Gijima Chairman Robert Gumede. Photo: Simphiwe Mbokazi

 

Johannesburg - A multi-million-rand government tender awarded to billionaire Robert Gumede’s company, GijimaAST, was irregular and should be scrapped.

This is the view of the Special Investigating Unit (SIU), which has concluded its investigation into the R360 million tender awarded to Gijima by the Department of Rural Development and Land Reform, and the State Information Technology Agency (Sita).

In its founding affidavit to the North Gauteng High Court, the SIU makes serious allegations about what appears to be tender-rigging that took place to ensure that Gijima was awarded the tender.

The unit also submitted affidavits of witnesses who were involved in the tender process, including that of the losing bidder, that had submitted that parts of its bid had been manipulated.

The SIU says in its founding affidavit that should its application to have the tender declared invalid succeed, it would pursue Gijima to recover the money government paid to the IT firm.

The Sunday Independent reported earlier this year that President Jacob Zuma had signed a proclamation authorising the SIU to investigate the tender award for alleged irregularities.

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

This was to ensure the government had electronic copies.

The contract was awarded in 2010 but to date the e-Cadastre system is not functional despite the department paying out money to Gijima and its subcontractors.

When The Sunday Independent reported about the investigation in March this year, Gumede threatened Independent Newspapers with a R1 billion lawsuit, which has not been filed to date.

This is the second controversial major IT contract involving Gijima and a government department which has collapsed.

In 2011, the company settled out of court with the Department of Home Affairs after a dispute over the R2.3bn “Who Am I Online” project.

At the centre of the row was escalating project costs which saw the initial figure for the tender rising from an initial R2.4bn to a total of R4.5bn.

The department cancelled the contract after it realised that the company would not be able to deliver the system before the start of the 2010 World Cup, as had been planned.

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

An interview with Rainer Jeske, a managing director at Datacentrix, also bidding for the tender, revealed that a sum of more than R56m quoted in one of the price items of the bid was not the amount submitted by the company.

The SIU discovered that Datacentrix had submitted a price item of R5m, but this had miraculously been reflected as R56m, resulting in Gijima scoring the highest points. And there were further discrepancies.

In a different price item for Datacentrix’s bid, a bidding amount of about R131m was inflated by more than R1.5m, ensuring Gijima scored more points than Datacentrix.

The most astounding discrepancy in the tender bid submitted, however, was how a price item that Datacentrix quoted at about R1.5m, was somehow manipulated and inflated to R52m.

“I (SIU investigator) submit that the overstatement of Datacentrix’s price is a fundamental flaw that goes to the heart of the validity of the scores awarded, and consequently the award of the tender to the First Respondent (Gijima).

“This taints the process as unfair and unlawful. This is moreso, I submit, that the award of the tender to the First Respondent was not fair, transparent, equitable, competitive and cost-effective within the contemplation of section 217 of the constitution,” said the SIU.

While it produced evidence of discrepancies, the SIU did not say who was responsible for price manipulations.

The SIU raised further questions about Gijima’s performance after it was awarded the tender.

The company had structured its pricing in such a manner that it increased the pricing by more than R100m.

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

The SIU goes on to quote a memorandum sent to Gijima by an internal auditor at the department questioning Gijima’s increased pricing, but which had been ignored.

In it, the company is told: “The manner in which the price adjustment was introduced is questionable.

The increase is based on false premises and constitutes unfair remuneration for the back scanning delivery.”

Gijima, a JSE listed ICT Company, said it noted the SIU’s application against it, Sita and the Minister of Rural Development and Land Reform.

The company said it was studying the application. However, it noted that:

* “It is odd that the application has been launched on an urgent basis as the SIU makes out no case for urgency.

* “It is further strange that the SIU has cited Gijima as the first respondent. Ordinarily in an application of this nature the Sita and the Department would be cited as the first and second respondent as it is their adjudication of the tender that is under scrutiny by the Court.

“Gijima is accordingly concerned that the SIU has proceeded on this basis,” said chief executive Eileen Wilton.

She added: “We are confident that from Gijima’s perspective the bidding process was competitive, equitable, fair, transparent and cost-effective and complied with the constitution and the relevant procurement laws.

However, should the Sita or the department have flouted the constitution and the relevant procurement laws, this would not be within Gijima’s knowledge.

All successful bidders in tender processes run the risk that the government makes mistakes and this is unfortunately out of the control of the successful bidder.”

Wilton added: “We would like to reiterate that from Gijima’s perspective the tender was awarded relying on the constitution and the relevant procurement laws, and Gijima will be sorely disappointed, and ready to protect its rights, should this not be the case.”

She added that Gijima had “incredibly high standards and ethics, as well as strict corporate governance rules, which are applied in tendering for new businesses.

“We as a company value our good reputation above anything else and this tender process was dealt at the highest level, which included the Office of the CEO, to ensure that we are guided by our strict bidding procedures,” said Wilton

Gijima said the company refuted “frivolous and baseless allegations not based on facts that it has increased its pricing by about 200 percent after the awarding of the contract.

“And as we’ve disclosed in our audited results of full-year 2013 and full-year 2014, Gijima has incurred losses on this project to the tune of R220 million – and yet we continued to work with the department to deliver solutions and to deliver on our commitments.”

She said Gijima would oppose the application and protect its rights.

 

Gijima’s response in full

Gijima, a leading JSE listed ICT Company, notes the application for judicial review launched by the Special Investigating Unit (SIU) against Gijima (the first respondent), the State Information Technology Agency (SITA), the second respondent) and the Minster of Rural Development and Land Reform (acting on behalf of the Department of Rural Development and Land Reform) (the Department, the third respondent) in the North Gauteng High Court.

Gijima understands that the application has been launched following an SIU investigation into, inter alia, the SITA and the Department in relation to the Department's large ICT project known as Project Vulindlela.

Gijima recently received the application and is studying it and preparing its opposition. However, at this stage Gijima notes that:

1) It is odd that the application has been launched on an urgent basis as the SIU makes out no case for urgency.

2) It is further strange that the SIU has cited Gijima as the first respondent. Ordinarily in an application of this nature the SITA and the Department would be cited as the first and second respondent as it is their adjudication of the tender that is under scrutiny by the Court.

Gijima is accordingly concerned that the SIU has proceeded on this basis.

“We are confident that from Gijima's perspective the bidding process was competitive, equitable, fair, transparent and cost-effective and complied with the Constitution and the relevant procurement laws. However, should the SITA or the Department have flouted the Constitution and the relevant procurement laws this would not be within Gijima's knowledge,” said CEO Eileen Wilton.

She added: “We would like to reiterate that from Gijima's perspective the tender was awarded relying on the Constitution and the relevant procurement laws and Gijima will be sorely disappointed, and ready to protect its rights, should this not be the case.”

Wilton added that Gijima has incredibly high standards and ethics, as well as strict corporate governance rules, which are applied in tendering for new businesses. “We as a Company value our good reputation above anything else and this tender process was dealt at the highest level, which included the Office of the CEO, to ensure that we are guided by our strict bidding procedures.

“Gijima and the Department of Rural Development and Land Affairs, meet regularly, at the highest levels in both organizations in order to ensure that communication is clear and that expectations regarding this significant Change Programme are appropriately dealt with, and furthermore, that each is attending to their responsibilities toward the other, appropriately.

“Gijima also refutes frivolous and baseless allegations not based on facts that it has increased its pricing by about 200% after the awarding of the contract.

“And as we've disclosed in our Audited results of full-year 2013 and full-year 2014, Gijima has incurred losses on this project to the tune of R 220 million - and yet we continued to work with the Department to deliver solutions and to deliver on our commitments.”

Wilton added: “While opposing this court case and protecting Gijima's rights, we are focusing on our ongoing turnaround strategy and investment that will grow the business.”

“Gijima with its executive leadership team adheres to strict corporate governance and Constitutionally compliant tender procedures. Gijima’s executive team has at no time been implicated in any fraud or corruption activities at any level.”

Sunday Independent