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By Karabo Ngoepe, Amanda Maliba, Manyane Manyane 
2h ago
The City of Joburg (COJ) overpaid an IT service provider about R1 billion in what has been called wasteful spending. That’s according to a forensic investigation that looked at the IT contracts the City had entered into between 2011 and 2017.
The whistleblowers have also lifted the lid on other ICT contracts that they claimed were scams the City should never have entered into.
The report compiled by Grant Thornton found that the City paid Dimension Data (DD) more than R900million irregularly for ICT updates between 2010 and 2017.
“It is recommended that the amount of R925566691.17 be reported as irregular expense in terms of section 32 (4) of the Municipal Finance Management Act by the accountant,” says the report.
He further added that corrective measures should be considered against former accountant Phumudzo Siphuma “for giving illegal instructions to a subordinate.”
Among the illegal instructions issued, Siphuma told administrative assistant Kgomotso Morebodi to “initiate a request for (a) framework order for DD without any documentation,” in 2014.
“Morebodi alleged that (the money) was related to a wide area network (WAN) and a local area network (LAN) for an amount of approximately R109 737 278. He provided us with an email addressed to Mr. Siphuma in which requested the latter to provide order approval and relevant supply chain management documentation. The email also mentioned that he had apparently ordered her to create the warrant without this documentation, ”the report continued.
“We identified numerous change orders in the payment lots. The SLA for contract A387 provided for the use of change orders. The change orders related to the various functional areas granted to DD. There was no list available that reflected the detail of the COJ’s change orders, nor did the COJ perform a reconciliation to establish whether the change orders exceed the contingency amounts granted. “
The original contract price was set at R39 203 641.92 and subsequently rocketed to the R1bn mark. City sources have 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,” said a source.
Sources said that DD’s “antics” 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 had some dodgy contracts. City Council IT contracts, all signed by a manager in office at the time. We even asked General Sibiya at one point to speak to Trevor Fowler to tell us what was happening. They all had problems. The level of corruption in the IT department was overwhelming. It was one of those departments that went crazy, ”Mashaba claimed.
He added that when they were investigating the contracts and wanted to reconcile regarding what they were paying, this resulted in DD shutting down its system last November.
Mashaba said they were being held for “ransom” and could not operate. “DD at one stage stopped the system because we refused to pay, wanting to reconcile,” the system said. He said he was surprised when he learned that the City was outsourcing his IT services, something he believes contributed to large-scale corruption.
“The entire IT department was outsourced. We trust these companies. We had to get an IT person to set up our own infrastructure. That’s when DD didn’t like what we were doing and they started putting pressure on us, ”he said.
The appointment of DD and EOH Mthombo surprised the city, as both were the highest in terms of prices during the evaluation period. Documents seen in the post indicate that DD collected R410992445.41 from the city, while EOH Mthombo collected R485 221 915.31.
The two companies were part of the four shortlisted that went to the final evaluation stage. The four shortlisted companies were EOH Mthombo, Nambiti Technologies, DD and Gijima Holdings, each of which underwent rigorous technical and functional evaluations.
Nambiti Technologies charged R464 6 5 2 5 9 8. 80, while Gijima Holdings charged 272 R $ 133 411, competing for the same contract.
City were taken to court by Gijima after losing the contract.
Gijima claimed that their evaluation points were awarded to DD and EOH Mthombo to ensure they won the tender.
The City did not respond to specific questions regarding the DD contracts and agreements.
Spokesperson Nthatisi Modingoane said: “Thank you for your inquiry. The City Council wishes to clarify that there were not three contracts that were terminated with the company in question. It should also be emphasized that the City is not aware of the payment of R144 million mentioned in its inquiry for the service provided ”.
Although the City was not aware of any payments, DD said that he was not owed any amounts and that he continued to provide services to the City.
DD Communications Chief Pearl Mngomezulu said: “Dimension Data can confirm that there are no outstanding payments owed to the company by the city of Johannesburg, and continues to provide technology services in line with its contractual obligations.”
EOH also declined to answer specific questions. Chief Risk Officer Fatima Newman said that as a matter of policy and in terms of its confidentiality and nondisclosure agreements with the City, “EOH cannot comment on the content and terms of the contract that it has raised in your inquiry.” .
“While we can confirm that we are in ongoing discussions with our client regarding this contract, it should be noted that your inquiry below reflects various factual and material inaccuracies (about) which we can only provide further information with the consent of the City of Johannesburg, ”Newman said.
Independent Sunday
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