Telkom's alleged tender irregularities will see it face the Pretoria High Court in a R500 million lawsuit lodged by disgruntled bidder Phutuma Networks.
The R1.5 billion tender is for telex machines, which Telkom supplies to the Post Office until 2015, and Phutuma says it has been working towards winning the tender since 2003.
SA's fixed-line giant came under fire earlier this year by the 51% black-owned Phutuma, which accused it of rigging the process. Phutuma initially lambasted Telkom for allowing a competing company to work on the project without tender and entrench itself.
Phutuma has now taken the battle higher, with its complaint lodged in the courts.
Telkom has declined to elaborate on the matter, saying only: “The summons has been received and Telkom is preparing its response in the ordinary course. Since the matter is now the subject of litigation, Telkom cannot comment any further.”
The summons issued to Telkom explains Phutuma was the only bidder in the tender process, and had passed all the necessary requirements stipulated in the invitation to apply. The company goes on to say that Telkom even bought some of the equipment presented for the tender process.
Phutuma's claims also say Telkom cancelled the tender in 2006, without providing an explanation, and that Telkom began to work directly with Network Telex, the company that Phutuma had subcontracted to help in the job.
According to Phutuma's statement, the tender was reinitiated in late 2007, which would see Telkom's involvement with the Post Office equipment being entirely outsourced. The summons states the contract was worth R10 million per month until the end of 2020.
The company says it was once again pitted against Network Telex, which appears to have won the bid, despite Phutuma's claims it did not comply with tender requirements. Phutuma also says its competitor had already started working on the contract, even while the tender process was under way.
Phutuma is now waiting for a court date to take Telkom to task on the matter.
Other troubles
This is the second tender process that has forced Telkom into the judge's chambers over the last few months.
Maredi served a notice of motion on Telkom, Ericsson SA and Telsaf Data, in January, over another tender scandal. Maredi lost out on Telkom's point-to-point radio equipment contract, which was awarded to Ericsson late last year.
Telkom was, at the time, accused of awarding the tender to a company that did not comply with the tender specifications and actually failed the testing period. The failed test has been admitted to by both Telkom and Ericsson. However, Ericsson was given the opportunity to retest and won the account.
Maredi lost the court battle with Telkom in February; however, it appears the company is looking at another route to take Telkom to task. According to Telkom's annual report for 2009, published a few weeks ago, the company says: “Maredi is proceeding with a review application in the ordinary course and Telkom is opposing the application.”
The company added: “Telkom is not currently able to predict when these disputes may be resolved or the amount that Telkom may eventually be required to pay.”
It stated it had not included provisions for all of these claims in its consolidated financial statements. “In addition, Telkom may need to spend substantial amounts defending or prosecuting these claims even if Telkom is ultimately successful.”
More to come
Telkom made no mention of the action expected by Phutuma in its statement. In earlier discussions, Telkom slammed media reports around Phutuma's accusations, saying it had never received a complaint from the company.
The telco did indicate the tender process on the telex contract had been halted for investigation. However, Ed Scott, CEO and founder of Phutuma, says the process is ongoing.
“The telex tender has not been awarded and will not be until all queries around the process have been fully investigated,” explained Telkom CFO Peter Nelson earlier this year. He also noted the cost of the tender was nowhere near R1.5 billion, and was closer to R10 million over the five-year contract period.
Telkom explained it would tighten processes if any irregularities were found.
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Telkom slams reports of shady deal
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