AG report confirms CIPRO breached tender regulations

The Democratic Alliance (DA) welcomes a long-awaited report of the Auditor-General (AG), which has been made public today (see here), and which we can confirm has found that procurement regulations were breached by CIPRO when a tender to the value of R152,7million was allocated to ValorIT CC in March 2009. This report vindicates our longstanding concerns over the ValorIT tender, and makes it absolutely clear that the positions of CIPRO's chief executive officer and chief information officer have become untenable.

The report confirms that "the contract with the successful bidder should be reconsidered and those responsible should be held accountable." The AG's office also pointed out that "information in the proposal of the successful tenderer was almost exactly the same as the information in CIPRO's [confidential] business case...". Although CIPRO claimed that "extracts from the business case were presented", "...the unsuccessful bidders confirmed that no business case or budget/costing information had been provided...". The business case was an internal working document, that looks at the expected cost of the tender, and it would be highly irregular for a tendering company to be privy to such information.

The Auditor General expressed concerns regarding the successful bidder's ability to deliver on a contract of this magnitude and the risks that this may incur. The Auditor-General also advised the Director-General of the Department of Trade and Industry to "obtain the reasons for the variances in the points scored between the two (bid) evaluation teams" and to "take appropriate action in instances where variances cannot be justified".

ValorIT CC, a Close Corporation with only two owners and a reported turnover prior to this of less than R2,2million, was allocated the R152,7million tender ahead of Faritec Ltd., a JSE listed company whose bid was for R63million. ValorIT CC is currently being sued by Mantra Consulting CC. Manta's owner, Mr. Abe Mbulawa, claims to have drafted the bid proposal on behalf of ValorIT CC after obtaining the confidential business case from CIPRO Chief Executive Officer Mr. Keith Sendwe and Chief Information Officer Dr. Michael Twum-Darko. We understand that Mr. Mbulawa in turn was instrumental in the appointment of Dr. Twum-Darko at CIPRO a few months prior to this meeting.

We are delighted that the truth is now emerging, more than a year after the first reports regarding the shenanigans at CIPRO appeared. What is most disturbing, however, is the fact that the CIPRO senior management has time and again tried to cover up these corrupt activities. Mr. Sendwe accused the Democratic Alliance in a press statement of "peddling lies", and their media officer, Elsabe Conradie, was quoted in October 2009 saying that "a forensic investigation ... has found no irregularities". Given this report's finding, such comments could clearly couldn't have further from the truth.

But what is more: Many persons saw their careers being irreparably harmed by exposing the corruption. At least four independent contractors lost their jobs. The Chief Operations Officer, Mrs. Melanie Bernard-Fryer, who made a "protected disclosure", resigned last month, citing occupational detriment as the cause. Mr. Rocco de Lorenzo, the risk manager, has been suspended for five months and still need to face a charge of giving information to the police.

As a last resort, the Democratic Alliance (DA) met with the Minister of Trade and Industry in March 2010 and requested him to intervene in this matter. He is scheduled to appear before the Portfolio Committee for Trade and Industry on Friday, 23 April 2010. We believe that, given the findings of this report, the positions of the Chief Executive Officer and Chief Operations Officer - both currently placed on suspension pending the outcome of the investigation - must be dismissed.

Statement issued by Andricus van der Westhuizen, MP, Democratic Alliance deputy shadow minister of trade and industry, April 23 2010

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