A long-standing dispute between a Gauteng-based ICT firm, global software giant Oracle, and the embattled South African Post Office (Sapo) has landed in the corridors of government, with allegations of a contract breach now placed before the department of communications for urgent intervention.
The ICT company, Time Quantum, wants communications minister Solly Malatsi to intervene in a damages claim that it believes to have now grown to R100-million.
The amount relates to a contract for the development and management of a software solution for Postbank.
The call for help comes after the Postbank was recently awarded a financial services provider licence.
As a service provider, Time Quantum generated revenue from the contract by supplying the software solution, dubbed Flexcube, to the Post Office.
The contract also involved revenue generated from licence and sub licence agreements, as well as annual maintenance fees.
Time Quantum sourced Flexcube – described as “a core banking software platform with comprehensive end‑to‑end servicing capabilities” – from Oracle.
This business arrangement was in place before Oracle entered the picture.
Time Quantum had been a service provider to the Post Office since about 1994, along with a business partner, I‑Flex, an Indian‑based company that provided the banking software solution used by the Postbank.
Oracle became involved in 2005 when it acquired I‑Flex, thereby becoming the software solution provider to Time Quantum. Time Quantum concluded a related sub‑licence agreement with the Post Office, authorising the service provider to grant Postbank the sub‑licence to use the software system for its own business purposes.
In addition to the existing licence agreement, Time Quantum was required by Oracle to assume membership of the Oracle Partner Network so that its relationship with I‑Flex could be extended to Oracle, enabling Time Quantum to distribute Oracle’s other programs, services and equipment.
The membership was renewable annually. However, the business relationship collapsed around 2014 when Oracle began supplying the Flexcube software solution directly to the Post Office, effectively elbowing Time Quantum out of the arrangement.
In March 2018, Time Quantum instituted a civil claim against Oracle and the Post Office in the High Court in Johannesburg for damages amounting to R61 603 515 for breach of the licence agreements.
The company alleged that, contrary to the terms of the licence agreements, Oracle and the Post Office negotiated and contracted directly with each other. Time Quantum further alleged that Oracle and the Post Office purported to transfer licences from Time Quantum to Sapo, that Oracle issued additional licences and sold extra modules of the I‑Flex software system to Sapo, and that Oracle and the Post Office concluded a software maintenance agreement to the exclusion of Time Quantum.
In 2023, the Supreme Court of Appeal ruled against Time Quantum on the basis of jurisdiction, pointing to a licence agreement clause stating that the parties had elected to settle their disputes through international commercial arbitration, with a juridical seat in London, England. The agreement further specified that disputes would be settled according to the applicable rules of arbitration of the International Chamber of Commerce.
The court, however, noted that the licence agreements were “perpetual”, subject to termination by either party in accordance with the agreements.
Speaking to Sunday World, Time Quantum managing director Titi Kekana said he wants the company’s full rights to be restored in line with the licence and sub‑licence agreements, as well as the 2012 protection letter, which he wants enforced.
Kekana said that in September 2013, Time Quantum placed an order with Oracle using the company’s template. About a year later, they learned that, in completing the template, their licences had allegedly been transferred to the Post Office.
“We went back to the protection letter, which stated that Oracle is not supposed to tamper with licences or anything they are earning from them until we reach some kind of agreement. In 2014, they said there had been this [licence] transfer [to the Post Office],” he said.
In recent months, Kekana has sought meetings with both Malatsi and his deputy, Mondli Gungubele, but these attempts have been unsuccessful.
Responding to questions from Sunday World, the department said Malatsi does not get involved in procurement-related matters of the department or its entities.
“The minister has not met with Mr Titi Kekana regarding this matter. As a matter of principle, the political principals do not intervene in contractual, procurement, or commercial disputes involving entities reporting to the department.
“These matters must be dealt with through the appropriate governance, legal, and administrative processes,” said the department’s spokesperson Tlangelani Manganyi.
“Accordingly, the minister is not in a position to express a view on the merits of the allegations relating to the licence agreement, nor can they intervene to resolve the matter in favour of any party.
“The appropriate course is for the matter to be handled by the relevant entity and, where necessary, through the proper legal and contractual channels,” she said.
Questions sent to Oracle remained unanswered.
- Time Quantum, a Gauteng ICT firm, is seeking intervention from Communications Minister Solly Malatsi over an alleged R100-million damages claim relating to a breached software contract with the South African Post Office (Sapo) and Oracle.
- The dispute revolves around the Flexcube banking software, originally supplied to Postbank by Time Quantum through a sub-licence arrangement with Oracle, who acquired the original software provider I-Flex.
- Time Quantum alleges Oracle and Sapo bypassed their agreement around 2014 by directly supplying Flexcube to Sapo, transferring licenses without authorization, and excluding Time Quantum from maintenance contracts.
- A 2018 court claim by Time Quantum was dismissed in 2023 due to jurisdiction issues, as the contract required international arbitration in London, though the agreements allow termination by either party.
- The government declined to intervene, stating contractual disputes must follow legal and administrative processes, and Oracle did not respond to inquiries about the matter.
