Treasury Director General Dondo Mogajane. Picture: ESA ALEXANDER
Treasury Director General Dondo Mogajane. Picture: ESA ALEXANDER

Irregular expenditure of R165m in a contract with an ICT service provider was one of a host of irregularities amounting to R273m, in the Treasury’s integrated financial management system (IFMS) project. 

The results of a forensic investigation into the R4.2bn project were presented to parliament’s standing committee on public accounts (Scopa) for the first time on Wednesday night.

“Horrifying” weaknesses were identified in the management of the project, standing committee on public accounts (Scopa) chair Themba Godi said in his introduction to the meeting.

He said it was critical that action be taken against officials who had acted irregularly.

The Treasury director-general, Dondo Mogajane, told Scopa members that while irregular expenditure on the project amounted to R273m, unauthorised expenditure was R17.8m.

The IFMS project was launched in 2006 to harmonise human resources and financial management systems across national and provincial government.

The first phase of the project had to be aborted after governance lapses resulted in misspending of R1.2bn. The project was abandoned with cabinet approval in 2013, after about eight years of preparation, in favour of a better alternative.

The Treasury only reluctantly submitted the forensic report of more than 400 pages to Scopa following the committee’s demand that it do so. Mogajane said the Treasury wanted to sort out certain matters first, and to give those cited an opportunity to respond to the allegations.

The forensic report compiled by Nexus Forensic Services identified conflicts of interest, tender irregularities and other failures in the contracting process and recommended that action be taken against officials involved. Some of the matters should be referred to law enforcement agencies, the report said.

The report said it was possible that that no business case/needs analysis/feasibility study was undertaken prior to the procurement from one of the service providers, ICT-Works.

The irregular expenditure of R165m was allegedly incurred due to the failure by the Treasury’s evaluation committee to exclude ICT-Works from the tender process because of the company’s nonsubmission of back-to-back agreements — a mandatory requirement — and due to the failure to contract with the name of the bidder, which was not ICT-Works but a consortium in which it was involved.

Mogajane told MPs that the contract agreement with ICT-Works was irregular and consequently all payments made in terms of the agreement were irregular.

Twelve service providers were appointed for the IFMS project: ICT-Works, KPMG, Abacus, Apex, Accenture, Oracle, Intenda, IBM, SAP, PiLog, BCX and Barnstone.

The forensic report found that the appointment of Apex and KPMG for certain aspects of the work was irregular and so too the payments made to them. The appointment of KPMG to the project management office was irregular, as well as the payments of R54m for this.

The Treasury officials were found to have not properly implemented, managed, enforced, monitored and reported on one contract, amid other failures, and to have exceeded the budget in another contract.

ensorl@businesslive.co.za