Monday, September 10, 2012

There's something rotten in the State - - -

Recently there have been a couple of judicial decisions that have made my flesh creep. 

First, there was a few billion dollars (many billions of Rand) at stake over the award of a tender to administer social benefits to South Africa's poor on behalf of the South African Social Security Agency.

One of the banks, ABSA, had set up a company called AllPay that had successfully developed safe, secure systems for delivering social grants to some 13 million deserving citizens. After a few years, their contract came up for renewal.  Enter a company called Cash Paymaster Services, whose parent is a United States-listed Net1 UEPS.  Voila! It won the contract.

AllPay went to court.  Mr Justice Elias Matojane found that the Agency had:
  •  "Irrationally and unfairly" lowered the scores of the losing bidder, AllPay;
  • "Irrationally" over­looked the fact that Cash Pay­master Services had failed to follow the bid specifications;
  • Not included a supply chain management expert on its bid evaluations committee as it was required to do; and
  • "Unlawfully" made no assessment of Cash Paymaster's black economic empowerment partners.
Any sentient person would have concluded that Cash Paymasters should be given the boot.  But no! Mr Justice Matojane ruled that the tender should not be set aside. The contract was signed, expensive infrastructure was being rolled out and that could not be undone without prejudicing Cash Paymaster. Reissuing the tender might interrupt grant payments, which would be unacceptable.

Hang on!  "Without prejudicing Cash Paymaster"? The Agency had prejudiced AllPay, and then some. In my books, justice is balanced, and the question the good judge should have addressed is not whether Cash Paymaster might be prejudiced, but whether AllPAy had been! On his own findings, there is no doubt that there was no hypothetical prejudice, there was real, blatant, out-in-the-open prejudice, and the Agency had a case to answer to AllPay.

 Mr Justice Elias Matojane features again in the matter of Esorfranki. In 2010, the Mopani district municipality awarded a tender for a R217m pipeline contract to the Tlong Rea Trading SMN joint venture.  One of the partners in the joint venture, Tango Consultants CC was only registered two weeks after the tender was first advertised.  None of the parties in the joint venture had a Construction Industries Development Board rating of 9, which was one of the key conditions of the tender.  The CIDB is a statutory body established by Parliament to stimulate sustainable growth, reform and improve the construction sector. The joint venture's bid was also higher than Esorfranki's.

On August 29 this year, Judge Elias Matojane found in favour of Esorfranki, and ruled that the municipality and the joint venture had colluded unlawfully. He found the municipality had been biased; that there had been fraud in the awarding of the tender; and that the awarding of the tender had been unlawful. He declared the tender process had been illegal and invalid and set the process aside. 

However, despite the unequivocal findings, neither the Joint Venture nor the Municipality received any sanction. The Joint Venture was permitted to retain the tender while Esorfranki was to pay its own costs.

Such a result sends the most appalling signals.  Corruption is okay.  Even if you get caught, you won't be rapped over the knuckles - or sanctioned in any other way.  Taxpayers money can be squandered at will. Construction quality is of no concern. Oh, the list goes on and on.  

Ultimately, we rely upon the law to see that wrongs are righted.  When the law fails us, that is the time to get worried, very worried.

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