A forensic audit has recommended a criminal investigation into the IT company that held the sole software and services contract for the Gauteng Shared Services Centre (GSSC).

Gauteng MEC for finance and economic affairs Paul Mashatile made the announcement at a media briefing in Johannesburg this morning, on the outcome of the forensic audit into the affairs of Capstone 518 (Pty) Ltd.

The company, trading as Infotech Solutions Services, is jointly owned by Blue IQ, the Gauteng government's economic infrastructure development entity, and the former CEO of the GSSC, Mike Roussos.

Capstone was contracted as the sole provider of IT services to the GSSC.

In September last year, the Gauteng Provincial Government announced that it had taken steps to address concerns raised by the Auditor-General regarding the activities of Capstone 518.

On review of the operations of the GSSC, the arrangement "was found to be in contravention of the Public Finance Management Act and other financial policies and regulations."

Mashatile said this morning: "I found that the CEO of the GSSC, Mike Roussos was a 50% shareholder in the company, which received R52-million worth of business from the GSSC while he was CEO. The other 50% of the company was owned by Blue IQ Investment Holdings (Pty) Ltd, which is wholly owned by the Gauteng Provincial Government (GPG).

"The employment contract of Mr. Roussos was terminated on 12 August 2004 after he disclosed his shareholding in Capstone 518 and the potential profit he stood to make."

"Since Mr Roussos' termination of employment, my department has initiated two rigorous investigations into the legal status of the Capstone 518 shareholders' agreement and its contract with the GPG, to ensure we get to the bottom of this."

Both investigations have now been finalised and the progress report on the investigations was tabled before the Gauteng Executive Committee last week.

The full reports will not be released into the public domain, but salient details are available on the provincial government's website "in the interests of transparency and to demonstrate Government's commitment to stamping out corruption."

Mashatile emphasised that only Roussos stood to gain from the deal, and he noted that former Gauteng MEC for finance and economic affairs, Jabu Moleketi, had not structured the Capstone shareholders' agreement, or signed any documents relating to it. "He was advised that the arrangement was acceptable, and accepted this."

Mashatile said both investigations had come to the same conclusion: that the Capstone 518 matter should be referred to the relevant authorities, with a view to a criminal investigation.

"As mandated by the Provincial Executive Committee, we have now done this. The matter is in the hands of the country's law enforcement agencies, and we now wait for the law to run its course. Alongside this, we have taken legal steps to ensure redress and to recover the state resources that may have been misappropriated."