How Moyane’s Sars apparently spent R200m on IT contract that led to nothing much

The million-pound (nearly R200 million in 2015) IT contract between leading research and advisory company Gartner and the South African Revenue Service (Sars) came under close scrutiny at the Nugent commission of inquiry into Sars on Tuesday, with questions about ethics and unknown sub-contractors party to the contract.

Critical questions were raised about Gartner’s Neville Willemse pulling in SAP partner Rangewave, which was run by now suspended Sars commissioner Tom Moyane’s friend and former government chief information officer Patrick Monyeki.

Moyane had already admitted to parliament’s standing committee on finance in March during a briefing that he and Monyeki were friends.

Through the IT contract, Moyane in effect paid R200 million for something Sars would never own and be reliant on for an unspecified time. Of the R200 million, 30% went to his friend Monyeki through a black empowerment arrangement.

Players in the contract, due end of March 2015, were Moyane, then acting chief operations officer Jonas Makwakwa, Sars branch operations group executive Dan Zulu, acting senior manager for ICT and “key procurement contact” Michael Mavuso, and procurement executive Mogogodi Dioka.

Sars’ own in-house counsel had, however, expressed serious problems with the contract, but were apparently ignored.

Monyeki no stranger to government work

In 2016 Monyeki’s firm also won a R35 million South African Social Security Agency (Sassa) contract under then Sassa minister Bathabile Dlamini, and in 2018 was given a nearly R12 million contract for three months’ work won in a closed bid process that was shut down by National Treasury during the social grants debacle.

Daily Maverick’s Scorpio has listed Monyeki as having won contracts with the department of correctional services (Moyane’s previous posting), the Government Printing Works, and the State Information Technology Agency – all of which are reportedly under investigation.

Empowering times

When Gartner public sector consulting head Michael Lithgow was approached, he noted in a January 13 2015 email that South Africa has a policy of black empowerment.

“This means that a company has to demonstrate that it is providing opportunities to the black majority population. Unless we can demonstrate this it means that our bid can be vetoed,” Lithgow wrote.

“The client has proposed that we use a small company that is led by an ex-government CIO whom Neville knows. This would add the necessary ‘proportion’ of Black Empowerment. The impact on us would be a 70/30 split ($700k Gartner/$300k partner) – 70% of the work by Gartner and the remainder by the partner.”

On February 4 2015, Sars acting group executive Erick Smith wrote an email that reflected the pressure Sars was under to sign off on the contract, and contained misgivings which, in hindsight, should probably not have been ignored.

“As you all know Sars has had to go with Gartner’s standard master services agreement, and not the Sars agreement, due to time constraints, as the Sars agreement would have to go through a process of negotiation with Gartner Ireland’s legal team,” Smith wrote.

“This is certainly not ideal and attracts considerable risk to Sars as the Gartner agreement is structurally awkward and omits critical clauses which are standard for most commercial agreements used in high-value contracts in South Africa.

“In addition, there are no governance structures and all dispute resolution matters have to be referred to arbitration in the UK and thus [are] subject to the laws of England. This despite the loci contractus and all contractual deliverables and performances being in South Africa,” Smith added.

According to the million-pound agreement signed between Sars and Gartner, Gartner retained “sole and exclusive ownership of the deliverable(s), Gartner tools, methodologies, questionnaires, responses, proprietary research and data, software, software documentation and other materials generated, provided or made available by Gartner in the course of performing the services in each case, whether in hard copy, electronically or otherwise”.

The emails are contained in a statement by Gartner’s vice-president ombudsman, John Robinson, wherein he noted Sars had decided “not to follow a competitive bidding process” and “Willemse had assisted Monyeki with the drafting of the terms of reference”.

It was through all of the above that Willemse and Lithgow bumbled their way through their answers under intense questioning from members of the commission on Tuesday, which eventually led Nugent to comment that a lot of the work Gartner had done appeared to have been wasted anyway because it never led to implementation.

Lithgow agreed, and said he had not seen evidence of “large tranches of that work having stuck”.

Nugent said it was fair to say a lot of the money that was spent was therefore wasted.

President Cyril Ramaphosa has given Moyane until Friday to give reasons as to why he should not be fired.

November 5, 7 and 8 have been reserved for witnesses who may yet wish to testify, including Moyane, who is currently applying to the Constitutional Court for direct access to attempt to stop the commission and his Sars disciplinary hearing.

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