Telkom's Gijima gamble

Telkom awarded a huge contract, worth an estimated R500-million over five years, to a company that it was concerned might not be solvent—and that didn’t have ownership and control of the equipment needed to do the work.

Further, it was an intervention by controversial liquidator Enver Motala that helped persuade Telkom to favour the company, Gijima, to take over production of Telkom phone cards.

In order to manufacture the cards, Gijima needed the assets of a company called Applied Card Technologies (ACT), which was in liquidation at the time.

On May 27 last year Motala, one of the liquidators of ACT, took the unusual step of writing to Telkom to assure the company that Gijima would probably obtain the necessary assets from ACT.

“It is our understanding that Gijima has tendered with yourselves for the production of your telephony cards,” wrote Motala, who is currently embroiled in controversy over his role in the hearings on the liquidation of another company, the Retail Apparel Group.

“The auctioneers appointed have already canvassed industry participants and from discussions to date, no other industry player will submit a higher bid than Gijima’s bid.”

Quite how Motala was able to make this claim, given that at this time the assets were still up for grabs, remains unclear.

Indeed, one other creditor, Brait Merchant Bank, was also interested in the assets and later launched a failed court application to overturn the sale, based on the claim it had submitted a slightly higher bid.

Questioned by the Mail & Guardian, Motala defended his letter to Telkom, which he confirmed he had written at the request of Gijima.

“Telkom were informed of Gijima’s interest in acquiring the assets and of the fact that its offer appeared to be the most attractive one at the time—indeed the only one then ...
There is nothing unethical in advising interested parties of the stage of negotiation and an anticipated result ...”

Two weeks after Motala’s letter, Telkom awarded the contract to Gijima.

According to Telkom correspondence in the possession of the M&G, the award was made contingent on the resolution of a host of concerns that might arguably have disqualified potential bidders.

They included:

  • The finalisation of the ACT liquidation;

  • Meeting a bridging finance requirement of R2-million;

  • Demonstrating the solvency of Gijima Information Technology Afrika;

  • Obtaining ISO certification for the manufacturing plant; and

  • Upgrading the security system to meet the Telkom specification.

    Telkom said Gijima was awarded the contract on June 10 2002, subject to conditions, on the basis that it achieved the highest overall score in the evaluation against two other shortlisted bidders: Prism and Integrated Card Technologies.

    “Telkom was aware that Gijima were acquiring liquidated assets from another company [ACT] to start up the operation. The contract was awarded to Gijima subject to the finalisation of the ACT liquidation, bridging finance of R2-million and a certificate of solvency of Gijima ... These conditions have subsequently been fulfilled.”

    Gijima purchased the required ACT assets on July 11. However, the M&G understands that the ACT liquidation is, in fact, still not finalised.

    There is a section 417 inquiry under way into the collapse of the company and it is understood that Brait is still contesting the ownership of certain of the assets at the plant. When Telkom signed a formal written contract with Gijima on July 16, no liquidation certificate was in place.

    Regarding the intervention of Motala, Telkom noted that Telkom’s legal services division liaised closely with “the curator of the ACT liquidation” as part of the “due diligence and verification process” and denied there was anything inappropriate about this.

    When first approached for comment, Telkom procurement executive Thapelo Petje denied that he was the official responsible for dealing with Gijima, flatly contradicting written correspondence between himself and Gijima. Telkom later denied he had said this.

    He also apparently swiftly made contact with Gijima to inform them of the M&G’s inquiries. When he was later telephoned and asked why he had done this, he switched off his cellphone. Telkom later denied Petje had tipped off Gijima.

    Gijima CEO Robert Gumede told the M&G that the final contract with Telkom was only signed on July 16 last year, and by that time Gijima had acquired the plant. Gumede said the “alleged facts” on which the Telkom transaction was questioned were “untrue and vindictive” as Gijima had won the tender fair and square.

    “In our opinion, the alleged investigation by your Mr Sole is nothing less than a witch-hunt, in all probability initiated by predominantly white-owned contenders for the Telkom tender or a disgruntled and vindictive Gijima ex-employee ...

    “We sense from your Mr Sole’s questions that if a black company succeeds to win an open tender against white major companies, then they are said to be incapable and/or corrupt ... We sincerely hope that we are not a victim of [some] faceless people’s or competitor’s hidden agenda.”

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