Software company must pay back R413m from two ’irregular’ contracts

Two multimillion-rand contracts “irregularly” entered into by a multinational software company, Systems Applications Products (SAP), and the Department of Water and Sanitation have been nullified by the Special Tribunal.

The Special Tribunal further ordered the company to repay an amount of R413 million to the department. On Tuesday, Judge Lebogang Modiba declared both contracts, valued at more than R1 billion, constitutionally invalid and set them aside. The order followed a probe by the Special Investigating Unit (SIU), which revealed that the software licence and support agreements had been irregularly concluded by the department and SAP between 2015 and 2016.

Judge Modiba said the department may not use any of the software licensed under the 2015 and 2016 licence agreements. She further ordered SAP to repay the department a staggering R413 121 283.40, representing the total amount received pursuant to the 2015 and 2016 licence agreements. She did not issue an order with regard to the costs of the review application.

A joint media statement between the department and SIU said: “The SIU confronted the Department of Water and Sanitation and SAP with evidence of wrongdoing, and by agreement the SIU together with the department and SAP declared the contracts invalid and unlawful.” The repayment of R413m by SAP was part of the R1 036 000 000 in software licence contracts.

“The R413m represents the total amount paid by the deparment to SAP pursuant to the 2015 and 2016 software licence and support contracts,” said a media statement. Judge Modiba also ordered SAP to pay an amount of R263 282 173.78 to the department within five days of the date of the order “with any remainder to be paid after the Special Tribunal’s determination of whether any further amount should be deducted from the amount due”.

Both state entities expressed a view that the order would send “a strong message to officials and companies doing business with the state that collusion and unethical business practices will not be rewarded”. The department announced that two officials implicated in wrongdoing were in hot water after the SIU made disciplinary referrals against them to the department.

SIU spokesperson Kaizer Kganyago said: ”The SIU was informed that DC against one senior official has been concluded, and judgment is expected within this week, while the department is considering disciplinary action against the other official.

“The SIU has also referred evidence pointing towards criminality to the NPA, AFU and Sars. The referrals are in line with the SIU Act 74 of 1996.”