Time is running out for the Companies and Intellectual Property Office (Cipro) to implement a much-needed IT overhaul, and yet, despite a settlement that removes a stumbling block for implementation, government has not shed any light on the status of the upgrade.
Cipro needs an electronic content management (ECM) system to cope with new duties that it will have to perform when the updated Companies Act comes into effect next April. The office has about four months to get the system in place.
However, implementation of the overhaul stalled after a R153 million contract with Valor IT was canned earlier this year by minister Rob Davies. Davies cancelled the deal after a forensic report uncovered irregularities during the award process.
Valor IT took the Department of Trade and Industry (DTI) to court to have the contract upheld, and last week agreed to a confidential settlement after the Pretoria High Court ordered the parties to negotiate the issue.
The undisclosed settlement amount relating to the canned deal removed the threat of a possible court case, which could have held up implementation of the system for years.
However, while the threat of a court case has now been removed as a stumbling block, it seems there are a few sticking points with the agreement. As a result, the DTI will not comment on the status of the ECM implementation.
Sticky issues
Sidwell Medupe, director of media and public relations, says the settlement has not been finalised and the implementation of the ECM system is linked to the court case. He cannot comment on either of these issues until the matter has been wrapped up.
ITWeb believes the hold-up relates to outstanding payments for work that had previously been completed. However, it is understood that this does not detract from the judge's ruling that the parties need to settle the matter to prevent a drawn-out legal process.
Questions asked
The ECM system is vital for Cipro to be able to cope with new requirements outlined in the upgraded Companies Act, which was meant to come into effect last month, but has now been delayed to April.
The Companies Act requires Cipro, in its new guise as a commission, to implement a range of electronic functions, with which its current legacy systems cannot cope. The new legislation will create a Company and Intellectual Property Commission, which will replace Cipro, reporting directly to Parliament.
Cipro has been slammed after being hit by several incidences of fraud perpetrated on its database, including a recent well-publicised hijacking of Kalahari Resources. The state of its database has also been questioned after a recent wide-ranging clean-up resulted in 750 000 companies being deregistered in one day.
The office is upgrading its existing IT systems to cut down on fraud, but acting CEO Lungile Dukwana previously conceded that “the current system is not helping us... this is an old legacy system”.
Jacques Smalle, the Democratic Alliance's shadow deputy minister of trade and industry, says: “It is becoming pretty clear that the system is not going to be in place in time. This has severe implications for all related parties,” says Smalle. He points out “a significant amount of state resources have been wasted on a fruitless process.
“It is very likely that the law won't be implementable by the time it is supposedly going to be enforced. This will seriously affect the credibility of Cipro and the DTI. This is also disastrous for businesses,” says Smalle.
Smalle argues that without the new system, Cipro will not be able to crack down on fraud perpetrated on its database.
“The risk profile of South African business will increase dramatically... Foreign investors will demand much higher risk premiums on South African investments, making business in SA much more complicated and much more expensive.”
He says a more realistic timeframe for implementation would be to have the system in place by 2012 as business will require much more time to adapt to the new system than initially anticipated, and Cipro will need more time to actually implement it.
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