Gartner: R200m Sars contract was pointless
IT consultancy tells Nugent commission of inquiry that it did not know contract was illegal
Global information technology consultancy Gartner on Tuesday admitted that the SA Revenue Service (Sars) did not receive value for money for its work and pleaded ignorance over the illegality of the contract it entered into with the tax agency.
Patrick Monyeki, a businessman linked closely to suspended commissioner Tom Moyane, was at the centre of much of the questioning around the R200m Gartner contract at the Nugent commission of inquiry into Sars on Tuesday.
His company, Range Wave, played a central role in attempts to revamp the agency’s IT environment with Gartner.
Gartner describes itself as a world leader in IT, present in 100 countries with $3.9bn in annual revenue. It is a member of the S&P 500, yet its representatives battled to answer questions around ethical conduct in the public sector and how it entered into illegal contracts with Sars in SA without red flags raised by its oversight office based in the UK.
The Nugent inquiry heard evidence over the past two weeks of the breakdown of the Sars digital infrastructure since halting the modernisation process and since Gartner stepped in to implement a new IT framework in a three-phase process.
Another global consultancy, Bain & Company, which was hired to overhaul the Sars operating model to disastrous effect, contributing to the tax agency missing its collection targets, has since offered to set aside the R164m it earned.
Gartner’s SA head, Neville Willemse, said he did not know the manner in which the firm obtained the contract — which he helped write the specifications for and which did not require a bidding process — was illegal. The main question Gartner’s SA and UK representative and public sector chief, Michael Lithgow, could not answer was the link between the consultancy, Range Wave, its owner Monyeki and Sars. He also could not say why Gartner accepted Monyeki’s word that he represented the tax agency.
A Monyeki-linked firm is part of a Sars controversy around the Financial Intelligence Centre report on suspicious and unusual transactions into an account of former Sars second-in-charge Jonas Makwakwa.
Evidence before the commission shows that Makwakwa was the point man in the Sars contract with Gartner, which subcontracted Monyeki’s Range Wave. Gartner officials said it paid 30% to 40% of the total contract to Range Wave.
Evidence shows that Range Wave was paid in three phases for its subcontracting work for Gartner. It was paid R2.7m for the first phase, R52m for the second phase and R5.3m for the third phase — this final phase was simply a handover report.
While Willemse and Lithgow said Range Wave supplied about eight consultants to complement Gartner’s team, e-mails provided to the commission show that only four consultants were provided for the project.
Prior evidence before the commission of inquiry showed that Monyeki was a "personal consultant" to Moyane, but Willemse and Lithgow could not adequately respond to questions on Monyeki’s involvement.
Lithgow said he had not been involved in those negotiations, and Willemse said he had never asked Monyeki what his link to Sars was when the latter asked him to pen specifications for the Sars contract.
On Tuesday, Lithgow complained that nothing Gartner had recommended to Sars was implemented. Gartner was paid R151m for phase two of the project, which was essentially the implementation phase.
‘‘I accept we failed because nothing we did was implemented, which for me is distressing. My confidence that even 10% of what we recommended was done is low,’’ Lithgow said.
He said that while he could justify Sars spending R200m on the work, it did not deliver value for money.
‘‘Yes, as a professional I am upset that the work did not deliver what we had hoped.’’ Lithgow largely blamed the Sars leadership at the time for this.