Durban - The Manase report into fraud and corruption in eThekwini has lifted the lid on the dealings that led to the city pouring nearly half a billion rand into an in-house revenue billing system.
According to the report, which was released in its entirety to The Mercury on Tuesday, the contract for the project was awarded irregularly to Ramco/Citi Works, and a municipal official involved in the process subsequently landed a top job at the same company.
The decision to develop the system was taken in 2003, after which the executive committee gave approval for the purchase “of a development platform” and for Ramco to be “a strategic partner”.
Manase investigators said Lunga Madlala, then-deputy head of information technology, co-signed a document in 2004 informing exco of plans to replace the revenue system.
Other signatories were then-deputy city manager for procurement Derek Naidoo, then-city manager Michael Sutcliffe, and city treasurer Krish Kumar.
“Madlala was subsequently appointed as an executive of Ramco/Citi Works.” However, the investigators were unable to establish when this occurred.
“Madlala’s role as deputy head of IT at the eThekwini Municipality and his subsequent role as an executive at Ramco/Citi Works is indicative of a possible conflict of interest,” the report said.
Another concern was the “extremely long” duration of the project. The costs had ballooned from an estimated R90m to R150m at inception 10 years ago, to R505m now.
The report also revealed that, other than the millions paid to Ramco/Citi Works, consultants were paid R118.76m to supplement the work done by the company.
“It is imperative that a formal plan is followed for eThekwini to become self-reliant… as the payment of high fees to external consultants cannot be sustained,” it said.
The Manase investigators recommended that a further investigation be conducted into the Revenue Management System, including Madlala’s involvement.
“The continuous overruns on budgets, the significant amounts paid to external consultants and the minimal use of eThekwini Municipality’s own staff appear to be symptomatic of poor financial controls since inception,” it said.
Last month, when Co-operative Governance MEC Nomusa Dube spoke about the report, she said an independent auditor had been appointed to review the work.
In a summary of findings, the department said the auditor had recommended that the billing system project be continued and an additional R150m be invested to ensure it went live and that all change management processes, data migration and user testing principles were in place.
The Mercury has reported that the auditor, Liepzig Advisory IT, landed a contract to oversee the project’s implementation. The summary also said that the anti-corruption task team was investigating.
DA councillor Rick Crouch said the Manase revelations were not surprising.
“The Revenue Management System is so incestuous as it is no different to the current developments involving Liepzig Advisory IT… It is common practice that government employees push for contracts to be given to a certain company (and) then later get an executive position in that company,” he said.
The Mercury was unable to reach Madlala for comment.
The Mercury