09/03/2012 Freeman Nomvalo and Judge Chris Nicholson answer questioins from the media after delivering the report of the committee of invetigation into the affairs of CSA at Loftus Versfeld.

Picture: Phill Magakoe
09/03/2012 Freeman Nomvalo and Judge Chris Nicholson answer questioins from the media after delivering the report of the committee of invetigation into the affairs of CSA at Loftus Versfeld. Picture: Phill Magakoe
File photo
File photo

Johannesburg - The multibillion State Information and Technology Agency (Sita) – the backbone of the government’s service delivery through the provision of ICT systems – is in a state of near-paralysis.

The public entity, which boasts an annual budget of R4.5 billion, is struggling to deliver on its mandate to provide the vital IT goods and services to government departments and other public institutions.

Weeks of investigations by The Star have revealed that corruption, maladministration and poor capacity are among the deficiency syndromes hampering Sita.

The entity has also been hamstrung by acute shortage of skills, partly arising from “flight of skill” due to resignations. It has also been bleeding millions of rand in taxpayers’ money because of massive payouts to senior staffers and service providers in golden handshakes.

The litany of malfunctions and malpractices afflicting Sita are laid bare in confidential documents that Independent Newspapers has seen. The documents include Sita’s internal audit reports and independent forensic audit reports and various correspondence.

Sita is struggling to achieve its mandated task to procure information and communications technology goods and services for government departments and other public institutions.

And unless the public entity adopts a decisive turnaround strategy, it faces the grim prospect of collapse.

This is revealed in the entity’s own review report on its performance in the 15 years of its existence.

While the Sita board raves about the “several milestones of delivery” of the requisite services, the report is also damning in its findings about its glaring failures.

“The audit and risk committee noted with concern that only 28 percent of the approved corporate balance scorecard was achieved by the entity, as reported by the Auditor-General,” the report reads, in part.

“The committee sees this non-achievement as a weakness in controlling performance and ensuring accountability and discipline throughout the company.”

The 60-page report, “A reflection of Sita’s 15-year contribution to the nation’s 20 years of democracy”, is signed by chief executor Freeman Nomvalo. It was submitted to former public service and administration minister Lindiwe Sisulu, now human settlements minister.

The report warns of dire consequences if Sita is not transformed.

“Sita sits at the crossroad of meeting the growing demand for services and increasing its value-add to the country, and it needs to re-architect its IT and procurement services and improve its organisational culture,” the report reads.

Last year, the Department of Higher Education and Training blamed Sita for the backlogs in the issuing of certificates to further education and training college students.

Director of examinations in the department Nadine Pote said backlogs were because of the instability of data-sets submitted by the entity, resulting in “high rejection levels by the quality assurance body, Umalusi.

Sita’s review audit report is damning in its findings about “the material breakdown” in the functioning of internal control measures and violations of the Public Finance Management Act, among others.

“Both internal and external audits continue to identify several instances of non-compliance with laws and regulations pertaining to the procurement process, contract management and adherence to internal control,” it reads.

Former auditor-general Terence Nombembe said in his 2012 report that corruption involving Sita amounted to R214 million between 2009 and 2011. It emerged last year that the Special Investigating Unit was investigating as many as 23 cases, mostly related to tender irregularities and conflicts of interest.

In the review report, the committee further “expressed its concern on the number of audit findings identified and reported”.

The negative findings make a mockery of the government’s numerous strategies to improve Sita. In a bid to turn the entity’s fortunes around, the cabinet in 2010 adopted a turnaround strategy and appointed a new board. But that appeared to fizzle when the board was summarily dismissed a year later.

A new board led by Nomvalo and board chairman Jerry Vilakazi was appointed in March this year. Nomvalo is the 17th chief executive in Sita’s 15 years of existence.

The appointment of successive boards appears to have done very little, if anything, to stop the myriad problems bedevelling Sita.

“When the (current) board assumed the reins of Sita in March 2013, it was against the backdrop of a looming storm. The organisation had been in the throes of a turnaround since 2010 and most of the strategic imperatives emanating from the turnaround were yet unrealised,” the report says.

Crucially, Sita’s report indicates that the entity had dismally failed to achieve most of its own targets. This includes sound financial management, improving its own corporate strategy, training companies and SMMEs, and reducing the number of customer complaints. Sita had also failed dismally to improve its supply chain management strategy.

Such is the severity of the problems that some departments - including Correctional Services and Water Affairs - became embroiled in disputes with Sita for bypassing the entity and procuring goods and services using their own internal procurement processes.

In the report, the board recommends a range of interventions.

“Fixing the procurement process” so as “to procure goods and services at a lower cost and improving bid specification quality” is listed as the cornerstone of its turnaround strategy. An initiative called Siyashesha was also introduced as an “immediate intervention to close glaring gaps linked to customer complaints”.

The Department of Public Service and Administration appears to acknowledge the crisis.

“We also note that President Jacob Zuma signed a proclamation for a formal investigation into Sita,” said departmental spokesman Brent Simons.

Sita has since been transferred to the new Ministry of Telecommunications and Postal Services.

Accounting and auditing findings as of March 31 this year:

* Investigations into allegations of financial misconduct against officials were, in some instances, not instituted within 30 days of discovery, as required by the National Treasury.

* Financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework, as required by the Public Finance Management Act and the Companies Act.

* Sita accumulated surpluses without the Treasury’s approval, in contravention of the Public Finance Management Act.

* Sita did not timeously establish a social and ethics committee, as required by the Companies Act.

* Investigations into allegations of financial misconduct against officials were, in some instances, not instituted within 30 days of discovery, as required by the Treasury’s regulations.

* The committee had expressed its concern at the number of audit findings that had been identified and had requested that the follow-up process on the resolution of these findings be accelerated and, where necessary, escalated.

Sita’s response

Freeman Nomvalo, chief executive of Sita, says the entity is on course to fix its problems.

“These are all indicators that this has been an organisation that has been broken down, but it is on the mend. I am saying it has not been fixed, but it is on the mend,” Nomvalo said in an interview with The Star.

He attributed the problems afflicting Sita to lack of stability at the organisation’s top management level.

“The issue with Sita is you do have an inherent problem that arises out of lack of continuity. You need consistency at the top. My sense is that the bigger problem is the lack of stability at the leadership level.”

The Star