Court showdown looms in Micro Focus, SITA disputed tender

Read time 3min 50sec

Luvo Gwiliza, owner of Afrocentric IP– a company whose contract is in dispute with Micro Focus and the State IT Agency (SITA) – has initiated legal action against the two organisations.

In a telephonic interview with ITWeb this morning, Gwiliza said although he has no hard feelings against the appointment of another black-owned business, X Telecoms, as Afrocentric IP's replacement in the tender, he is not happy with how his company’s contract was terminated.

Afrocentric IP was appointed in November last year as one of the fulfilment agents for the framework agreement between Micro Focus and SITA, which is estimated to be worth $25 million (about R364 million).

However, Afrocentric’s two-year contract was terminated “without cause” eight months later.

According to Sunday Times, deputy communications minister Pinky Kekana then advised Micro Focus on which local company to appoint as its local partner.

Micro Focus forwarded the name of X Telecoms, owned by Johannesburg business person Khethi Nkosi, as Afrocentric’s preferred replacement.

The paper says Nkosi confirmed his company had been approached by Micro Focus but denied Kekana had anything to do with it.

SITA told ITWeb that on 11 July 2019, it was formally notified Micro Focus is terminating its relationship with Afrocentric. No reasons were provided, and SITA was not consulted, the agency says.

In a statement, Micro Focus says: “Micro Focus can confirm that it legally terminated the fulfilment agent contract between itself and Afrocentric.

“In addition, and in the spirit of providing the best support for its customers and partners, Micro Focus is currently assessing alternative fulfilment agents. One of these agents is X Telecoms.

The UK-based software provider says the consideration of X Telecoms as a potential fulfilment agent has not come at the recommendation of deputy minister Kekana.

“The selection of a new fulfilment agent will be based on an impartial assessment of capabilities in line with business demands and the guidelines specified by the State Information Technology Agency. Micro Focus is committed to maintaining the highest ethical standards in its business dealings around the world and among its employees and partners.”

Gwiliza said that in the contract, there is a mandatory clause that says either of the parties may terminate the contract without cause.

“As a fulfilment organisation, we were sitting in between SITA and Micro Focus. Technically, we were a SITA service provider,” he said.

“In as much as Micro Focus forwarded our company to SITA to approve us to partake in the contract, Micro Focus should have also given reasons to SITA on the cancelling of the contract. SITA was supposed to be party to the whole process and that’s where the problem is.”

According to Gwiliza, sometime in 2016, he approached Gary de Menezes, Micro Focus country general manager for SA, when he had just been appointed and told him Afrocentric wanted to participate in the contract.

“He [De Menezes] had made it clear to me that he wanted only one distributor. At the time, he had terminated other contracts with other distributors and that confirmed his stance that he wanted a single distributor for the whole country.”

However, he said this changed when De Menezes asked him to partner other companies in that contract but declined. The reason why he declined, Gwiliza said, though it made business sense to him, it looked unethical.

“From those incidents, our relationship started deteriorating until the termination happened for no reason.”

On the way forward, Gwiliza said: “We are taking them to court. We are in the process of litigation as we speak. Micro Focus cannot put and replace SITA’s service providers as they please without SITA’s consent.”

However, he said he is not aware if Kekana played any role in the termination of the contract. “I don’t want to be dragged into the politics of the deputy minister.

“I don’t have any issues with the appointment of X Telecoms because we are not the only company. Giving black-owned businesses contracts is not a bad thing. It’s actually quite healthy for our industry. However, the process of appointing service providers must be scrutinised.”

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