American tech titan faces South African blacklisting over botched R822-million tender

The Special Investigating Unit (SIU) says it has begun the process to blacklist Oracle, blocking the company from doing business with the government.

This follows the conclusion of the SIU’s investigation into the R822 million Integrated Financial Management System (IFMS) contract that National Treasury awarded in 2015.

Speaking to Parliament’s Standing Committee on Public Accounts (Scopa), SIU chief national investigations officer Leonard Lekgetho said that based on their findings, they made several referrals.

“We [made] two disciplinary referrals […] and we have issued one blacklisting referral letter to National treasury,” Lekgetho stated.

“Five criminal matters have been referred to the National Prosecuting Authority.”

Last year, the SIU told Scopa that after eight years, all Treasury had to show for its R822 million was a single computer running a prototype system somewhere in Pietermaritzburg.

Lekgetho explained that Treasury asked to be given an opportunity to respond to the SIU’s September 2023 presentation.

The SIU agreed and National Treasury submitted its inputs on 22 January 2024.

“The SIU has had an opportunity to review National Treasury’s representation and the accompanying documentation,” said Lekgetho.

“The documents provided by National Treasury were, in fact, instrumental in the SIU investigation and were considered when making our initial findings.”

After thorough review, the SIU informed Treasury on 22 of March 2024 that it still hold the same view — that the tender was irregular and must be set aside.

SIU head Andy Mothibi (pictured above) said their investigation into the tender spanned four years and identified a conflict of interest between unnamed senior Treasury officials and Oracle.

“During the investigation we’ve gathered evidence — which we really can’t unpack in the committee meeting — but we do have the evidence that supports the findings,” Mothibi stated.

Oracle is a $344.31-billion U.S. computer technology giant whose holdings include pervasive software tools.

Besides Oracle’s own database technology, several products the company has acquired over the years are widely used in South Africa.

These include the PeopleSoft enterprise resource planning systems, the open source MySQL database system used by many websites, and the Java programming language.

It is unclear what Oracle’s blacklisting would mean for South African technology companies doing business with the state whose products and services rely on these technologies.

Treasury’s problems with its IFMS system date back over a decade.

In 2010, when he was also serving as finance minister, Pravin Gordhan said that the IFMS contract had been awarded to a consortium comprising ICT Works (Pty) Ltd and Arivia.kom, a subsidiary of T-Systems.

However, this project was abandoned in favour of the new project. Government wrote off the R1 billion spent on this initial tender in 2014.

Treasury concluded a new contract with Oracle in 2015.

Parliament first learnt that the new project was also being botched in 2017.

Then-finance minister Malusi Gigaba promised to appoint a team to conduct an investigation and report back to Scopa.

President Cyril Ramaphosa authorised the SIU to investigate the tender in 2020.

MyBroadband contacted Oracle for comment and it did not respond by publication.