Public Protector Busisiwe Mkhwebane. File picture: African News Agency (ANA)
Public Protector Busisiwe Mkhwebane. File picture: African News Agency (ANA)

WATCH: Sars IT tender probe continues

By Ayanda Mdluli Time of article published Nov 12, 2019

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Johannesburg - Public Protector Busisiwe Mkhwebane’s office is investigating the awarding of an irregular tender between the SA Revenue Service (Sars) and IT firm Budge, Barone and Dominick (BBD).

The probe relates to the contract awarded to the company in 2006, when Public Enterprises Minister Pravin Gordhan was still the commissioner of Sars.

Independent Media can exclusively reveal that in the past two years, Mkhwebane wrote letters to Sars informing them that her office was investigating a complaint by a whistle-blower into allegations of irregular tender processes, and the appointment of BBD by Sars according to Section 182 (1) of the Constitution, and several sections of the Public Protector’s Act.


Video by: Chelsea Lotz, Business Report TV

One of the letters, which states that the tender must be re-advertised, supports allegations that in 2006 Gordhan, who was commissioner at the time, submitted a memorandum to then minister of finance Trevor Manuel, recommending the “noting of an intended appointment BBD”.

The letter by Mkhwebane’s office states: “The memorandum was sent in light of the intended cancellation of the appointed service provider Siebel (now known as Oracle), which in December 2005 entered into an agreement with Sars to provide software licenses, maintenance and professional services to configure and co-develop functionalities to meet Sars’s customer-management needs.”

It said former deputy finance minister Jabu Moleketi noted the memorandum and requested more information, but instead Manuel went beyond noting and approved the memorandum.

The complaint contained in the letter, said the contract was initially valued at R100million yet no tender process was followed by BBD.

The whistle-blower alleges that Sars contravened National Treasury regulation 16A6. in that Sars had no grounds to deviate from normal competitive bidding. The complaint also alleges the rules were rigged in favour of BBD, where the service provider was given four weeks to make proposals to Sars, without a competitive bidding process.

It is also believed that BBD was given an additional six weeks to scope the project which they had already been awarded.

“The 100m awarded has now escalated to over R1.4 billion,” read the public protector’s document, with additional costs of over R7bn.

Based on the whistle-blower’s documents, several witnesses have been interviewed and the public protector was well into finalising the investigation. It has also emerged that the new commissioner Edward Kieswetter allegedly ignored Mkhwebane’s ruling and extended BBD’s contract to December 2022.

Oupa Segalwe, spokesperson for the Office of the Public Protector confirmed that they were investigating the matter.

“In previous engagements with Sars officials, it was agreed that the contract would be extended for the last time until December 2019. This was after Sars made a motivation against the initial cut-off date of December 2018. The public protector subsequently learnt that the contract has been extended to 2022 in defiance of her directive.

“The public protector’s investigation continues, and she is not at liberty to indicate what will happen henceforth, as that could amount to pre-empting the case,” he said.

Independent Media also revealed last week that BBD is a subsidiary of investment company Sphere Holdings

Jabu Mabuza is chairperson of Sphere Holdings and holds a 10% shareholding in the company. Sphere Holdings owns 49.9% of BBD.

Mabuza is also the chairperson and interim chief executive of Eskom.

BBD, whistle-blowers claimed, has access to all the intellectual property of Sars’s IT department through a source code, and has access to all taxpayers’ sensitive information, posing a security risk as it is a private company.

Special Investigations Unit

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