Two software license and support agreement contracts between the Department of Water and Sanitation (DWS) and Systems Application Products (SAP) worth over R1 billion were declared invalid and set aside by the Special Tribunal.
The Special Court’s order follows a thorough investigation by the Special Investigative Unit (SIU) into the DWS cases, which found that the department had improperly entered into licensing and software support agreements. between 2015 and 2016 with SAP, a multinational software company. The SIU confronted DWS and SAP with evidence of wrongdoing and, by mutual agreement, the SIU, together with DWS and SAP, declared the contracts invalid and illegal. The agreement was made the order of the Special Court.
On March 15, 2022, the Special Court ordered SAP to reimburse DWS the amount of R413 million on software license agreements of R1,036,000,000. The R413 million represents the total amount paid by DWS to SAP under the 2015 and 2016 software license and support agreements.
The Special Court further ordered SAP to pay DWS R 263,282,173.78 within five days of the date of the Order, any balance to be paid after the Special Court determines whether an additional amount should be deducted of the amount due. Under the terms of the Special Court’s order, DWS may not use any of the software licensed under the 2015 and 2016 license agreements.
The disputed amount of approximately R83 million for third party costs incurred by SAP and the non-profit principle will be adjudicated by the Special Court and a further order issued as to the reimbursement of any part of the R83 million to DWS.
The SIU and DWS welcome the Special Court’s order as it sends a strong message to public officials and companies doing business with the state that collusion and unethical business practices will not be rewarded.
The result of the Special Court’s order is the continued implementation of the results of the SIU investigation and consequence management to recover financial losses suffered by state institutions. There are other cases in the Special Court still awaiting trial for a combined value of R2.1 billion and which will result in further recoveries for the state.
Meanwhile, the SIU made disciplinary referrals to the DWS against two senior officials. The SIU has been advised that the CD against a senior official has been concluded and judgment is expected later this week, while the DWS is considering disciplinary action against the other official. The SIU also referred evidence pointing to criminality at the NPA, AFU and SARS. The cross-references comply with the SIU 74 law of 1996.
Distributed by APO Group on behalf of the Department of Water and Sanitation, Republic of South Africa.
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