Apr 25, 2010 12:10 AM By Rob Rose
Tech company GijimaAst, chaired by ANC-donor Robert Gumede, is gearing up for legal action but it may still lose the war to force the Department of Home Affairs to honour its R4.4-billion ''Who Am I" contract.
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Many question marks are hanging over who am I
''Who am I" was meant to replace home affairs' archaic and fraud-ridden systems with new state-of-the-art identity verification technology.
But two weeks ago Gijima received a letter from home affairs director-general Mkuseli Apleni saying that due to a "failure to perform" and concerns over how the deal was struck in the first place in 2008, the contract was "invalid".
This sparked a bloodletting in Gijima stock, wiping 15% off the share price in 10 days - a R176-million knock. (For Gumede, who owns 34.3% of GijimaAst, the plunge meant his personal investment fell by R60.1-million to R351-million).
Gijima won a small victory this week after its 140-strong ''Who Am I" team was ejected from the home affairs premises in Pretoria. Gijima's lawyers fired off letters warning that this was "unlawful", causing Apleni to allow them back.
But a bigger battle is coming.
A series of letters between government and the JSE-listed technology company, now in the Sunday Times' possession, provide insight into how the relationship had soured. While GijimaAst's leadership is privately hoping that home affairs will reverse its position, this seems unlikely.
Though concerns have simmered for months over how Gijima got the deal, the root of the current dispute seems to lie in a meeting held on February 9 between Home Affairs Minister Nkosazana Dlamini-Zuma and Gijima, including Gumede and its chief executive Jonas Bogoshi.
Here, Gijima told Dlamini-Zuma it would only be able to install the new identity verification system in 93% of the country's ''ports of entry" - including major airports - by the time the World Cup kicks off in June.
Dlamini-Zuma was angry, and took the matter to cabinet. It was then decided to get the SA Revenue Service's suppliers (who implemented the e-filing system) to step in.
Then, last Tuesday, Apleni's letter arrived at Gijima's offices, saying that "given your failure to perform and deliver, it became necessary to get the priority work done".
Apleni said he had "investigated and considered the process and documentation leading to the contract of 9 July 2008 and ... it became apparent that on various grounds, the contract (is) invalid and unenforceable".
The next day, Gijima's lawyers, Brian Kahn attorneys, fired back a letter to Apleni and Dlamini-Zuma, saying it "does not, and will not accept the repudiation of the contract".
But the lawyers said Gijima would not ask a court for an urgent interdict to stop Sars building the system, given "the short period of time" until the World Cup and "the obvious huge embarrassment to the government ... should such (an) interdict be granted on the eve of the World Cup".
Unless Dlamini-Zuma's department changed its mind, the lawyers threatened that Gijima would go to court and ask for "appropriate relief" - including damages and a "declaratory order" on whether the contract was valid or not. Last Saturday night, Gijima's lawyers sent another detailed letter to Apleni, saying claims Gijima "failed to perform" were "untrue".
In that letter, Gijima painted a picture of a flailing government department. The lawyers said home affairs had "frustrated" the implementation of ''Who Am I", lacked "skilled resources" and "appropriate planning" to train staff.
"The state of the department of home affairs' financial processes and support for the project has been unacceptable, and has caused embarrassment to (itself) and its director-general," the lawyers wrote.
Gijima demanded that home affairs reverse its decision, and asked for "adequate reasons" for that decision - or it would go to court.
But home affairs is digging in its heels. Spokesman Ronnie Mamoepa said he is "under instruction not to speak on this matter", but added that the department is sticking to its guns over the reason for cancelling.
One government insider, however, told the Sunday Times that there was a strong feeling that Gijima had "pillaged the fiscus" by initially putting a price of R1.9-billion on a contract that then soared to R4.4-billion.
"The final straw came in February, when they (said) they can't deliver ''Who Am I" in time for the World Cup. Discussions were held with Treasury, and cabinet gave a directive that Sars should intervene," he said.
Gijima denies this.
One of its lawyers told the Sunday Times: "The tender value was R1.9-billion, and this only rose to R2.3-billion because of inflation and a few other reasons. The rest (R2.2-billion) was to build the hardware architecture that we thought was there when we were appointed, but which wasn't. That was then included in the tender."
In the absence of full explanations from government, speculation has run rife that the cancellation was either for ''political" reasons - targetting Gumede - or that government had uncovered irregularities in Gijima's appointment in 2008.
Gumede hit the headlines when he donated R10-million to the ANC at a fundraising function for the party's president, Jacob Zuma, in October 2008. Two months later, the ANC awarded Gijima a R10-million contract to install computers at its parliamentary office.
However, Gumede said that he also donates cash to other political parties, including the opposition Democratic Alliance.