South African IT agency nightmare

The State Information Technology Agency (Sita) of South Africa is outsourcing its procurement services while employing the necessary staff for the job, the City Press reports.

This follows Communications Minister Solly Malatsi’s call for the Public Service Commission (PSC) to investigate various governance issues, irregular procurement practices, and operational inefficiencies at the state body.

During a visit to Sita’s offices in Pretoria earlier this week, the Minister discovered that the state IT agency was outsourcing the procurement of internal transactions and supply chain-related issues to a company called Nakede Management Service.

This is despite employing 72 individuals for this very purpose. Sita has over 3,300 employees in total.

It was also reported that Nakede was appointed without being vetted by government, although Sita spokesperson Tlali Tlali has since denied this.

Tlali said that the necessary procedures were followed in awarding the tender, which was a short-term resolution to address additional capacity needed in Sita’s supply chain environment to clear procurement backlogs.

He also said that Sita’s procurement decisions are subjected to an audit process to ensure impartiality and fairness.

Therefore, the agency believes the payments made to Nakede were “audited and budget-compliant.”

This is not the first time red flags have been raised at Sita in recent months, with lifestyle audits of several of its senior executives indicating potential corruption at the agency.

The report — submitted to Sita management by the company’s internal auditors on 24 July 2024 — raised concerns over some executives’ conflicts of interest and large unexplained payments into their bond accounts.

Nine of the 13 executives assessed failed the review for various reasons, including owning or having close links to companies doing business with the government.

Four employees failed to fully declare companies owned by themselves or their family members.

“One employee’s external business interest was registered on the central supply database (CSD) as a government supplier,” the report said.

“Furthermore, we noted that, in two instances, the employees had interests in IT-related companies, which is prohibited in terms of the conflict of interests policy.”

Five of the employees also had family members and friends with an interest in companies registered on the CSD.

Two senior managers and a current and retired executive allegedly received large amounts of money in their bond accounts for which they had not provided a clear explanation.

Several of them were accused of owning companies that do business with the government and Sita or having family or friends who own companies that do business with the entities.

Further investigation required

However, the report stressed that the findings indicated something “may be amiss” but were not conclusive proof of illicit activity.

“There may be a perfectly reasonable explanation for what, on the face of it, may appear to be an extravagant lifestyle,” the report said.

“These explanations include an inheritance or a wealthy partner or family member providing financial support, which is unknown to the employer.”

“The results of this review must accordingly be approached with caution and should require, where necessary, further detailed investigation.”

Sita spokesperson Tlali Tlali emphasised that the lifestyle reviews were ongoing and weren’t “audits”.

“This means that there’s no basis for concluding that any executive has failed the lifestyle reviews,” said Tlali.

The release of these findings came at the same time that Malatsi visited Sita’s offices alongside the Parliamentary Committee on Communications on Tuesday, 11 December 2024.

Malatsi said that the visit addressed “pressing issues impacting Sita’s ability to deliver on its critical mandate.”

The Minister listed several specific issues that needed to be addressed, namely:

• Service delivery failures impacting numerous departments, including the Ministries of Police, Home Affairs, and Justice, resulting in requests to be exempt from using Sita services.
• Governance challenges including allegations of corruption, maladministration, and interference at the board level.
• Unstable leadership caused by high turnover at the executive and senior management levels leaving critical roles filled by individuals in an acting capacity, resulting in organisational instability and poor decision-making.
• Irregular procurement, including alleged failures to adhere to proper procurement processes, results in irregularly awarded contracts.
• Worsening audit outcomes, including Sita’s failure to submit its 2023/24 annual report, highlight a worrying decline in financial and operational accountability.
• Missed performance targets with underwhelming results against predetermined objectives, reducing confidence in the agency.

Malatsi said that if these issues were left unaddressed, it would hinder the agency’s ability to deliver value to South Africans.