The Department of Home
Affairs (DHA) has moved to salvage the controversial multimillion-rand
Automated Biometric Identification System (ABIS) tender and slapped technology services
company EOH with a R44 million penalty over delays in the implementation of the
project.
After months of wrangling
and negotiations over the delays, the DHA has fined EOH over the R400 million
contract and has recommended it be ceded to a suitable subcontractor.
The department has since
approached National Treasury seeking guidance on the matter.
EOH is contesting this
penalty and the amount is under dispute.
This is not the first time
EOH has been hit with a fine in recent months. In July, the company was penalised R7.5 million by the Johannesburg Stock
Exchange (JSE) for publishing false information in its 2017 and 2018 financial
results.
The latest details of the
fallout between EOH and the department were revealed in Parliament last week by
home affairs minister Dr Aaron Motsoaledi, who presented
a rescue plan for the ABIS to the portfolio committee on home affairs.
The contract was for EOH to
migrate data on the current Home Affairs National Identification System, which
only records photos and fingerprints of South African citizens, to the new
ABIS.
The final implementation of
the system would provide a single source of identification for citizens across
state institutions and private sector entities.
The contract was processed
and awarded by the State Information Technology Agency on behalf of the DHA.
However, the project was
delayed after the missing of master files
in the ABIS contract with EOH and a forensic audit is under way into the
contract.
Delivery discrepancies
In his presentation to the
portfolio committee, Motsoaledi revealed that out of the R400 million contract,
R224 million had already been spent on services, infrastructure and software.
He also said in terms of
the contract, if there are any delays in the implementation of the project, the
DHA reserved the right to levy a penalty for every month of delay.
“In invoking this penalty
clause, DHA levied a penalty of R43 973 141.80 against EOH because the project
has already been delayed by two years. EOH is contesting this penalty and hence
the amount is under dispute. The contract also stipulates that such disputes
are to be mediated by a senior counsel appointed jointly by the DHA and EOH
Mthombo,” he said.
The joint appointment has
already been made and the mediation process is starting this week.
Furthermore, the minister
said EOH has taken a decision to exit all government contracts and as part of
its exit plan from the DHA contract, EOH is proposing to cede the work to a
subcontractor.
“In the event of EOH exiting,
the contract still needs to be salvaged because most plans of modernisation of
DHA services revolves around ABIS,” Motsoaledi said.
The minister added that the
legal opinion obtained by the DHA suggested that ceding is permissible, subject
to certain requirements being met.
According to Motsoaledi,
after meeting with officials from the Department of Communications and Digital
Technologies, it was decided that the DHA proceed with the ceding, provided the
cession is approved by National Treasury.
“The DHA has already
approached National Treasury for guidance. It is recommended that the portfolio
committee notes the decision to cede the ABIS contract to a suitable
subcontractor, subject to the finalisation of the negotiations and approval by
National Treasury.”
Discord continues
EOH, however, has denied it
is quitting government contracts.
A spokesperson says the
company has noted the minister’s presentation, adding: “EOH remains committed
to the project insofar as the engagements under way present viable options
which are commercially sustainable for both parties.
“EOH maintains and intends
to maintain its ongoing strategic relationships and engagements with the
government insofar as those relationships and engagements are commercially
sustainable.”
Further, in terms of the
contract, EOH said it is disputing that it is the cause of the delays.
“In this regard, EOH and
the DHA are proactively and constructively engaging one another through their
respective attorneys with a view to securing an amicable outcome to the
difficulties encountered on the Automated Biometric Identification System
project to date. There are presently no arrangements or agreements in place
concerning the replacement of EOH on that project, whether by cession or
otherwise.”
The JSE-listed company has
been battling with a myriad challenges − operational and legal.
EOH’s problems surfaced
after Microsoft in February last year terminated its contract with the IT
services company after an anonymous whistle-blower filed a complaint with the
US Securities and Exchange Commission about alleged malfeasance to do with a
R120 million contract with the SA Department of Defence.
Ever since, the company has
been trying to improve its image after corporate governance issues emerged
following an investigation by ENSafrica, which unearthed suspicious
transactions worth about R1.2 billion