According to a report in the City Press this morning, the Bosasa Group is facing a probe over allegations of fronting.
The group stands accused of paying white IT specialists and engineering staff through a "indistinct" shelf company, says the paper. It says, citing sources, is to keep them off Bosasa's books.
According to the paper, the company will now be investigated by the Department of Trade and industry to determine whether this amounts to fronting. City Press says the Consilium Consortium and Sondolo IT are at the centre of the alleged scheme.
Consilium, headed by Jurgens Smith, is "an opaque company that has no infrastructure of activities of its own," alleges the paper. It says Smith did not respond to requests for comment.
According to the paper, some white Sondolo staff are paid through Consilium, although they do not work for it. Bosasa spokesman Papa Leshabane, in the report, denied the fronting and said Bosasa did not have shares in Consilium and it was not paying Bosasa staff.
Bosasa claims to be a level two empowerment company with around 7 000 staff. It occupies a five hectare stand in Mogale, which used to be known as Krugersdorp.
By far the bulk of its contracts are with government entities, such as the departments of justice and correctional services.
In 2009, the Special Investigating Unit (SIU) found that the Department of Correctional Services (DCS) was losing millions every year as poorly managed IT systems are leading to rigged and manipulated tender processes.
The finding came as the SIU probed a range of contracts at the department. The SIU aided the department in recovering almost R5 billion.
The SIU also looked into Sondolo R88 million security contracts for alleged irregularities. In a forensic audit held in May 2008, the SIU cited the Sondolo IT contract for possible tender rigging and collusion with DCS officials.
City Press notes that the SIU found that Bosasa had bribed its way into being awarded the contracts.
Bosasa is a group of companies that services government departments, municipalities, ministries, the president's office and is now moving into the private sector.
Its IT arm, which has about 350 staff according to the company, comprises three entities: Sondolo IT, which processes financial transactions; On IT1, which operates the trustMASTER system and provides security solutions; and TatvaSoft SA, which does Microsoft custom development.
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