JOHANNESBURG (Reuters) - Global media and services company Thomson Reuters (NYSE:TRI) has suspended work with a South African subcontractor following a newspaper report that focused on an alleged conflict of interest related to the awarding of a 225 million rand ($14 million) government IT contract.
South African newspaper The Sunday Times reported https://www.timeslive.co.za/sunday-times/news/2022-06-12-it-tender-cloud-hangs-over-office-of-chief-justice-amid-r225m-contract that Thomson Reuters, having won a contract from the Office of the Chief Justice (OCJ) to supply court software, subcontracted 30% of the deal, as South African law requires, to a local company called ZA Square.
ZA Square had been created just five days after Thomson Reuters won the contract, and its three directors were all senior employees at the OCJ.
The OCJ told the paper the three directors played a role in the selection process, which led to the granting of the contract by the OCJ to Thomson Reuters.
As a result, the OCJ and Thomson Reuters have launched probes into the paper's allegations that the three directors set up ZA Square and got a slice of the lucrative deal because of their knowledge of the contract.
In a statement on Monday, Thomson Reuters said it "operates with the principles of trust and integrity" and was looking into the matter "with the utmost seriousness".
"We ... have launched a formal investigation to understand the facts," it said. "During this investigation, all work with the subcontractor, ZA Square, has been put on hold."
Thomson Reuters is the parent company of Reuters News.
The OCJ said it was taking legal advice.
"We can assure the public that the State funds relating to this matter are safe," it wrote in a statement. "In view of this, the OCJ will not at this stage be making further comments or providing any additional information in this regard."
The three OCJ employees turned ZA Square directors - Nathi Mncube, Yvonne van Niekerk and Casper Coetzer - denied any wrongdoing. Speaking on behalf of the directors, Mncube referred Reuters to statements the three made to local media.
Van Niekerk and Coetzer confirmed Mncube's role as their spokesperson in the matter.
The Sunday Times report centred on the circumstances of a deal for a nationwide rollout of CaseLines - a Thomson Reuters court document and evidence management platform.
In South Africa, the law states that government procurement deals exceeding certain values must subcontract a minimum 30% of the contract's value to boost local economic empowerment.
ZA Square had registered as a new company with Mncube, van Niekerk and Coetzer as its directors on Dec. 15 of last year, five days after Thomson Reuters was awarded the CaseLines rollout contract, South Africa's company registry showed.
Thomson Reuters selected ZA Square after advertising for a subcontractor in January, Thomson Reuters spokesperson Dave Moran told the newspaper.
ZA Square signed a contract with Thomson Reuters in late April, Coetzer told Reuters, at which point the directors gave notice of their resignations from the OCJ and left at the end of May.
Thomson Reuters' CaseLines contract came into effect on June 1.
Mncube told The Sunday Times the creation of ZA Square and subsequent arrangement with Thomson Reuters did not constitute conflicts of interest since the contract did not start until after the three company directors left the OCJ.
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