Smart driver’s licence card nightmare in South Africa

South Africa’s Auditor General’s investigation into alleged tender manipulation involving the Department of Transport (DoT) and the bid winner, Idemia, is not the first time the French company has been accused of such wrongdoing.

In fact, it is the third time Idemia has been accused of tender misconduct in South Africa, and the third relating to identity document tender impropriety in developing countries.

Idemia was established in 2017 following the merger between Safran Identity and Security and Oberthur Technologies.

Safran and Oberthur Technologies both specialised in identity and digital security.

In 2012, Safran, formerly Morpho, was fined 500,000 euros for bribing Nigerian officials.

The alleged bribery occurred between 2000 and 2003 and was used to secure a $214 million contract to produce national ID cards.

The fine was the only punishment as no senior management was prosecuted, although it had happened over ten years earlier.

Asked about this, Idemia said the events in Nigeria pertain to a different group, which was acquitted nearly ten years ago.

Fast-forward ten years to 2022, and French authorities held Idemia responsible for Oberthur Technologies’ past wrongdoings.

Idemia was fined 7,957,822 euros (R153 million) in a deferred prosecution agreement following allegations of bribing a foreign official.

France’s National Financial Prosecutors Office’s (PNF) investigation into the allegation found that Oberthur Technologies had made improper payments to a Bangladeshi official with ties to the Prime Minister between 2013 and 2015.

The investigation found that these payments were made to secure a tender to print identity cards for the Bangladesh Election Commission.

This was part of a World Bank-funded project to help create a national identification system in Bangladesh.

As a result of the findings, the World Bank sanctioned Oberthur Technologies for 30 months on 30 November 2017.

The sanction relates to corrupt and collusive practices under the Identification System for Enhancing Access to Services Project (IDEA), a project designed to establish a secure, accurate and reliable national ID system in the People’s Republic of Bangladesh.

According to a leaked 2022 Organisation for Economic Cooperation and Development report, these foreign corruption rulings are rare in France.

It stated that authorities lacked the resources to combat corruption in big export contracts.

Idemia told MyBroadband that it subcontracted the tender to a local company that was ultimately investigated by the World Bank.

“Unfortunately, the practices and behaviour of this subcontractor did not meet Oberthur Technologies’ rules and policies nor the World Bank’s standards,” Idemia said.

Because both incidents occurred before Oberthur Technologies and Safran merged into Idemia, the company told MyBroadband that “any past allegations involving previously associated companies do not reflect our current operations or practices.”

“Since its formation in 2017, Idemia has implemented robust compliance measures and has consistently upheld the highest ethical standards in all our tender processes.”

Department of Home Affairs

Home Affairs was the first South African government department to raise questions about Idemia. In this case, it involved late delivery of a project.

In 2017, Home Affairs appointed EOH to develop two T3 data centres for the Home Affairs National Information System (Hanis).

The contract included all equipment, a commercial off-the-shelf solution, and the related services to develop interfaces and migrate data from its existing system to a new data store.

The database houses fingerprint and facial image records for all persons residing in South Africa.

Home Affairs and the State Information Technology Agency (SITA) awarded the contract.

It was supposed to be completed by November 2018 but was not delivered on time.

The Auditor-General found that the initial awarding of the tender to EOH was suspicious and said the department must investigate it.

Nexia SAB&T was appointed and discovered that EOH and SITA officials had allegedly engineered an unlawful scheme to ensure EOH would land the contract.

In light of the investigation’s findings and to avoid further delays, EOH ceded Phase 2 of the contract to Idemia, for which the department paid over R150 million in April 2021.

Idemia had been subcontracted under EOH to complete phase one of the project.

EOH gave Idemia six months to complete the work, scheduled to be fully operational by the end of November 2021.

However, the system only went live in September 2022 following multiple extensions given to the French company.

Home Affairs’ 2022/23 annual report that the department levied fines against EOH and Idemia of R65 million in the 2021/22 financial year and R69 million in the 2022/23 financial year for not reaching project milestones.

The report also noted that irregular expenditures on the project amounted to R14 million for the 2022/23 financial year.

Idemia said that a number of factors, such as Covid-19 and successive lockdowns, resulted in the delay of the delivery of Hanis.

Airports Company South Africa

Then, in 2023, Airports Company South Africa (ACSA) awarded a tender to the French company for a biometric and digital identity technology project involving its Automated Border Control project, e-gates, and single tokens.

It cancelled the contract earlier this year following an investigation that unearthed indications of malfeasance surrounding it.

ACSA also placed its chief information officer, Mthokozisi Mncwabe, on precautionary suspension.

The contract was valued at R115 million.

ACSA explained that the contract required at least 30% black ownership and that Idemia had a teaming agreement with local company InfoVerge as its partner.

The airport operator said it became aware of an impasse between Idemia and InfoVerge and engaged with both to reach an amicable resolution.

Initially, ACSA was satisfied the companies would work together to deliver the required services. However, the dispute became acrimonious.

“This resulted in InfoVerge approaching the Gauteng High Court, seeking relief to set aside ACSA’s decision to award the tender for the provision of Automated Border Control project to Idemia,” it said.

Idemia said the contract was terminated for convenience using a standard contractual right, allowing either party to end the agreement without fault or dispute.

It added that it was unfortunate that ACSA decided to cancel the contract, saying it remained optimistic about the future.

The French company told MyBroadband that it was approaching the completion of phase one of the project when it received notice of ACSA’s decision to terminate the contract.

“We look forward to the opportunity for ACSA to re-issue a tender for the implementation of this solution in the future,” it said.

Department of Transport

In early August, the DoT’s Driver’s Licence Card Account (DLCA) announced that Idemia Identity and Security had won the tender to produce new driver’s licence printers for the country.

However, the Organisation Undoing Tax Abuse (Outa) had gathered information on the tender for some time and noticed several irregularities in the bidding process.

Regarding the 25 companies that participated in the bidding process, Outa CEO Wayne Duvenage said that “the driver’s licence card account (DLCA) was doing everything in its power to wear down and whittle out people in whichever way they could.”

“Then you start to have fewer and fewer people in the race, and what we saw was that Idemia was the last company to cross the last hurdle as everyone else had been knocked out.”

Duvenage attributes the whittling down of competition to instances of point manipulation, pricing bid tampering, and multiple other irregularities.

When bidding for a tender, companies undergo three evaluations.

The first is to ensure they can adhere to the necessary administrative processes, such as having the required tax clearance, competency, and correct management structure.

Once bidders have passed this, their bid undergoes a technical evaluation where they are awarded points based on whether the contract is deemed technically feasible for the company.

Bidders need 24 out of 30 points to pass to the next stage.

Duvenage pointed out that many bidders were turned down at this phase despite having all the technical requirements to fulfil the bid, with proof of this in their submissions.

In the final phase, the adjudication panel reviews each bidder’s cost proposals, which should have been concealed until this point in the process.

However, Duvenage said many bidders who were disqualified following the technical evaluation had brought forward evidence that their pricing documents had been opened and tampered with.

This led to transport minister Barbara Creecy announcing that the Auditor-General would investigate the tender for producing the new card.

“The Auditor-General has been requested to prioritise this audit process given the current backlog for driving license card applications and the parlous state of the current printing machine,” Creecy said.

Idemia has said that it supports the decision to extend the scope of the current audit.

“We are supporting the ministry in all transparency and with confidence to provide all necessary information to bring this audit to a fruitful completion,” it said.