A damning legal opinion has recommended that a controversial fisheries tender awarded by the Department of Agriculture, Forestry and Fisheries be put on ice.

Minister Tina Joemat-Pettersson is also headed for a showdown with her top officials after discovering that the department had failed to spend more than R800-million.

The tender, also worth R800-million, was awarded to Sekunjalo Holdings to combat illegal fishing along South Africa's coastline. Questions have now been raised why the department ignored a conflict of interest arising from the fact that one of Sekunjalo's subsidiaries - Premier Fishing - has rights to fish in South African waters.

Sekunjalo chairman is Iqbal Surve, a politically connected businessman who is also director of Premier Fishing.

Critics argue that awarding the contract to a company with interests in fishing makes it both referee and player in the R2-billion industry. The preferred bidder was also announced despite the failure by the department to conclude a due diligence process.

But the department has defended itself, saying the legal opinion was its initiative. Outgoing service provider Smit Amandla Marine has gone to court to challenge the decision to award the contract to Sekunjalo. It wants the court to review that decision.

However, legal opinion obtained by the department after the preferred bidder was announced warns the court is likely to find in favour of the company that lost out.

"The prospects of successfully defending the review are not good and in our view the review is likely to succeed on the basis that the scoring was irrational and cannot be rationally and fairly correlated with the information which served before the bid evaluation committee."

The legal advice noted that there were discrepancies in the awarding of the contract. It points out that the tender should have been re-advertised when all the bidders failed to meet the minimum requirement of 80% functionality.

Director-general Langa Zitha was given three options by the bid evaluation committee:

• That the functionality requirement for the contract be reduced to 60%;
• That the bidders be invited to make oral presentations to clarify certain issues; or
• That the tender be re-advertised with more detailed evaluation criteria.

The department opted for the second option and invited the bidders to make oral presentations. But this gave rise to further discrepancies in the scoring of the bids. "We are of the view, given what has emerged from the consultations and the information provided to us, that there is substantial risk that the award cannot be justified rationally."

Accordingly, the lawyers argue that the contract awarded to Sekunjalo can be set aside by the department as a result of the deficiencies in the bid evaluation process.

Highly placed insiders said the blame lay squarely at Zitha's door as he endorsed the final recommendation to select Sekunjalo despite glaring irregularities in the process of awarding of the tender.

Zitha and Joemat-Pettersson have clashed in the past following a series of blunders, including perceived failure by the director-general to approve important projects.

"The minister does not sit on tender committees; all she did was announce the preferred bidder. But why did the director-general sign when there were serious problems with process?" asked a senior official who refused to be named.

Department spokesman Selby Bokaba said while they could not comment on a matter before the courts, they had initiated the legal opinion. "It must be stated on record that the legal opinion route was the initiative of the department."

Bokaba defended the minister, saying she was not involved in the awarding of tenders.

Meanwhile, Joemat-Pettersson and Zitha are headed for another a showdown after it emerged that the department has over R800-million held by the Land Bank, including money for flood and poverty relief.

The minister has refused to approve a report on departmental finances which shows that money meant for important projects has not been spent and that the provinces have only spent R447-million of the R1-billion available.

The department has failed to spend R84-million in flood relief money despite flood devastating several areas around the country. It also has more than R560-million earmarked for loans to struggling farmers.

Joemat-Pettersson now wants answers from Zitha and other senior officials as to why the money was not spent. Bokaba said the minister had since been given updated expenditure figures. "There are new and updated figures and information which has subsequently come to the attention of the minister which renders the initial information outdated."