SIU to probe tenders at Ithala and KZN municipality

KwaZulu-Natal premier Thami Ntuli has welcomed SIU probes into alleged maladministration at the embattled Ithala Development Finance Corporation (IDFC) and a municipality in the province.

President Cyril Ramaphosa authorised the SIU to investigate the IDFC and its subsidiary Ithala SOC, also known as Ithala bank, as well as the Kokstad municipality on Monday.

The investigation into the financial institution comes as Ithala and the KZN government fight off a liquidation application by the Prudential Authority (PA) of the South African Reserve Bank (SARB) at the Pietermaritzburg high court.

The PA claims the bank is “legally and technically insolvent”.

The application has resulted in the halting of Ithala’s operations, affecting more than 250,000 clients who can’t access their funds.

Despite opposition to the liquidation attempts, Ntuli commended the president’s “decisive actions”.

He said the investigation into the controversial R34.97m tender awarded to Tech Mahindra to modernise Ithala's information technology systems in 2020 will “uncover any irregularities and ensure those responsible for any wrongdoing are held accountable”.

The company allegedly failed to deliver work and the Ithala board chose not to recover funds aside from reporting a criminal case.

The project was flagged by both the auditor-general and the PA.

The project is believed to be among the reasons the PA did not issue Ithala an exemption notice — which granted the entity to operate as a bank — upon the expiration of its last one in December 2023, and the subsequent liquidation application.

Ntuli, who is also a client of Ithala bank, said: “Ithala is an essential institution in KZN's economic landscape and we must ensure that its legacy and contributions to economic development are not undermined by any form of mismanagement. This investigation must bring transparency and help restore confidence in the institution.”

He also commended another probe into two tenders by the Kokstad local municipality, for the appointment of:

• a service provider to supply and renew software licences for three years; and
• a service provider to supply customer care and IT service desk solutions.

The SIU probe will examine whether the procurement and contracting were made in violation of national or provincial treasury rules.

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