Corruption charges halt two South Africa tech contracts

Irregularities found in bid evaluation process

South Africa, Africa's second largest telecommunications market, has become the latest country on the continent to deal with corruption charges regarding technology contracts, moving to cancel deals valued at more than US$552 million.

The Department of Home Affairs has cancelled a contract worth about 4 billion South African rand ($532 million), awarded to GijimaAst almost two years ago and meant to implement technology to track citizens from birth to death. The technology was supposed to work with an automated fingerprint identification system.

The country's Department of Trade and Industry has also cancelled a supply contract, valued at about 153 million South African rand ($20 million) that was awarded to Valor IT for the supply of an electronic content management system for the Companies and Intellectual Properties Registration Office (Cipro). The government agency issued allegations of irregularities in the bidding process and awarding of the contract.

In the face of widespread charges of corruption in bidding for government projects, South African Finance Minister Pravin Gordhan last year launched a project to tackle irregularities in the government's supply chain.

"South African government should not only cancel the contracts but should also prosecute those involved in the scandal in order to deter the reoccurrence of irregular tender process in future," said Amos Makanya, assistance communications officer at the Southern Africa Communication Agency.

Throughout Africa, government and industry insiders say that corruption has manifested itself in inflated costs for big infrastructure projects, mainly funded by loans from the World Bank.

In Nigeria, Africa's largest telecom market, the government is trying to root out corruption in supply contracts for the country's telecom market. Nigerian government officials are alleged to have received more than $21 million in bribes by Siemens officials for supply contracts. Siemens officials have already been slapped by a fine in Germany while former Nigerian government officials are still being investigated by the Nigerian Economic and Financial Crimes Commission (EFCC) over bribery charges.

Like the Nigerian government, the South African government invests millions of dollars in information technology development each year. However, the cancellation of the two contracts by South Africa has put the spotlight on corporate governance in the country.

The cancellation of the contracts was sparked by the Auditor General's investigations, which revealed a number of irregularities in procurement processes. The report by the Auditor General said Sita (State Information Technology Agency), a state IT agency responsible for most government computer procurement, had failed to check on the viability of Cipro as a business prior to the contract award.

The report further revealed that Sita had broken public procurement rules when it failed to show proper evaluation of Valor IT's financial status before the company was placed on an approved suppliers list. Inaccuracies were also noted on calculations on the scoring sheets completed by Sita's bid evaluation committee.

The cancellation of the two contracts brings to three the number of supply contracts that have been cancelled by the South African government in less than two years. Last year, a $896 million electronic payment system was cancelled due to flawed tender procedures.

One of the major criticisms leveled against African governments is lack of appropriate laws against corrupt companies, and in some cases, lack of effective implementation of the laws. In Kenya, the government hopes to save more than $680 million annually by implementing electronic solutions that will help prevent corruption by government officials.

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Tags legalCriminalGijimaAstValor IT

More about Department of Trade and IndustryFCCOffice of the Auditor GeneralSiemensSITA AustraliaWorld Bank

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