In an unexpected move, the Department of Home Affairs has told GijimaAst that its controversial multibillion-rand “Who Am I” contract is invalid and will be cancelled.
The controversial deal, worth R2.5 billion, awarded to the listed company was initially signed in June 2008. “Who Am I (I am I said)” is the Department of Home Affairs' integrated business system that aims to replace all manual processes with online and real-time transactions.
Despite work having been carried out on the implementation for two years, the contract now hangs in the balance, 56 days before thousands of tourists are expected to enter SA for the Soccer World Cup.
GijimaAst says, in an announcement released to shareholders this morning, that it is seeking legal advice on the dispute, and contends that the deal is valid, and enforceable.
Phase one of the implementation, which was expected to be rolled out in the first quarter of this year, involves activating the new systems to ports of entry in time for the games. SA is expecting about 350 000 tourists during the four-week tournament.
The first phase has to be rolled out in time for the Fifa 2010 Soccer World Cup, as the department has given assurances to the organisers of the games that it will be ready. As a result, its service provider, listed outsourcing company GijimaAst, has had to stick to tight deadlines.
Carrying on
Carlos Ferreira, GijimaAst group FD, says the company received notification that the department would cancel the deal. He adds that no reasons were provided in the “short notice”.
While GijimaAst is seeking legal advice on the matter, it is committed to continuing to implement the contract, notes Ferreira. He says systems will be up and running in time for the soccer games, although this will be legacy structures that have been updated.
The company says it has fulfilled its obligations and continues to perform in terms of the contract. Consortium partners on the project include multinational companies, such as Daon, a global player in identity management systems; IBM and Siemens.
GijimaAst says the department never previously indicated it was unhappy with the contract and its implementation. “The department's claim that the contract is invalid was completely unexpected.”
Ferreira says the amount of revenue under threat is about 15% of the company's annual turnover, or R450 million. GijimaAst reported revenue of R1.44 billion in the first six months of the year to December.
Its shares slumped sharply on the news to 105c, a drop of 18c or 14.63%.
Another setback
“Who Am I” has been dogged by controversy since it was first mooted in 2006.
The initial tender for the project was worth R1.9 billion; however, when the contract was finally signed in mid-2008, the cost had increased to R2.5 billion.
It was then referred to the auditor-general for investigation by then home affairs minister Nosiviwe Mapisa-Nqakula, on recommendation from the Parliamentary Portfolio Committee for Home Affairs.
Questions were raised around the awarding of the contracts, even though the department and the State IT Agency said they were awarded properly. The auditor-general did not find any wrongdoing by GijimaAst.
GijimaAst will continue to keep shareholders informed of further developments, while Department of Home Affairs spokesman Ronnie Mamoepa says he will comment on the matter this afternoon.
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