City of Joburg dimensional data overpaid near R1bn, surveys show

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By Karabo Ngoepe, Amanda Maliba, Manyane Manyane 51 min ago

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The city of Joburg (COJ) overpaid an IT service provider by almost R 1 billion, which was called unnecessary spending. This is according to a forensic investigation that examined the IT contracts that the city had concluded between 2011 and 2017.

The whistleblowers also lifted the veil on other ICT deals they said were scams the city should never have done.

The report compiled by Grant Thornton found that the city had paid for dimension data (DD) of over R 900 million irregularly for ICT upgrades between the years 2010 and 2017.

“It is recommended that the amount of R925566691.17 be declared as irregular expenditure within the meaning of Article 32 (4) of the Law on Municipal Financial Management by the Accountant,” the report said.

He added that corrective measures should be considered against the former accountant Phumudzo Siphuma “for giving illegal instructions to a subordinate”.

Among the illegal instructions issued, Siphuma asked the administrative assistant Kgomotso Morebodi to “initiate a request for a framework order for DD without any documentation”, in 2014.

“Morebodi alleged that it (the money) was tied to a wide area network (WAN) and a local area network (LAN) for an amount of approximately R109,737,278. She provided us with an email to Mr. Siphuma in which she asked the latter to provide order approval and relevant supply chain management documentation. The email also mentioned that he pointedly asked her to create the order without this documentation, ”the report continues.

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“We have identified a lot of change orders in the payment batches. The service level agreement for contract A387 provided for the use of change orders. Change orders related to the various functional areas assigned to DD. There was no list available reflecting the details of the COJ change orders, and a reconciliation was not performed by the JOC to determine if the change orders exceeded the contingency amounts granted. “

The initial contract price was set at R39 203 641.92 and then inflated to the R1bn mark. Sources in the city told the publication that despite the report’s recommendations, DD received a “settlement agreement” worth more than R100 million last October.

“We still don’t understand how they were paid despite the report’s findings,” a source said.

The sources said the DD “shenanigans” were just the tip of the iceberg, as all ICT contracts in the city were riddled with corruption. Former Johannesburg mayor Herman Mashaba told the publication this week that 90% of ICT contracts in the city were flawed.

“I know we’ve had quite a few questionable contracts. City IT contracts, all signed by an interim manager at the time. We even asked General Sibiya at one point to speak to Trevor Fowler to tell us what was going on. They all had problems. The level of corruption in the IT department was overwhelming. It was just one of those departments that was driven to go crazy, ”Mashaba said.

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He added that when they looked at contracts and wanted to come to terms with what they were paying, this resulted in DD shutting down his system last November.

Mashaba said they were held “ransom” and could not function. “DD at one point shut down the system because we refused to pay, wanted to reconcile,” the system said. He said he was shocked to learn that the city was outsourcing its IT services, which he said contributed to widespread corruption.

“The entire IT department has been outsourced. We relied on these companies. We had to ask an IT specialist to set up our own infrastructure. That’s when DD didn’t like what we were doing and they started to put pressure on us, ”he said.

The nomination of DD and EOH Mthombo raised eyebrows within the City as they were both the highest in terms of price during the evaluation period. Articles viewed by the publication indicate that DD billed the city R410992445.41, while EOH Mthombo billed R485 221,915.31.

Both companies were among the four shortlisted that reached the final stage of the evaluation. The four shortlisted companies were EOH Mthombo, Nambiti Technologies, DD and Gijima Holdings which each underwent rigorous technical and functional evaluations.

Nambiti Technologies charged R464 6 5 2 5 9 8. 8 0, while Gijima Holdings charged R272 133 411, competing for the same contract.

The city was taken to court by Gijima after losing the contract.

Gijima claimed his evaluation points were awarded to DD and EOH Mthombo to ensure they won the tender.

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The City did not respond to specific questions relating to contracts and SD regulations.

Spokesman Nthatisi Modingoane said: “Thank you for your question. The City would like to point out that there were not three contracts that were terminated with the company in question. It should also be noted that the City is not aware of the payment of 144 million rand mentioned in your request for service rendered. “

Although the City is not aware of any payments, DD stated that it had no amount to pay and that it continued to provide services to the City.

DD Communications Manager Pearl Mngomezulu said, “Dimension Data can confirm that no unpaid payments are owed to the company by the City of Johannesburg and that it continues to provide technology services in accordance with its obligations. contractual. “

EOH also declined to answer specific questions. Chief Risk Officer Fatima Newman said that on policy matters and their confidentiality and nondisclosure agreements with the city, “EOH cannot comment on the content and terms of the contract. that you raised in your investigation ”.

“While we can confirm that we are in ongoing discussion with our client about this contract, it should be noted that your request below reflects several factual and material inaccuracies (on) which we cannot provide further information on. only with the consent of the City of Johannesburg, ”Newman said.

Independent Sunday

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