The Democratic Alliance (DA) has called on minister of trade and industry Rob Davies to release the terms of the legal settlement reached between the Department of Trade and Industry (DTI) and Valor IT.
However, the official opposition argues that any possible outcome of the situation will have negative factors.
The North Gauteng High Court recently ruled that the DTI and Valor IT should settle their differences in the best interests of the Companies and Intellectual Property Registration Office (Cipro), which is in urgent need of an IT system upgrade - in time for the implementation of the new Companies Act, in April.
The initial upgrade, a R153 million contract - awarded to Valor IT - to implement an electronic content management (ECM) system at Cipro, was canned earlier this year by Davies.
This was as a result of an independent forensic investigation and report, which was completed in March, exposing tender irregularities in the awarding of the deal.
Valor IT subsequently took legal action against the DTI to force the department to uphold the contract and allow it to complete the overhaul of Cipro's legacy IT systems.
The forensic probe also resulted in Cipro's CEO Keith Sendwe and CIO Michael Twum-Dwarko being suspended. In May, Davies announced the pair would be charged, but Sendwe has since died and Twum-Dwarko is still waiting for a hearing date to be set.
The DTI subsequently offered a settlement to Valor IT, which was accepted by chairman Josias Molele.
Lose-lose
However, the DA is far from happy with the arrangement.
“It seems that Cipro has spent significant amounts of money on a fruitless exercise, with R90 million already paid to Valor IT, and no real progress being made in delivering the required electronic systems,” says DA deputy shadow minister of trade and industry Jacques Smalle.
“With the parties forced to settle, it is likely that Cipro and the DTI will lose significant amounts of money in the process,” says the shadow deputy minister.
He adds that if Valor IT is to be replaced by another provider, the R90 million already spent by the DTI and Cipro would have been wasted.
In response to a recent parliamentary question, Davies confirmed that R97 948 634 had been paid to Valor IT, by June, and the software procured from company is not being utilised.
He added that the final implementation could not be initiated, because of the termination of the contract. The utilisation of the software is subject to the finalisation of the litigation process between Cipro and Valor IT, as the product is in the latter's possession, according to Davies.
“If Valor IT is to stay on, then the service will essentially be provided by a company that received the tender in an allegedly irregular process. This would compromise the credibility of the DTI and Cipro. All of these issues, unfortunately, remain outstanding,” says Smalle.
Looming deadline
“The DA notes with concern that the irregularities in the tender process and the ensuing court battle have all but scuppered Cipro's attempt to have the necessary electronic systems up and running by April, as required by the new Companies Act.
“This means that Cipro will not be able to implement all the provisions of the Act in time, causing some problems,” says Smalle.
He says, for this reason, it is crucial that the settlement information be made public, as public funds will be involved in the process.
“It is equally important that this issue be resolved as soon as possible. Companies are dependent on Cipro's information systems, as these systems will have to regulate some of the provisions of the Companies Act.”
Smalle adds that failure to set these monitoring networks up in time will in effect mean that the new Act might not be entirely enforceable.
However, big businesses have called for an extended deadline for the implementation of the Act as more time is needed to secure the necessary IT systems.
Molele previously told ITWeb that the parties had negotiated a settlement agreement. He would not disclose the amount he accepted from the DTI, saying it is confidential. He adds, however, that it is “not a small figure”.
According to Molele, the DTI was forced into a settlement because it did not follow proper procedure when cancelling the contract.
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