Almost a year has passed since trade and industry minister Rob Davies promised action after a forensic investigation revealed irregularities with a tender to overhaul IT systems at the Companies and Intellectual Property Registration Office (Cipro).
However, despite his public statement, no disciplinary action will be taken. The office will spend even more money to fix its legacy systems, and a looming court battle will further delay a much-needed IT overhaul.
Meanwhile, the clock is ticking towards April, when Cipro is set to be reinvented as the Companies and Intellectual Property Commission, which will report directly to Parliament. Cipro's transformation is a requirement of the new Companies Act, which will come into effect then.
The new Act will place a larger burden on the office, which will have several new electronic requirements and oversight duties to fulfil.
“This matter is not something that is going to stand in the way of us making that transformation,” says Davies of the ongoing legal battle with Valor IT.
Stopgap solution
Last year, Valor IT's R153 million contract to overhaul Cipro's legacy systems was canned, after a forensic investigation revealed irregularities in the tender process.
The investigation also resulted in Cipro CEO Keith Sendwe and CIO Michael Twum-Darko being suspended last March. In May, Davies announced the pair would be charged; but it seems unlikely this will happen.
Valor IT took the Department of Trade and Industry (DTI) to court over the cancelled contract and claims to have a settlement agreement with the department. However, the department denies that any such agreement has been signed off, so it can't be enforced.
As a result of the legal wrangling, the implementation of a new electronic content management (ECM) system hangs in the balance. The legal issue is preventing Cipro from moving ahead with installing a more secure framework that could cut down on fraud perpetrated on its database.
Cipro is now forking out another R11 million to Waymark, the company that installed its current legacy system, to plug the gaps.
Valor IT chairman Josias Molele claims Waymark is actually implementing the ECM system, and he will interdict Cipro from allowing the company to do any work on its legacy systems.
This is in addition to the R95 million that was paid to Valor IT for the aborted implementation, which was canned in the middle of last year. Moreover, Valor IT is determined to make the minister cough up R28 million in penalties and outstanding payments.
Molele says he has served the minister with papers and his demand for payment will be heard on 1 March.
However, Molele could face counter action from the department, as Davies disputes the amounts already paid to Valor IT, hinting that the department may take the IT company on in court to recover what Cipro has spent. “This is about compensation one way or the other,” says the minister.
Davies says the DTI will also re-examine the R56 million that was paid to Valor IT, just three days after the company delivered a box of software, and will continue to looks at its “options”.
Still waiting
Moreover, despite the minister's assurances last year that heads would roll over the fiasco, no disciplinary action has been taken against either of the Cipro executives who were suspended. As a result, neither Twum-Darko, nor the late Sendwe faced their accusers.
Acting director-general Lionel October says Twum-Dwarko's employment has ended, and so has his relationship with Cipro. He says there are criminal matters that have been referred to the police, but the department has not laid specific charges. “There is absolutely no legal contract between us,” says October.
Twum-Darko refused to comment on either his contract coming to an end, or the possible criminal investigation.
Vital solution
Deputy director-general Zodwa Ntuli says the R11 million payment to Waymark over an 18-month period is insignificant in comparison to the cost of the economy as Cipro's current systems continue being abused.
Waymark and Cipro are in discussions around an agreement that will see the IT firm maintain Cipro's legacy systems for the next year-and-a-half, and plug loopholes in its security system.
Cipro has been plagued by fraudsters that hijacked at least 11 companies last year and another three in the first few weeks of this year. As a result of the abuse on its database, the South African Revenue Service was conned into paying tax refunds to hijackers.
Ntuli says the legacy system, installed by Waymark, was good at the time but needs to be enhanced. She says the ECM platform is the “next level” for Cipro, but while the department waits for the outcome of the court case, it needs to “close the gap”.
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