SAP. Picture: ISTOCK
SAP. Picture: ISTOCK

The Special Investigating Unit (SIU) has found that a needs analysis was not conducted and there was no budget for the R950m purchase by the department of water and sanitation of licences from German software giant SAP.

The licences were for the department and nine water boards, as well as for the Trans Caledon Tunnel Authority.

A total of R285m has already been paid to SAP so far in terms of the contract, which is the subject of a SIU probe mandated by President Cyril Ramaphosa under a proclamation published in September.

The proclamation was issued on the basis of allegations that the purchase of the licences from SAP was not necessary, involved the payment of kickbacks of R35m, and was made without correct tender processes being conducted.

Head of the SIU advocate Andy Mothibi told a meeting of parliament’s standing committee on public accounts on Tuesday evening that the SIU team had already looked at computers and documentation from the department.

Evidence so far indicated that the value of the contract with the SAP was about R950m, excluding VAT consisting of R450m for licences, plus maintenance for five years.

No needs analysis had been conducted before concluding the contract; there was no budget for the purchase and there was no virement or approval of the payments.

“The State Information Technology Agency (Sita) was not consulted as is required for such purchases, and in fact SITA advised the department of water and sanitation against proceeding with this contract,” Mothibi told MPs.

He said the SIU planned to initiate civil litigation in the first quarter of 2019, and to finalise an interim presidential report by end-March 2019.

Mothibi briefed the committee on all SIU investigations into the department of water and sanitation dating back to 2008.

Previous media reports have disclosed that the five-year deal with SAP was concluded despite the water boards and the Trans Caledon Tunnel Authority having contracts with different software companies and paying their own licence, maintenance, and support fees.

Reuters reported SAP as saying in September that it was reviewing all its public-sector work in SA dating back to 2010.

“If we identify any matters of concern, we will address and manage them vigorously and comprehensively. SAP continues to co-operate with US and South African authorities in their ongoing investigations.”

The US department of justice and the Securities and Exchange Commission had opened an investigation into the company under the US Foreign Corrupt Practices Act (FCPA), related to SA.

ensorl@businesslive.co.za