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SAP must repay R413m to Department of Water Affairs and...

South Africa

AGE OF ACCOUNTABILITY

SAP must repay R413m to Department of Water Affairs and Sanitation

Head of the Special Investigating Unit Andy Mothibi. (Photos for illustrative image: Chris Ratcliffe / Bloomberg | Gallo Images / City Press / Leon Sadiki)

The Special Tribunal has declared the software licence and support agreement concluded between the Department of Water Affairs and Sanitation (DWS) and System Application Products (SAP) unconstitutionally invalid and ordered that it be set aside. The Tribunal has a statutory mandate to recover public funds taken from the fiscus through corruption, fraud and illicit money flows.

In a ruling on Tuesday, Judge Lebogang Modiba ordered that SAP repay the department R413-million of R1,036-billion in software licence contracts.

The R413-million represents the total amount paid by the department to SAP pursuant to the 2015 and 2016 software licence and support contracts. The Special Tribunal order follows an investigation by the Special Investigating Unit (SIU) into the department, which revealed that the department irregularly concluded software licence and support agreements on 22 December 2015 and 26 July 2016 with SAP, a multinational software company.

Suspicions of alleged irregularities surfaced in June 2020 when Public Protector Busisiwe Mkhwebane ordered the Hawks to investigate allegations that there had been criminal conduct in the purchasing of SAP licences.

The Special Tribunal further ordered SAP to pay the department R263,282,173.78 within five days of the date of the order, with any remainder to be paid after the Special Tribunal’s determination of whether any further amount should be deducted from the amount due.

In terms of the order, “DWS may not use any of the software licences under the 2015 and 2016 agreements”. 

The Special Tribunal came to this decision after a submission served before the tribunal and papers indicating the decision to award was wrongful, due to irregularities in the procurement process and no competitive bidding. The Special Tribunal also found the unlawfulness and the illegality thereof as the main characteristics relating to the awarding of the contract.

SIU spokesperson Kaizer Kganyago said the disputed amount of about R83-million for third-party costs incurred by SAP and the no-profit principle will be adjudicated on by the Special Tribunal and a further order made on repayment of any portion of the R83-million to the department.

Kganyago said: “The SIU and DWS welcome the Special Tribunal order as it sends a strong message to officials and companies doing business with the state that collusion and unethical business practice will not be rewarded.”

He reiterated that other matters with a combined value of R2.1-billion that are enrolled in the Special Tribunal are still awaiting adjudication and will result in further recoveries for the state.

The SIU has made disciplinary referrals to the department against two of its senior officials. The SIU, Kganyago said, was informed that disciplinary action against one senior official had been concluded and judgment was expected this week, while the department was considering disciplinary action against the other official.

He said the SIU had referred evidence indicating criminality to the National Prosecuting Authority, Asset Forfeiture Unit and SARS. “The referrals are in line with the SIU Act 74 of 1996,” he said.

The Special Tribunal has a statutory mandate to recover public funds taken from the fiscus through corruption, fraud and illicit money flows.

On Tuesday, 8 March, the Special Tribunal ordered two construction companies to return the profits they had earned from R40-million in contracts to erect the Beit Bridge border fence. This follows an investigation by the SIU which uncovered several irregularities, including a prepayment to the companies by the Department of Water Affairs and Sanitation.

Since its establishment, the tribunal has recovered about R8.6-billion from unlawful accounts. On Monday, 14 March, President Cyril Ramaphosa expressed confidence in the Special Tribunal and the SIU, while underlining that a huge amount of stolen funds was yet to be recovered. DM

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