Durban — A major US-based multinational software conglomerate, Tibco, has been accused of serious ethical misconduct and non-compliance with South Africa's corporate governance laws after it cancelled a trading contract with its local Black Economic Empowerment (BEE) partner, TechSoft, without the prescribed notice as per the contract between both parties.
According to documents obtained by the Daily News, the two tech companies had established a joint venture and strategic partnership agreement (SPA) known as TechSoft to provide software services to private and state-owned companies such as Telkom.
Other clients of the joint venture, which include Rand Merchant Bank (RMB), Nedbank, First Rand Group and many others in Sub-Saharan African countries, are alleged to have been affected. They were faced with possible system disruptions as Tibco abruptly attempted to end the relationship in September when it cancelled the contract, plunging the local supplier into huge financial costs running to several hundreds of millions of rand.
TechSoft responded by filing an urgent court application to interdict the cancellation and demanded the reasons for stopping the contract as the company believed that it had agreements that prevented such an event from being executed.
According to documents, the matter has been through several iterations in court, where the judge ruled in favour of TechSoft that the matter was urgent and a determination needed to be made as soon as possible.
In its heads of arguments, TechSoft said it would suffer irreparable damage, including laying off 60 staff.
TechSoft corporate affairs executive Brian Mpono said his company had a firm view that the cancellation was unlawful and irrational since their company was not given the notice and termination as per the contract.
He explained that besides not being given appropriate notice, the company did not even believe there were valid reasons for cancellation since TechSoft had not breached any partnership agreement, arguing that was the reason why they decided to challenge the decision in court.
Mpono said under normal circumstances, and in respect of the spirit of the TechSoft SPA, Tibco could have behaved ethically and given consideration for its BEE partner of 16 years by implementing a structured plan which protected both brands and the goodwill of both entities.
“This could have easily been achieved, but Tibco exercised its strength and failed to do this,” he said.
He added that instead of giving his company notice and dealing with the matter collectively, Tibco management, without TechSoft’s knowledge, informed customers not to do business with TechSoft.
“I don’t believe it’s ethical, and definitely should not be condoned,” said Mpono.
He further blasted Tibco for not being honest in court.
“When the judge questioned why we were in court as Tibco had not cancelled and may choose not to cancel, the judge continuously indicated that Tibco may not cancel, and at no point did Tibco’s counsel confirm their intentions.”
Mpono added that his company then filed another urgent application and this time TechSoft won, based on urgency.
“We were shocked to learn from our clients that we did not have a contract to supply them, yet our contract states that Tibco is obliged to fulfil all TechSoft obligations as TechsSoft is an extension of Tibco.
“How unethical was that for a reputable international company providing a strategic business to big organisations, including state-owned enterprises?” said Mpono.
Furthermore, Mpono said the whole action by Tibco made them conclude that it never entered into a partnership with them in good faith, but used TechSoft for their BEE credentials since South African laws required them to have black partners in order to continue getting tenders from the government, and most private sector companies as well.
When pressed for comment, Tibco’s legal representative, Jason Hunter, from Thomson Wilks attorneys said: “Please note that your letter has been directed to our offices by Tibco, whom we represent in the proceedings under Case No: 047934/2022. We are taking instructions from our client and will provide formal correspondence once we have our instructions.”
They would not be drawn into commenting further.
However, research shows that Tibco has been operating in SA since early 2000 as Tibco SA, until 2006, when the government made it mandatory for big companies who do work with the state to have local black partners.
This forced Tibco to negotiate with Dynatech, a black-owned local software company, which was doing similar work.
Their relationship grew to a point that they formed another joint venture where Tibco transferred its rights to Dynatech subsidiary, TechSoft, to establish the Techsoft JV and supply software to African countries.
Daily News