SOUTH AFRICAN REVENUE SERVICE
MEDIA RELEASE NUMBER 29 OF 2001

29 JUNE 2001

ALLEGATIONS MADE ABOUT SARS TENDERING PROCEDURES: KENNEDY MEMANI

SARS regrets the completely unfounded allegations suggesting impropriety on its tender process and subsequent dealings with Mr Kennedy Memani and XKM Consulting Services. It is unfortunate that there is an attempt to draw us into what is ultimately a business fall-out between XKM and Bain, who formed a consortium that was awarded the tender for Siyakha.

We reject the futile attempt to cast aspersions on the integrity of our organisation and our commitment to black economic empowerment.

For the record, SARS confirms that it contracted Bain and Company South Africa Inc. and XK Memani, Ruiters & Associates, jointly and severally, to provide consulting services in relation to the business re-engineering programme, Siyakha. Siyakha aims to radically enhance the capacity of SARS in the discharge of its revenue collection and customs control and trade administration function.

This contract was awarded after a due process in accordance within the SARS tender procedures which require a fair, transparent and efficient process to be followed. The criteria for the tender required the consultants approach, style and methodology that was appropriate to SARS needs, a proven track record in similar assignments and the quantified success thereof, commitment to black empowerment as well as demonstrable experience and expertise of the core team.

Subsequent to awarding the tender it became apparent that the partnership was fragile and riddled with internal conflict, particularly the division of the fee structure. In the interest of safeguarding the success of Siyakha, SARS actively mediated to obtain an outcome that would ensure the continued participation of both parties in the transformation process. The result was an agreement by both parties to set aside their differences and continue their work. We were happy when our mediation efforts ended in an amicable settlement.

True to its support for black economic empowerment, SARS actively engaged Mr Memani to overcome capacity constraints in his organisation in order to add value to the project. XKM identified the areas and committed staff to those areas where it felt it could add the most value. A total of four staff members were committed for a six month period to the project at a value of R3,6 million, of which only R2,69 million was paid. Unfortunately XKMs input tapered off and payments to the consortium in respect of XKM's contribution ceased based their inability to provide staff who could make a meaningful contribution to Siyakha. Despite this lack of capacity, SARS did not terminate its relationship with XKM and requested that XKM honour its contractual obligations.

SARS is therefore surprised at the accusation that we do not value black economic empowerment as the original agreement between the consortium and the organisation is still in place but since no services were delivered by XKM no payments were made.

The payment of a share of Bain's fees to XKM is matter for Bain & XKM to resolve. SARS has nothing to do with this and they must find their own solutions. SARS cannot, and will not, pay public funds to XKM if no services are delivered - purely in the name of black empowerment. We have done much to promote black empowerment - both within and outside SARS. We value, and will continue to enhance black empowerment on the strength of services rendered.

Although SARS has expressed its absolute respect for the right of both parties to seek legal redress in the matter, we have, however, felt it was also our national responsibility to caution against an approach where selective reporting in the public domain could destabilise the Siyakha programme. Evidently there are elements who believe they will benefit from this, whatever the consequences.

We have offered to mediate in the conflict between the partners but obviously we are not in a position to arbitrate.

SARS as an organ of state is acutely aware of its obligations to the taxpaying public to ensure that we receive value for their money when contracting consultants. We have also made it abundantly clear that we shall not pay anyone who has not delivered value to the organisation and the well-being of government and all South Africans.

ISSUED BY THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE
PRETORIA



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