender process and ensure that the deal was approved by the board and the National Treasury.
According to court papers, Freeman Nomvalo, Sita’s chief executive at the time the deal was signed in 2014, exceeded the authority delegated to him by the agency's board, as contracts above R100million required its approval.
"In terms of Sita’s supply chain management policy, the board is required to approve all procurement contracts with a value exceeding R100m,” reads a letter Sita wrote to The iFirm after discovering the discrepancy.
Nomvalo had told Petros, a former Western Cape and Gauteng provincial police commissioner who is The iFirm’s executive chairperson, that he had no authority to sign the deal and that the approval of Pravin Gordhan, who was finance minister at the time, could not be obtained by Sita, as required by the Public Finance Management Act.
"The chief executive's lack of authority to conclude the contract on behalf of Sita renders the contract unlawful in terms of the constitution and unenforceable in terms of the law of companies,” Sita told Petros.
The iFirm, which Petros established after leaving the police in 2013, and which has former Mpumalanga police commissioner Thulani Ntobela as its managing director, disputed Sita's repudiation of the contract, saying it was unlawfully terminated and demanded the payment of about R13m for damages it allegedly suffered.
However, The iFirm did not act on its threats and failed to serve summons on Sita.
Sita later launched an application to have the contract declared unlawful, invalid and set aside.
On June 15, North Gauteng High Court Judge Nicolene Janse van Nieuwenhuizen declared the contract constitutionally invalid and set it aside.
The iFirm was also ordered to pay Sita’s legal costs, according to the judgment.
Judge Janse van Nieuwenhuizen slammed Sita’s initial conduct of concluding a legally invalid agreement as “deplorable”.
"The respondent's (The iFirm) decision to oppose the application was in direct conflict to the prevailing legal principles and bad in law,” the judge found.
This is despite The iFirm claiming in court that it must not be blamed for unlawful conduct and should not be forced to pay the costs of Sita's application.
The iFirm shot into prominence when it was awarded a R10m contract to investigate the theft of three laptops from its head offices in February 2014.
Court papers show that The iFirm and Petros found out in July 2014 that its agreement with Sita might be an issue and resolved to terminate the investigation into the theft of the three computers.
The company was paid R3m by Sita despite not having a tax number.
At the time, Sita defended its decision to award the contract to The iFirm even though it was not on its database and stated that it needed people with experience in the police, could link the information quickly and someone the agency could trust.
The deal was also subject of a Special Investigating Unit probe three years ago.
The iFirm provides security services, forensic investigations, business intelligence and advice.
Ntobela said The iFirm would not challenge Judge Janse van Nieuwenhuizen’s ruling.
He said the company would insist on getting paid for the work it had already done for Sita, including uncovering corruption.