Audit report lifts lid on Sita suspensions

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IOL st digi  SITA Nomvalo Pretoria News Freeman Nomvalo, chief executive of Sita. Photo: Phill Magakoe

Johannesburg - Five senior executives who helped develop a turnaround strategy for the State Information Technology Agency (Sita) awarded a multimillion-rand contract without it going through the mandatory tender process.

The initial estimated cost for the tender was R42 million, but this doubled to R84m after the final payment. This was despite the companies that were awarded the contract not completing an earlier contract worth R700m.

These are among the damning findings by an independent forensic audit report into the irregular awarding of a contract to a consortium led by ICT Works, a women-owned BEE company.

The joint venture comprised, among others, the Simunye Consortium, which was led by SAP South Africa.

Chief operations officer Khumbudzo Ntshavheni, corporate services executive Diamond Mushwana, executive for supply chain management Thenjiwe Mjoli and general manager for human capital management Matsiliso Gumbi were placed on precautionary suspension in July last year.

Another executive, Nagalin Tuganadar, who was responsible for government solutions and standards at Sita, was suspended in October.

But no specific reasons were given for their suspensions. Now a PricewaterhouseCoopers (PwC) audit report into the awarding of the tender has opened the lid on the suspensions.

PwC found that “a single-source appointment of the ICT Works and Simunye Consortium was recommended” on December 15, 2011.

However, no reasons were furnished for deviating from the tender process.

The tender, which was part of the government’s R4 billion Integrated Financial Management System (IFMS), was for the maintenance and support of Sita’s software and skills transfer.

Sita had initially awarded a separate but related contract worth R700m to the ICT Works and Simunye Consortium in 2007.

The project was a joint venture between the Treasury, the Public Service and Administration Department and Sita.

But the two companies did not complete their duties.

PWC found that while Sita had used the same contract agreement that existed from 2007 to motivate a deviation process from the normal procurement process when awarding the tender, the agency failed to disclose this to the Treasury, as required by the prescribed regulations.

“(The) appointment and contracting of ICT Works did not follow normal Sita tender process and did not comply with Sita supply chain management policies and procedures…” the report reads in part.

“The procurement process was highly irregular (and) appears to have been flawed. Sita acted in direct contravention of the Treasury instructions,” the report says.

But Mjoli and Tuganadar denied any wrongdoing, insisting that they had disclosed the terms of the awarding of the contract.

Ntshavheni, Gumbi and Mushwana refused to comment, citing confidentiality clauses with Sita.

Documents seen by The Star show that Mushwana was not part of the meeting that considered the contract, while Gumbi was not part of the recommendations committee for awarding the contract.

The report also found that a possibility existed that the costs were inflated during payment of the services rendered.

This accounted for the tender escalating to R84m from the initial cost estimate of R42m in the bid document.

“There is no indication as to how the estimated total costs were calculated. It cannot be determined whether the estimated costs would be reasonable and that Sita would receive value for money for the services to be provided.”

In addition, the contracts had proved to be wasteful and fruitless expenditure as most of the tasks had not been implemented.

“The consortia have also embarked on an exercise to transfer skills to Sita (for) product maintenance and functional support services. This exercise proved to be extremely challenging and had little success,” the report adds.

It states that even with the initial R700m contract, this would have been wasteful expenditure.

“There has been no transfer of skills to Sita over the past four years, so there is no motivation or reason for the consortium to transfer skills over the next two years either.

“It can be argued that by retaining them over such a long period of time, Sita is fostering a dependency which may eventually result in an evergreen contract.”

PwC recommended that Ntshavheni, Mushwana, Mjoli and Tuganadar be sanctioned for “dishonesty, deliberate non-performance and financial misconduct, including fruitless, wasteful and irregular expenditure”.

It also recommended that Sita institute disciplinary proceedings against the four executives.

ICT Works refused to comment, citing confidentiality clauses with Sita.

Repeated attempts to obtain comment from the Treasury proved unsuccessful.

Xolisa Dodo, from the Treasury’s communications unit, said she had forwarded the inquiry to spokesman Jabulani Sikhakhane.

The Star has been trying to obtain a comment from Sik-hakhane for three weeks.

OnMonday, his phone rang unanswered and he did not respond to follow-up e-mails.

Ansophie Strydom, the spokeswoman for SAP SA, Simunye’s holding company, refused to comment, citing “non-disclosure agreements which we sign with our customers”.

Sita spokeswoman Jeanny Morulane said “the executives in question were indeed suspended, and they have subsequently left” the organisation.

“We confirm the charges were proffered against the four executives,” she said.

The disciplinary proceedings against three of the four executives ceased after their contracts expired.

“Only one matter against a senior manager is pending,” Morulane said.

“With regard to the fourth executive (Gumbi), Sita entered into a termination of services by mutual consent agreement based on the change of role as the role no longer existed in the new company structure.

“All matters were considered closed,” Morulane said.

Role players respond:

Tuganadar

I vehemently deny all allegations against me by Sita as inaccurate. The audit report used by the Sita chief executive officer was inaccurate and incomplete. In fact, the report is a disclaimer as it states that the standard auditing process was not followed and that only documentation provided was reviewed. It further states that none was verified for accuracy.

The so-called resignations were an exit strategy to avoid civil lawsuits. It is quite clear that a witch-hunt was undertaken by Sita to get rid of the entire executive committee. In a nutshell, political interference and the ever-changing executive management of Sita have resulted in Sita not succeeding in delivering any value to the government for the past 14 years.

Mjoli

The IFMS project was awarded through a normal process in 2007, and the companies did not finish the work. Why was the hearing only held six months after my suspension and on the week my contract was coming to an end?

After six months, they wanted to conclude (disciplinary) cases in four days. How possible is that? Either they made a big issue out of nothing or they didn’t know what they were doing. This was a vendetta against me. They must come and do a lifestyle audit and polygraph tests on me.

The reason Sita is failing is because it doesn’t have capacity. It is in a dichotomy between a government entity and the private sector. Like other state entities, it is caught between political tussles. There are also layers and layers of bureaucracy (hampering performance) in Sita, while it lacks capacity.

Sita’s stand on corruption

Morulane said: “Corruption is not a problem that only affects Sita, but is a scourge that the country as a whole is dealing with.

“The perception that corruption is rife in Sita can only remain an allegation until substance is provided.

“Sita, as a responsible corporate citizen, has put in place the necessary controls and procedures to help deal with this plague in our nation.

“Sita acts promptly against any reported corrupt activities that have been verified by investigation.

“In cases where investigations have proved there is corruption, the organisation has acted decisively against employees who have been found guilty of corrupt practices, and they have been suspended and/or dismissed, depending on the outcome of the respective case.”

The Star



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