As many as five former directors of Sentech could soon face criminal charges related to a deal the state-owned company concluded for the lease of technology equipment with IT finance company RentWorks Africa.

Sentech chairman Quraysh Patel told parliament’s portfolio committee on communications on Wednesday that he would meet with government this Friday to decide how to proceed in the matter.

Ahead of that meeting, Sentech is seeking advice from legal counsel.

An amount of more than R35m in relation to the RentWorks deal has been earmarked as irregular expenditure.

During the 2010 financial year, the previous board had sought “condonation” from government related to the RentWorks deal — in other words, a pardon whereby the company’s accounting officers would be treated as if an offence had not occurred.

Government turned down this request, and all expenditure related to the RentWorks deal has been deemed irregular under the Public Finance Management Act.

Criminal charges may follow as early as next week after Sentech’s bilateral meeting with government this Friday. If criminal charges are brought, “all board members who were involved” in the RentWorks transaction will face charges, Patel told parliament.

TechCentral understands that as many as five former Sentech board members could be prosecuted.

Patel has promised to share all the details of the alleged transgressions with government and with parliament’s portfolio committee on communications.

“We can’t make a fresh start … unless we tell you everything and we will be telling you everything,” Patel said.

He also accused former Sentech chief financial officer Mohammed Cassim of issuing purchase orders without consent or approval from government; of sending incorrect reports to government; and of failing to pay licence fees to the Independent Communications Authority of SA, for which Sentech was fined.

Because of this, Patel said, the board withdrew Cassim’s delegation, stripping him of his ability to sign off contracts of any financial significance.

Patel is moving quickly to clean up the mess left behind by Sentech’s former board.

That board was purged earlier this year after a report, which was commissioned by communications minister Siphiwe Nyanda, uncovered serious problems at the company.

The 93-page report recommended that Sentech’s executive team be sacked. As a result, Nyanda appointed a new Sentech board in April, replacing former chairman Colin Hickling with Patel. Beverley Ngwenya was appointed as acting CEO, replacing Sebiletso Mokone-Matabane, whose contract was effectively terminated (officially, she resigned).

However, Ngwenya resigned soon after as a result of allegations of irregular spending levied against her by the new board.

Meanwhile, Patel has also provided details to parliament of R150m in VAT payments that Sentech failed to pay to the SA Revenue Service over a three-year period.

Patel told TechCentral in an exclusive interview last week that Cassim failed to pay VAT on more than R1bn in funding provided by national treasury after receiving advice from the company’s internal auditors that it was not necessary to do so.

“Every other state-owned enterprise was paying VAT, but we felt we didn’t have to pay VAT,” Patel told parliament. “We paid them R80 000 and they told us we don’t have to pay VAT, even though our external auditors [had already] told us we had to pay.

“When we spoke to national treasury, which we ought to have done in the first place, we had to pay R150m plus an additional R80m in interest.” — Duncan McLeod, TechCentral