Cape Town - The Ghost of jailed businessman Schabir Shaik is still hanging over the department of transport's credit card-sized driving licence system, after it emerged at a parliamentary committee that the state tender board had rejected changes to the ownership of Prodiba, the company that provides the service.

It emerged that Face Technologies, a subsidiary of state-owned arivia.kom, had bought Shaik's shareholding in the company contracted to provide the service for an undisclosed sum.

Questions from Jeremy Cronin, the ANC MP and chairman of the transport portfolio committee, and his opposition counterpart, Stuart Farrow, about details of the purchase did not elicit a response from the transport department last week. It is not known when the purchase took place.

Chief financial officer Dan Pretorius told the committee that in August the tender board had considered such matters as the ownership and directorships of the companies involved in Prodiba - in which Shaik's company had previously held a minority share.

This was after Face Technologies bought Kobitech's interest in Prodiba earlier this year. Prodiba won the contract in 1996 to provide the licences to the public.

Mo Shaik, who has taken over the management of his brother's businesses, including Kobitech, since Schabir was jailed for corruption, was not available for comment. He was quoted previously as confirming that Kobitech's interest had been sold at a loss. He did not provide a sale figure.

However, in September 1996, when the tender board granted the licence to Image Database Technologies, it was described as a member of the state-owned Denel group of companies.

There was a 24.95 percent shareholding by a subsidiary of the French company Thomson-CSF, called Idmatics.

There was also a 24.9 percent shareholding by Nkobi Holdings, the holding company of Kobitech.

The estimated contract value amounted to R264 million over a production period of five years. That contract was renewed in 2002.

Pretorius told the committee that Prodiba had appealed the tender board's ruling. The ruling had not yet been told to the transport department.

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Timeline: State's connection to convicted criminal

The department of transport signed the contract for the manufacturing of driving licences with Face Technologies on February 28 1997. This concluded a process that started on September 5 1996, when the state tender board awarded the contract to Face Technologies, Idmatics and Nkobi Holdings.

In November 2004, it was reported that a former Nkobi accountant claimed Shaik had paid cash bribes to ministers and then made the amounts disappear in the group’s books. Celia Bester said: We got the whole Prodiba deal through our political connectivity. There were no development costs.

Shaik was convicted of corruption and fraud in May 2005.

After an appeal to the supreme court, Shaik began his prison sentence last November.

The SABC reported in February that the transport department contract with Prodiba described as one of the companies of convicted fraudster Schabir Shaik hung in the balance. Questions were asked by Mpumi Mpofu, director-general of the transport department, who noted that the Public Finance Management Act forbade government departments from doing business with convicted criminals.

The SABC also reported in February that Shaik and his company stood to lose a substantial amount of money, although the amount was not quantified.

However, it reported that the first phase of the contract with Prodiba involved R260 million for the first 10 years.

In August the tender board rejected changes to the shareholding and directorship of Prodiba, after the transport department indicated that it wished to cancel the contract.

With acknowledgements to Donwald Pressly and Business Report.