SIU goes after R6.5 trillion tech giant

 ·28 Mar 2024

The Special Investigating Unit (SIU) has said that it would institute proceedings to blacklist US tech giant Oracle after an investigation found that an R822-million contract awarded to them was “irregular.”

Speaking to Parliament’s Standing Committee on Public Accounts (Scopa), a four-year investigation by the SIU found that a contract awarded by National Treasury back 2015 was irregular, supply chain management policies were not followed, there was a conflict of interest, and expenditure was fruitless and wasteful.

The company, which currently has a R6.55 trillion market cap, was awarded the R822-million contract to update the government’s Integrated Financial Management System (IFMS) by integrating the state’s payroll, supply chain, finance and HR systems.

Last year, the SIU had told Scopa that after the eight years since the awarding of the contract, all Treasury had to show for its R822 million was a single computer running a prototype system somewhere in Pietermaritzburg.

SIU head Andy Mothibi said that the investigation into the tender has resulted in strong evidence of irregularities, although the evidence cannot be made public at this moment.

Chief national investigations officer at the SIU, Leonard Lekgetho, said their investigations found that “there was a corrupt senior official at National Treasury that was involved in the award of the contract to Oracle,” as well as other officials in the department.

As a result, the SIU made “two disciplinary referrals […] and we have issued one blacklisting referral letter to National treasury… on the basis of the evidence that we uncovered that indicated the roles of officials in the National treasury that they would have played in the process of these irregularities,” said Lekgetho.

“Five criminal matters have been referred to the National Prosecuting Authority,” he added.

Deputy finance minister David Masondo told the committee that the Treasury held itself to high standards of governance and financial management, however conceded that the handling of the project fell short.

Conversely, Treasury’s director-general Duncan Pieterse told Scopa that they “disagree with [the SIU’s] findings.”

In response to this, committee chairperson, Mkhuleko Hlengwa, said that “it seems to me that this is the hill you [Treasury] are prepared to die on,” since previous investigations into the matter from the department’s internal audit committee and an independent investigator found impropriety and non-compliance with the tender processes. 

Hlengwa further said that the response is a “glaring indictment” of the Treasury, which needs to be taken seriously.

Treasury’s problems with its IFMS system have been long-winded

In 2010, Pravin Gordhan, then finance minister, disclosed that the IFMS contract was given to a consortium including ICT Works and Arivia.kom, a T-Systems subsidiary. This contract was then later dropped, and the government wrote off the R1 billion spent on it by 2014.

Treasury then concluded a new contract with Oracle in 2015. However, it came to light to Parliament that the new project was also being botched in 2017, which led to internal and private investigations

President Cyril Ramaphosa authorised the SIU to investigate the tender in 2020.

Reported with MyBroadband

Read: Ramaphosa has put Home Affairs and Prasa in the SIU crosshairs

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