This article was posted by Editor on Jun 17th, 2011 and filed under News. You can follow any responses on: http://www.techcentral.co.za/expensive-it-solution-under-fire/23873/
An e-government revolution in municipalities, which was championed by cooperative governance & traditional affairs minister Sicelo Shiceka as part of the state’s much-vaunted local government turnaround strategy, is floundering at its pilot site in a small Gauteng municipality.
The Special Investigations Unit has confirmed that it is considering an investigation into the Westonaria local municipality, which comprises a clutch of small towns on the West Rand.
This follows allegations that an IT company irregularly landed a multimillion-rand contract to install a Belgian software system and that millions have been spent with very little to show for it.
Lefatshe Technologies is well connected but controversial, not least because its CEO, Coltrane Nyathi, is awaiting trial for allegedly bribing two officials in an attempt to prevent the cancellation of a separate contract it had with the department of home affairs.
IT shopping in Belgium
Shiceka and a large delegation travelled to Belgium in January last year to “investigate how information communication technology solutions can be leveraged to improve service delivery and accountability at local government [level]“, according to a release from his department at the time.
Three days into his trip, Shiceka said in another statement that IT systems were “one of the key interventions” needed to achieve success with the local government turnaround strategy, which was approved by cabinet the previous December.
In an interview with Beeld he waxed lyrical, saying that he aimed to replicate the Belgian experience of using IT to give citizens insight into their municipalities’ finances, personnel issues, council resolutions, tenders and service delivery.
“I had a discussion with the president. He feels that it is imperative that the turnaround strategy be successful at all costs. He said: ‘Go to Belgium and find out how much money is needed and we will see to the rest,’” Shiceka said in the interview.
During his trip, Shiceka met representatives of Cipal, a nonprofit Belgian government agency responsible for local government IT solutions. By that time Cipal already had a foothold in SA through a 2002 partnership with its SA counterpart, the State Information Technology Agency (Sita), to distribute Cipal’s solutions locally.
In January 2008, two years before Shiceka’s trip, Lefatshe announced that it, too, had obtained rights to distribute “the powerful municipal software management suite from Cipal”. A company press release quoted then-CEO Noedene Isaacs-Mpulo saying that the Cipal solution would help municipalities to improve service delivery, a “prime focus of government”.
Plan comes together
A confluence of events during that period placed Lefatshe in pole position to benefit from a roll-out of Cipal systems across municipalities. Seamlessly, an opportunity that might have accrued to Sita was parlayed into private hands. Had the wider roll-out occurred, Lefatshe could have made immense profits.
Neither Lefatshe nor Cipal responded directly to questions about the way in which Lefatshe was appointed the agency’s distributor. Lefatshe claimed it could not give details without Cipal’s consent, whereas the agency said to “maximise the possibilities of knowledge transfer” it entered into agreements with more than one distributor.
But part of the answer appears to lie in the fact that Isaacs-Mpulo had joined Lefatshe as CEO after leaving Sita, where she was chief operating officer, just two months before Lefatshe announced the Cipal deal. A spokesperson for Lefatshe confirmed that “Isaacs-Mpulo was responsible for securing the agreement”.
A telling sequence of events included:
- November 2007: Isaacs-Mpulo leaves Sita for Lefatshe and the Gauteng department of local government allegedly suggests Cipal to Westonaria as a pilot site.
- January 2008: Lefatshe announces publicly that it had obtained rights to distribute Cipal in SA and at about this time Westonaria contracts Lefatshe to install Cipal.
Key players were Isaacs-Mpulo and George Seitisho, then the municipal manager of Westonaria.
Isaacs-Mpulo, like Lefatshe founder and chair Cheslyn Mostert, was well connected. Mostert, previously coordinator of the ANC’s economic transformation committee, helped design black economic empowerment policies; Isaacs-Mpulo chaired Blue IQ, the Gauteng government’s business incubator agency.
Asked whether she had used her Gauteng government connections to get Cipal pushed on to municipalities because she was negotiating its software rights for Lefatshe, Isaacs-Mpulo said this week that the “question is vague and I don’t understand which contacts you are referring to. However, in the normal course of business people build and nurture relationships and networks.”
She added: “I believe that we need strong corporate governance in business and institutions in our country and have always conducted myself accordingly in all my professional roles.”
A whistleblower report on the saga, written by a member of Westonaria’s finance unit, claims that the Gauteng department of local government promised the municipality R5m in November 2007 to install Cipal’s municipal solution. TheMail & Guardian obtained the report from a union official and knows the identity of the whistleblower.
The report claims municipal officials were “surprised to hear this as they knew nothing of this system and expressed concern internally that due process … [had] not been followed”. However, Seitisho assured them “this is a provincial government initiative and that [Westonaria] will be the Gauteng pilot site before it eventually goes into all municipalities”.
Lefatshe’s answers to the M&G confirmed that it regarded its installation of Cipal’s software in Westonaria as a “pilot … commissioned by the Gauteng department of local government”.
Seitisho, as municipal manager, introduced Lefatshe’s Cipal offering to Westonaria as an unsolicited bid, which allows deviation from ordinary tender processes. The whistleblower report claims that this was done without a critical requirement: advertising Lefatshe’s bid so that other suppliers could offer competitive bids.
This week Seitisho denied anything untoward had taken place, saying all his decisions as municipal manager had been “in line with applicable regulations, policies [and in] consultation with and approval of council”.
He also said “not a single decision or activity was done … by me as an individual”, adding that records would show the municipal council had approved the contract and the bid had been openly reported as unsolicited.
Seitisho played down his role in plans for a roll-out beyond Westonaria, saying that, as municipal manager, “I would not have had powers to instruct or ‘want’ a Cipal roll-out in a province”. But he confirmed joining a subsequent trip by Gauteng officials to Belgium “looking at municipal IT systems”.
In December 2009, Seitisho resigned his position at Westonaria to join Shiceka’s department. He is now portfolio head of the local government turnaround strategy — the very programme to which Shiceka said IT systems such as those he saw in Belgium were “key”.
Because of his new position, Seitisho appears to have been involved with Shiceka’s Belgian trip — the whistleblower report says he had called Westonaria to gather information for the trip, saying he would accompany Shiceka to Belgium.
By this year, according to the report, well over R8m had been spent on the Cipal system in the Westonaria municipality, with more than R70 000 added to the bill each month. The report also claims that “very little value [has been] received to date” and only one of three modules is functional. The Lefatshe spokesperson countered: “This is not true. The system works.”
The M&G has learnt that the report has been handed to the Special Investigations Unit. SIU spokesperson Marika Muller confirmed that the unit was considering an investigation after receiving complaints.
Muller said in a text message that Westonaria’s new, acting municipal manager “had requested a meeting with the unit to look [at] formalising the relationship with us. It is very early in the process, so I am unable to give details of what issues may be under investigation.”
Acting municipal manager Thabo Ndlovu would not comment and referred theM&G back to the SIU.
Despite Shiceka’s exuberance in Belgium, plans for a wider Cipal roll-out appear to have stalled.
A spokesperson for Shiceka’s department, Vuyelwa Vika, distanced the department from the intended roll-out, telling the M&G: “Only the municipalities that use such a system would be able to help you; municipalities do not share information about their IT systems with the department. This is not in the department’s programmes, so I do not have an answer for you.”
Lefatshe spokesperson Mbuso Thabethe confirmed that there had been no wider roll-out thus far, saying “the pilot has been successfully installed in Westonaria only”.
Isaacs-Mpulo left Lefatshe in May last year and was replaced by Nyathi. He was arrested three months later for allegedly paying a R200 000 bribe to two home affairs officials to avoid the cancellation of a R20m contract with that department. He and one of the officials are out on bail awaiting trial and the other one has turned state witness.
Home affairs director-general Mkuseli Apleni released a statement after the arrests in which he said the department had cancelled Lefatshe’s contract because it had failed to deliver the necessary standards beyond the first phase of the project.
Responding at the time on behalf of Qedani Mahlangu, then Gauteng’s local government minister, spokesperson Mandla Sidu said she had nothing to do with the project. — Nelly Shamase, Mail & Guardian