The R4-billion IT contract and Broadband Infraco’s “chosen” CEO

Outa has stated that “it is possible” the Gupta family influenced decision makers in their appointment of Broadband Infraco’s CEO in 2012.

Outa made the statement in its submission to the judicial committee of inquiry into state capture.

The submission covered Broadband Infraco, along with how “certain individuals and entities were benefited by the awarding of certain tenders to SOEs and other departments”.

Two points focused on by Outa were:

  • Broadband Infraco going into partnership with T-Systems to supply Transnet with IT data services.
  • The appointment of Puleng Sejanamane as Broadband Infraco CEO.

The T-Systems deal

The T-Systems deal saw the company and Broadband Infraco enter an agreement to supply Transnet with IT data services for five years – with the contract ending in 2014.

“However, the contract was extended for a period of two years and earned T- Systems nearly R1.3 billion in additional revenue,” said Outa.

There was also a dispute over the contract, and the company will earn an additional R900 million in revenue, it added.

“Therefore, T-Systems would have earned just under R4 billion from a 2010 contract, initially only valued at R1.7 billion.”

It was also reported that T-Systems outsourced services to Sechaba Computer Services – which was allegedly owned by the Guptas.

“In 2014, when the contract extension came into play, T-Systems appointed Sechaba Computer Services as a supplier development partner to carry out services in the Gauteng region, as this formed part of Transnet’s empowerment requirements,” said Outa.

Sechaba Computer Services also allegedly made a payment to Zestilor, which was T-Systems’ then BEE suppliers and was owned by Zeenat Osmany – Salim Essa’s wife.

“The Gupta Leaks revealed that Zestilor first wanted to buy a 51% stake in Sechaba before the two companies concluded a ‘management fee’ deal, a deal that would earn Zestilor R200,000 a month.

It is further alleged that Sechaba Computer Services did not have adequate capacity, and staff members were transferred from T-Systems to service Transnet.

Following multiple media reports and investigations into the deals, T-Systems terminated all contracts with Sechaba Computer Services and Zestilor.

CEO appointment

Outa’s report also covered the appointment of Sejanamane as CEO of Broadband Infraco in April 2012.

Sejanamane was appointed by former Public Enterprises Minister Malusi Gigaba.

Outa stated that an email sent from Ashu Chawla to Ronica Ragavan contained a draft letter in which Broadband Infraco’s chairman addressed Gigaba about the appointment of the new CEO at the state-owned enterprise. This was two months before Sejanamane was appointed.

Before Sejanamane’s appointment as CEO, in late February 2012, the Guptas also reportedly arranged and paid for Sejanamane to travel to Dubai and India – and stay in a Radisson hotel.

It therefore appears that it is possible the Gupta family was able to exert undue influence over Gigaba in appointing Sejanamane as CEO of Broadband Infraco, said Outa.

Update – T-Systems responds

T-Systems has responded to Outa’s submission, stating that it extensively addressed issues regarding its business with Transnet and Broadband Infraco in a public web page on its site.

It also denied allegations made in the Outa submission.

See T-Systems’ reply to Outa’s statement here.

Now read: MTN’s digital revenue plummets after fixing WASP subscriptions

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The R4-billion IT contract and Broadband Infraco’s “chosen” CEO