Transnet's Gupta row simmering over 'unlawful' T-Systems contract

03 March 2019 - 00:00 By MPUMZI ZUZILE

Almost three months after being ordered by the high court in Pretoria to cancel an "unlawful" multibillion-rand contract with a Gupta-linked company, Transnet is dragging its heels.
The court ordered Transnet to withdraw the R2.5bn IT data services contract from German multinational T-Systems, and instead award it to Gijima, a company owned by billionaire IT entrepreneur Robert Gumede which had scored higher in the tender process.
This week a frustrated Gumede sent Transnet a letter of demand through his lawyers.
T-Systems previously ceded a different PC rentals contract to Zestilor - a company that was owned by Zeenat Osmany, the wife of Gupta associate Salim Essa. T-Systems said it ceded that contract since it was not part of its core services to Transnet.
Gijima Holdings challenged Transnet's board decision by complaining to Transnet's procurement ombudsman, resulting in the National Treasury ruling that the contract was not in accordance with Transnet's legal obligations under the Preferential Procurement Policy Framework Act.
Transnet then went to court to have the contract legally cancelled and in December judge Raylene Keightley found the T-Systems contract "invalid and unlawful" and ordered Transnet to award the tender to Gijima.
Three months later, Transnet hasn't implemented the court order.
Gijima's lawyer, Nicqui Galaktiou, wrote a letter to Transnet's lawyers, MNS Attorneys, last week demanding to know when Transnet would implement the court order.
In it, she demanded that Transnet issue Gijima a letter of award by February 26 and commence with contracting in a genuine and bona fide manner within three business days of this. However, Galaktiou told the Sunday Times on Friday she had not heard back from Transnet.
"Our instructions are to take all steps necessary in the circumstances, including but not limited to an application for compliance with the court order," she said.
In her letter, Galaktiou also accuses Transnet of extending the T-System contract at inflated prices.
"[Transnet] acknowledges that it currently incurs R54m in monthly costs to procure the services of T-Systems in comparison to the R22m it would be paying [Gijima] for the exact same service . This amounts to R32m extra a month in wasteful and fruitless expenditure.
"Who is ultimately benefiting from this looting from Transnet?"
Transnet spokesperson Molatwane Likhethe confirmed the high court order but said it was "not prescriptive on how and when the tender should be awarded to Gijima".
"Accordingly, a letter of regret was issued to T-Systems and the award of the tender to Gijima is under consideration," Likhethe said.
He denied Transnet had disobeyed the court order, saying they had been engaging with Gijima.
"The assessment process on this contract has started and Transnet is constantly updating all the relevant parties involved," he said.
He said Transnet was in the process of an independent assessment of the contract and Gijima has been made aware of this. T-Systems would continue to provide the essential ICT services to Transnet as part of the disengagement process.
However, Galaktiou said Transnet had only requested a meeting this week, after questions from the Sunday Times.
She said they were aware of Transnet's assessments of the contract.
"This information only came to Gijima's attention in the past week when the media provided Gijima with Transnet's so-called risk report reflecting that further due diligence on Gijima is surreptitiously being conducted with a view to deliberately and unlawfully exclude Gijima from concluding the contract, in order for the contract to be retained by the T-Systems and Sechaba consortium."
T-Systems spokesperson Thamsanqa Malinga said they were ready to hand over the contract to Transnet's new service provider in line with the Transnet board's decision.
"We are still waiting for Transnet's directive on the handover process. We informed the Transnet board that we would co-operate with their decision, as prolonged litigation would not be in the interest of any of the parties involved, the country or Transnet's customers," Malinga said.
Editor's Note: This article has been amended to correct a reference to the Zestilor contractfor clarity regarding the contract.

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