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Transnet’s awarding of IT services to T-Systems was ‘biased’, High Court finds

2018-12-14 13:18

Transnet’s board showed “bias” in its decision to appoint German multi-national company T-Systems, a R2.5 billion IT data services tender, the North Gauteng High Court found this week.

The state-owned enterprise (SOE) awarded the tender to T-Systems in March 2017, despite the company having come second to Gijima Holdings after the bidding process was concluded.

Gijima Holdings, owned by billionaire Robert Gumede, challenged Transnet’s board decision until former Transnet chief executive officer, Siyabonga Gama, realised that the board had made a mistake and applied to have the decision set aside so that the tender could be awarded to the deserving bidder, Gijima, who scored the highest points.

The board’s acquisition and disposal committee (ADC) overruled advice from Transnet’s line managers who had given Gijima the thumbs up to be appointed, after risk factors that were identified in its bid had been resolved.

“The ADC,” reads the Wednesday judgment by Judge Raylene Keightley, “appears to have completely ignored that line managers were satisfied that risks that were identified could be mitigated.”

“One is left wondering whether the ADC was not being driven by extraneous considerations … the recommendation by the ADC was irrational and tainted by bias in favour of the incumbent supplier of IT services, T-Systems,” Judge Keightley said.

Keightley quotes ADC’s minutes where its former chairperson, Stanley Shane, showed brazen bias to T-Sytems. Shane was heavily-linked to the Gupta family’s state capture project.

On the other hand, T-Systems has – although having repeatedly denied this – a link to the Guptas.

The IT data services contract was held by government-owned IT company, Arivia.kom, until T-Systems bought the company in 2009. Since then T-Systems has been providing the service to Transnet.

After buying Arivia.kom, T-Systems ceded its contract to Zestilor – a company that was owned by Zeenat Osmany, the wife of Gupta associate Salim Essa.

In February 2017, before the tender was awarded, Shane addressed the ADC and said: “To go and source to Gijima or anybody else, in my opinion, would be tantamount to suicide.

"That is my perspective on it. That is the newspaper article I would rather have, with no disrespect to Gijima who are not alien to suing their customers … I am happier with the risk of getting sued by Gijima who did not get the contract than us getting rid of the incumbent we helped to create.”

Shane added: “The last thing I want to do guys, with due respect, is change my mainframe supplier and my IT supplier. I will tell you what my understanding at the time of putting this thing out to tender was that we wanted to keep T-Systems, honest. That was the actual motivation.”

It was in light of Shane’s remarks that the judge questioned the ADC’s partiality in awarding the tender.

“To permit such a tainted decision to stand,” said Keightley, “would be inimical to the constitutional requirement that tender processes should be fair, equitable, transparent, competitive and cost-effective. I am satisfied that Transnet acted unlawfully to award the tender to T-Sytems.”

The court ordered Transnet to award the tender to Gijima Holdings.

T-Systems withdrew its opposition to Gama’s application last month.

T-Systems managing director, Dineo Molefe, said at the time that the company agreed to “co-operate” with Transnet following extensive consultation and backing by its shareholders.

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February 17 2019