Publication: Timeslive Issued: Date: 2009-11-29 Reporter: Amukelani Chauke     

Theft gives ex-Shaik company new life

 

Publication 

Timeslive
Date

2009-11-29
Reporter Amukelani Chauke
Web Link www.timeslive.co.za


Multimillion-rand driver's licence card contract extended

A "security breach" at the department of transport has forced the government to extend a multimillion-rand contract with a company once linked to convicted fraudster Schabir Shaik.

The Times has established that documents pertaining to the new tender to produce plastic driver's licence cards have "disappeared" from the government's "very secure" storage facility, which can be accessed only by means of a signed register.

The contract, which the department awarded to Prodiba in 1997 - reportedly worth R650-million - was due to expire at the end of next month, but has been extended by six months pending an investigation into the disappearance of the documents.

Prodiba was formed from a consortium of Face Technologies, Kobitech (representing Shaik's Nkobi Holdings) and Thomson CSF (later renamed Thales), the French arms company named in the case against Shaik.

George Mahlalela, the department's acting director-general, yesterday confirmed the ''security breach'', telling The Times that police had been called in to investigate. He said ''seals'' had been "tampered with".

The Times understands that the disappearance of the documents was discovered in August.

Mahlalela said that as a result of the ''breach', Transport Minister Sbu Ndebele had ordered that the tender for the contract to manufacture new hi-tech licence cards be scrapped, and for Prodiba's contract to be extended to June next year.

"The tender was re-advertised two weeks ago and the new closing date is January next year.

"That is why we decided to extend the existing contract to allow the department time to find a new service provider," he said.

He said the breach, as well as new tender specification requirements implemented by Ndebele, had forced the department to extend Prodiba's contract.

The new specifications required that new driver's licence cards be similar to the planned new hi-tech Home Affairs identity cards.

Mahlalela said he did not know how much the contract's extension would cost the department - this would depend on the number of driver's licences that will be issued between January and June next year.

Prodiba gets R40 each time a licence card is made for the first time or is renewed.

The tender has been surrounded by controversy for years.

The Sunday Times reported that Prodiba, in which Shaik had a 33% stake through Nkobi, was awarded a five-year contract extension in 2004 without having to tender for it, and without other companies being invited to bid through an open tender process.

The extension was reportedly authorised by a junior official, and without the tender board's knowledge.

The official was later reported to have left the department to join Prodiba.

Mahlalela said Shaik was no longer part of Prodiba after his fraud conviction in 2005.

The National Prosecuting Authority's asset forfeiture unit last year seized about R30-million of Shaik's assets, including Nkobi Holdings.

Upon his conviction, Shaik was forced to relinquish his Prodiba shares to avoid the department cancelling the driver's licence contract, as required by the Public Finance Management Act.

The department had been under immense pressure in Parliament on transport to enforce the Act, which prohibits the government from dealing with convicted criminals.

Shaik's brother, Moe, who heads the South African Secret Service, told The Times via SMS message yesterday that Nkobi's stake in Prodiba had been sold early last year to Face Technology, which is jointly owned by Eskom and Transnet.

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With acknowledgements to Amukelani Chauke and Timeslive.
 

Although it might be true that Nkobi Holdings had to divest of its shares in Prodiba, these were not forfeited to the State as a result of the State's conviction for corruption and fraud.

This is because the latter case did not involve the credit card driver's licence contract, but the Arms Deal contract involving Thomson-CSF Naval Combat Systems and African Defence Systems (Pty) Ltd.

So Shaik had to forfeit his shares in ADS via Thomson-CSF (Pty) Ltd.

So if Shaik had to divest of his shares in Prodiba, then he sold them to Eskom and Transnet via Face Technology.

This is all very interesting because Face Technology was started by Denel, but sold by Denel as it was not core business, but clearly very profitable and low risk business.

But this is not core business for Eskom and if it is core business for Transnet then it is a conflict of interest because the contract comes from the Department of Transport.

In any case, Prodiba gets a minimum of R40 and maximum of R50 per licence.

About 1,5 million new and renewed licences and issued per year.

That's about 20 million licences in 13 years.

Prodiba get an average of R50 each, that's R1 billion in the contract duration.

Overheads are very low, about 20%. After tax Prodiba will have earn about R500 million before interest. At least R100 million will have been earned on interest, leaving R600 million nett profit after tax and interest.

Nkobi owns or owned 33% of Prodiba, so it earned R200 million nett profit after tax and interest during the 13 years of the initial contract, or about R40 million per year.

Even when Shaik was convicted in 2006, the contract had another 3,5 years to run.

It also clearly had or had a good chance of winning the new post 1997/2009 contract, seeing it already had the equipment, staff, contacts, etc.

So at the very least, Shaik's Nkobi shares in Prodiba were worth R135 million in mid-2006.

So when Shaik, wife a child stayed at the Thanda Private Game Reserve, the World�s Leading Luxury Lodge,  for three nights at R47 500 a night, this is small potatoes.

He certainly didn't need anyone to pay for him.

He also got about a R5 million discount from the Asset Forfeiture Unit, who repaid him the interest on the capital amounted forfeited - weird reasoning.

Now he's probably going to get the entire R34 million back, plus the R5 million in initial interest plus the subsequent interest on the R34 million plus the subsequent interest on the R5 million. All in all he'll get about R50 million back if he's pardoned and gets back his forfeiture.

Weird.