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Suppliers sue SITA for R33m

Martin Czernowalow
By Martin Czernowalow, Contributor.
Johannesburg, 21 Oct 2014
SITA owes suppliers R33 million, while it spent close to R5 million defending itself against creditors since 2002.
SITA owes suppliers R33 million, while it spent close to R5 million defending itself against creditors since 2002.

The State IT Agency (SITA) is embroiled in legal action with suppliers/service providers that have taken steps against it for the non-payment of goods and services, with the total amount in dispute currently at about R33 million.

This is according to a written reply to Parliamentary questions posed by Democratic Alliance shadow minister of telecommunications and postal services Marian Shinn.

The legal trouble comes at a time when the embattled agency seeks to implement a turnaround plan to steer away from problems that have plagued it over the past few years.

During a recent press conference, CEO Freeman Nomvalo said SITA's turnaround would focus on central pillars, including improving procurement, core IT services and organisational health. He noted the agency has, over recent years, encountered low customer satisfaction, a demoralised workforce and operational processes behind industry standards.

In reply to Shinn's question, the Department of Telecommunications and Postal Services (DTPS) stated the suppliers/service providers and amounts owed are as follows:
* Harebueng - R3.7 million;
* HR Computek - R12.7 million;
* Gijima - R9.5 million;
* ELCB - R370 711 and R5.9 million; and
* PM Focus Consulting - R1.4 million

In terms of the period that each of the payments have been outstanding for, the DTPS's reply shows the time lines range from July 2004 (Harebueng) to July 2013 (Gijima). The DTPS also gave a breakdown of the status of each case in dispute, revealing that in several instances SITA is waiting to appear in court.

Commenting on the dispute with Harebueng, to which SITA owes R3.7 million since mid-2004, the department explains: "SITA attempted to settle this matter through negotiations with the supplier, without any success. It was then referred to external attorneys to defend it. The matter has been set down for trial [in] March 2015."

Pending cases

In regard to the highest outstanding amount - R12.7 million owing to HR Computek since October 2008 - the DTPS stated SITA successfully defended the matter in the North Gauteng High Court, and the supplier has now taken the matter on appeal. "Both parties are now waiting for the Supreme Court of Appeals to either grant or refuse the application for leave to appeal."

The department revealed that, in the case of money owing to Gijima - an amount of R9.5 million, outstanding since July 2013 - "will be heard in the North Gauteng High Court on 17 November 2014 for an application brought by SITA to set aside the contract between the two parties, on the grounds that lawful procurement processes were not followed in the procurement of these services".

In terms of the two outstanding amounts, owed to ELCB since 2009, SITA is disputing the claim for R370 711, on grounds that services were not provided. "It was referred to external attorneys in order for it to be defended. The litigation process is continuing and the matter is now in discovery stage."

According to the DTPS, the larger amount of R5.9 million is also being disputed on the grounds that procurement processes were not followed, and SITA has made an application for the contract to be declared invalid. "The parties are currently waiting for a court date for such application to be heard."

Lastly, the department says SITA has made recommendations to the Department of Transport to settle the amount of R1.4 million that is owned to PM Focus Consulting and adds the agency is currently waiting for a response from the transport ministry. Further details were not given.

Legal fees

A second question asked by Shinn revealed SITA has spent R4.6 million since 2002 on legal fees to defend itself against creditors. The DTPS listed eight legal firms as having been hired by SITA during the period in question in its response.

These include such firms as Bowman Gilfillan, Gildenhuys Lessing Malatji and Kunene Rampala Botha. In terms of amounts paid for legal services, DTPS's reply showed the amounts ranged from R1.5 million - paid to Bowman Gilfillan, to R43 000 - paid to Dlamini Attorneys.

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