Sunday, 23 May 2021

NSSA BATTLES TO RECOVER US$10M AFTER TENDER SCAM

Zimbabwe pension manager, the National Social Security Authority (NSSA), is seeking to recover US$10.4 million paid to a digital solutions company, Twenty Third Century Systems (TTCS), for the implementation of Systems, Applications and Products (SAP) that failed to work for the authority.

The authority, as reported last week, is among a flurry of state-owned enterprises that engaged TTCS to provide multi-million dollar services that were never completed including SAP licencing because, mainly, Twenty Third, a digital solutions provider, did not have the SAP licence.

The SAP Africa (Pty) Limited company — a subsidiary of a giant German digital outfit — cancelled TTCS’s licence in 2019 for reported impropriety but, even then, the digital firm kept getting contracts from parastatals amid reports that the Office of the President and Cabinet (OPC) as well as senior government officials were imposing the digital solutions company.

Other affected state enterprises   include the Zimbabwe Revenue Authority, Civil Aviation Authority of Zimbabwe, Grain Marketing Board, Insurance and Pension Commission and Rural Electrification Fund.

Documents show that, despite losing to another company, Integra, NSSA awarded TTCS a digital services contract in 2013 following a reported directive from the OPC during the late Robert Mugabe’s time, investigations by The Standard, in collaboration with Information for Development Trust, revealed.

But NSSA, like the other parastatals, has been having headaches with TTCS for more than seven years after Mugabe’s office foisted the US$10.4m job on the authority. The market value of the contract, it was discovered, was only US$250 000, meaning that the award was inflated by a whopping 4 000 percent plus.

The Robin Vela-led NSSA board cancelled the TTCs contract in December 2017 over failure by the company to deliver and overpricing despite numerous pleas from the digital solutions company for more time to implement the SAP system.

Vela was subsequently relieved of the NSSA chairmanship and then Labour minister, Petronella Kagonye forced the new NSSA board led by Cuthbert Chidoori to pay TTCS the US$10.4m, which is now the subject of a recovery action by NSSA.

This payment was effected following OPC intervention. NSSA has since advertised another tender, Number NSSA06/21, for a core social services system with a June 4 deadline that was extended by a month from May this year.

The new tender is bound to gobble more millions in pension funds, while beneficiaries continue to wallow in poverty. The authority’s lawyers Mutumbwa Mugabe and Partners Legal Practitioners confirmed the development.

NSSA has summonsed TTCs seeking a refund of all the money paid, with the lawyers accusing TTCS, cited as first respondent, of breach of contract.

A fairly unknown company, Leadbrake Enterprises (Pvt Ltd), was cited as second respondent, with Blessmore Chanakira, Auxillia Danayi Munyeza and Henry Chikova being second, third, fourth and fifth respondents.

Chikova is the former director for benefits, schemes planning and research who NSSA is suing for alleged deliberate misinformation that led to the awarding of the tender to an undeserving supplier.

 

“The supply and implementation contract entered into between plaintiff and first defendant on October 31 2013…is hereby declared unlawful and invalid,” part of the summons dated April 12 read. “First defended…is hereby ordered to restitute plaintiff the amount paid by the plaintiff to the illegal contract. Cost of suit on the attorney-client scale.”

Alternatively, NSSA is also seeking TTCS to pay damages for breach of contract and is now moving to seize four Borrowdale properties, assets pledged as collateral security by the ICT company under case number 7584/20, with the authority describing the contract as unprocedural.

Mutumbwa Mugabe & Partners law firm has since written to Chikova asking him to show cause why NSSA should not institute a claim against him for the recovery of losses it has suffered because of the questionable contract.

Chikova led a NSSA delegation to Europe and, upon return, recommended TTCS, according to the lawyers.

“You were the head of the NSSA delegation which visited certain locations in Europe and upon your return, you reported that TTCS had fulfilled the said requirement. It has transpired that your report contained a falsehood in that TTCS had not been involved at all the sites visited by your delegation,” charged the lawyers.

They added: “The misrepresentation caused the authority to contract with a supplier which did not have the requisite qualifications and has resulted in NSSA suffering heavy loss.”

The lawyers insist that tender process violated section 7 (1) of the Procurement Regulations, Statutory Instrument 171/02 as the contract was awarded without the authority of the then State Procurement Board nor the chairman of the agency.

“Further, there was no satisfaction of the cumulative requirements of Section 7 (2) (a) – (f). At all material times, you as the director of benefits, schemes planning and research, were the head of the user department of the social security system… As project director, you were responsible for the contract and its implementation,” said the lawyers.

Mutumbwa Mugabe and Partners argue that, as result of non-compliance with the legislation, the contract with TTCS was “void and of no force and effect”.

“Contrary to the stipulations of the supply and implementation contract that payment would be made upon the issuance of a final acceptance certificate, you authorised payments amounting to US$10,445,582.66… before the issuance of a final acceptance certificate and commissioning of the project and thus caused our client to suffer loss in the said amount,” noted the lawyers.

According to documents, TTCS came second during bidding, with 470.8m points trailing behind Integra, which scored 507.4 points. However, Integra quoted US$17.8 million against US$12.2m by TTCS, whose financial score was rated 95% as opposed to the frontrunner’s 63%.

“Other considerations here also included the solution’s flexibility to accommodate changing and future solutions,” part of the cost benefit analysis of the SAP Social Security System on NSSA SAP implementation report published on May 10, 2017 read.

According to sources, Vela, during his tenure at NSSA, resisted pressure from the OPC to pay TTCS the US$10.4m after he dispatched a team to five African countries that included Ghana, Zambia, Kenya and Mozambique to benchmark TTCS work.

Vela was pressured by TTCS and the OPC on several occasions to make the payment, with Ray Ndhlukula — the former deputy chief secretary to cabinet — and the Labour ministry permanent secretary, Ngoni Masoka, reportedly meddling with tendering.

He refused to pay after sending NSSA executives to visit fellow African countries and evaluate what they were doing, returning with the higher  standard annual fee of US$250 000 compared to the US$10m being demanded by TTCS.

Vela lost the chairmanship during Kagonye’s time after he spiritedly resisted paying TTCS and the payment was only effected when the Chidoori board came on.

A report compiled by Deloitte & Touche, an international auditing firm, in March 2017 confirmed that TTCS overcharged NSSA by close to Euro 4 million.

“TTCS invoiced a total of Euro 3,733,448.50 (per their invoice dated 19th September 2016) to NSSA for the regularisation of the SAP licences,” part of the Deloitte report read.

“TTCS’s invoice amount of Euro 3,733,448.50 is more than the amount Deloitte has calculated as being due from NSSA for the SAP Licenses. On line item ‘SAP Tax, Benefits & payments engine’ (which was a new release and was needed to upgrade the other two engines which NSSA had already paid for) TTCS did not bill for the increase in active business partners but for the total number of business partners as at that time they did audit and the amount they billed was Euro 4,200,000.00.”

Several correspondences showed that TTCS solicited the help of the OPC to force NSSA to pay.An email by suspended NSSA finance director, Emerson Mungwariri, to the NSSA board on December 11, 2017 showed the OPC’s involvement.

On January 12, 2018, Mungwariri wrote again to the board: “As discussed, attached is the TTCS correspondence received from OPC. I have only extracted the exchange of letters. These are accompanied by a detailed TTCS response to the bulk files we sent to the ministry in December last year.”

The emails were in response to correspondences from Ndhlukula to Masoka.

“Please be advised that it has come to the attention of this office that NSSA is failing to honour its obligation to pay SAP licence fees under its current contractual agreement,” Ndhlukula wrote on November 1, 2017.

“Please note that this issue is adversely affecting the working relationship between the government and SAP as well as with other state agencies that are running the SAP system. NSSA is, therefore, being asked to urgently resolve this issue without any further delay.”

On January 10, 2018, Ndhlukula wrote again: “TTCS have indicated that they will take the legal route to resolve the matter. I believe it is the best way forward as administratively, no resolution can be found.”

TTCS refused to comment on the involvement of the OPC and the ongoing feud with NSSA. “As the matter is sub judice, we are not able to comment on issues that are pending before the courts,” TTCS Zimbabwe managing director Michael Gonese said.

A NSSA ICT review of May 2017 confirmed intimidation of NSSA workers who expressed divergent views, exposing that TTCS was backed by top government officials in the OPC.

 

“(We) confirmed intimidations to Mutambudzi, Mumbure and Jongwe. Jongwe confirmed that they were marked for firing from the project team because they had raised too many business issues that the system was not addressing,” part of the report read.

“Senior management was not responsive. They were also advised that their names had been submitted to higher authorities in government.” The report also highlighted the challenges faced in the implementation of SAP.

“The contract for the project was supposed to be 12 months. This project has now gone for over three years and still not yet commissioned, let alone complete NSSA ICT review. TTCS/SAP rushed through the blueprint without considering actual NSSA business processes. SAP/TTCS greatly underestimated the NSSA business and its intricacies,” noted the report.

It added: “It took 18 months to test the registration module. Several requirements on the module were denied by SAP because they advised that SAP was not designed to cater for such requirements. For example, national ID validation.

“At some point the testing SAP environment in NSSA had Zimra headings and references, showing that some of the modules had been copied from Zimra straight into the NSSA testing environment. These were later removed after persistent complaints from the same users. None of the SAP/TTCS personnel had the social security experience which was mandatory in the RFP, but senior management overlooked them.”

Minutes of an ICT meeting on March 14, 2017 showed that several legal firms were engaged to justify the TTCS cost versus benefits analysis.

“The NSSA works council had expressed concern about the suitability of SAP and management was of the view that TTCS had no solution to resolving the challenges being faced by the users. The outstanding ICT project cost amounting to US$588,000 was paid in two instalments to TTCS and the Authority was still holding on to a US$1 million performance bond.”

The decision to terminate TTCS’ contract came after joint marathon meetings between ICT and legal committees that included NSSA management and sometimes the Labour minister. Standard

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