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Shaik link puts licence contract under review
June 8, 2006

By Michael Hamlyn

Cape Town - The department of transport was renegotiating the contract for the provision of credit card-format driving licences held by Prodiba, in which convicted fraudster Schabir Shaik's company holds a significant interest, MPs heard yesterday.

Director-general Mpumi Mpofu was pressed about the contract by MPs from both sides of the house during a hearing of the standing committee on public accounts.

Anchen Dreyer of the Democratic Alliance asked whether the contract was being renegotiated, and was told that the department was considering restructuring the deal, estimated to be worth R650 million when it was first awarded to Prodiba in 1998.

Shaik's Nkobi Holdings holds a third of Prodiba through its Kobitech subsidiary and another third is owned by French defence group Thales, formerly Thomson CSF, which was named in Shaik's trial.

Prodiba financed the R265 million capital costs and receives R40 of every driver's application fee. Its contract was renewed in 2004.

Mpofu said she had had to manage the issue carefully, in part because of the legal implications and because the remaining third of Prodiba was held by Face Technologies, a division of state-owned technology group arivia.kom, which was not involved in the Shaik judgment.

"We had to apply our minds on how we deal with that component that is not affected by the judgment," she said. "And we have since then asked that they consider in that part of the review how we proceed."

One problem was to keep the system operational while a changeover took place, so as not to interrupt the delivery of driving licences.

"A mechanism is being discussed," she said, adding that she would expect to see the matter resolved within the next six months.

Parliament's financial watchdog also grilled Mpofu over questions raised by the auditor-general's report on the department's finances. She and the SA Rail Commuter Corporation (SARCC) were accused of breaking the law over failures to comply with accounting rules.

"The committee is concerned about the total disregard of the law, the lack of financial discipline and ineffective management of contracts," ANC MP Pierre Gerber said.

Fellow ANC MP Enyinna Nkem-Abonta told the acting chief executive of the SARCC, Neli Xaba: "It is the law. I do not think you have the right to refuse to declare the remuneration of board members."

The department was compelled to admit it did not know how much money the provincial transport authorities owed it for driving test fees.

Mpofu also had to admit that a manager, who wrongly allowed a contract extension, had resigned without being sanctioned by a disciplinary hearing. "We get this a lot," she said. "Officials resign rather than face disciplinary action."

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