Home Affairs asks SARS for a bail-out

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The Department of Home Affairs has asked the South African Revenue Service (SARS) for help in completing the controversial “Who Am I” contract.

Yesterday, GijimaAst told the market the department had pulled the plug on the contract, and was cancelling the deal. The company said the move was surprising, and no reasons were offered in the short letter it received from the department. However, GijimaAst is not letting the matter rest, and intends taking legal action to enforce the R2.5 billion deal.

Home affairs has now asked SARS for help in implementing the project, which is meant to seamlessly transform paper-based processes into electronic functions. SARS spokesman Adrian Lackay confirms home affairs minister Nkosazana Dlamini-Zuma has asked the taxman for help.

He says SARS has been working with home affairs during the past few weeks on implementing the project at points of entry.

However, because there could be legal action around the cancellation of the deal, Lackay says other queries should be directed to Home Affairs. They, however, do not want to talk about the contract, or what will happen now. Spokesman Ronnie Mamoepa says GijimaAst issued the statement and not the department. “They and they alone are in the best position to respond to media queries regarding the contents of their statement. Accordingly, the department will not engage in any public discourse regarding this matter.”

However, Dlamini-Zuma alluded to the cancellation of the contract in her budget speech on Wednesday. She explained in her budget vote that SARS and the department were implementing an enhanced movement control system, to facilitate the secure movement of people in and out of the country in preparation for the 2010 Fifa World Cup. The system is being piloted at OR Tambo International Airport and will roll out to 34 priority ports of entry before the World Cup, “notwithstanding the changing of the service provider”, she said.

The controversial deal was initially signed in June 2008, ITWeb reports. “Who Am I (I am I said)” is the Department of Home Affairs’ integrated business system that aims to replace all manual processes with online and real-time transactions. Despite work having been carried out on the implementation for two years, the contract now hangs in the balance, 56 days before thousands of tourists are expected to enter SA for the Soccer World Cup.

Carlos Ferreira, GijimaAst group FD, says the company received notification that the department would cancel the deal. He adds that no reasons were provided in the “short notice”. While GijimaAst is seeking legal advice on the matter, it is committed to continuing to implement the contract, notes Ferreira. He says systems will be up and running in time for the soccer games, although this will be legacy structures that have been updated.

The company says it has fulfilled its obligations and continues to perform in terms of the contract. Consortium partners on the project include multinational companies, such as Daon, a global player in identity management systems; IBM and Siemens. GijimaAst says the department never previously indicated it was unhappy with the contract and its implementation. “The department’s claim that the contract is invalid was completely unexpected.”

Ferreira says the amount of revenue under threat is about 15% of the company’s annual turnover, or R450 million. GijimaAst reported revenue of R1.44 billion in the first six months of the year to December. Its shares slumped sharply on the news to 105c, a drop of 18c or 14.63%.
“Who Am I” has been dogged by controversy since it was first mooted in 2006. The initial tender for the project was worth R1.9 billion; however, when the contract was finally signed in mid-2008, the cost had increased to R2.5 billion. It was then referred to the auditor-general for investigation by then home affairs minister Nosiviwe Mapisa-Nqakula, on recommendation from the Parliamentary Portfolio Committee for Home Affairs.



Questions were raised around the awarding of the contracts, even though the department and the State IT Agency said they were awarded properly. The auditor-general did not find any wrongdoing by GijimaAst.