Corrupt US$10m Nssa tender dead in the water

THE murky US$10 million ICT social security system deal at the National Social Security Authority (Nssa) which had been irregularly pushed by board chairperson Emmanuel Fundira is now dead in the water, The NewsHawks can reveal.

This follows revelations that Public Service Minister July Moyo froze it and, in a crunch meeting of the Nssa board last month, the deal suffered a further blow.

Sources told The NewsHawks that at the last board meeting, a resolution was passed not to proceed with the deal.

“The board members simply distanced themselves from the deal and said if the minister froze it, we cannot as well be seen as resuscitating it. So in essence, the deal is now dead in the water,” said a source.

The controversial deal involved local software company Twenty Third Century Systems (TTCS) (Pvt).

TTCS, which is based in Newlands in Harare, provides technology and software solutions. It was linked to German multinational SAP, a market leader in enterprise software application, and South Africa’s EOH Holdings, which is a tech giant, until 2019.

Until the deal reached this current stage, Fundira was accused of brazen and corrupt abuse of office as he railroaded the Nssa board, which includes Merjury Chinyemba, Tarusenga Chitemere, Shepherd Mundondo, Grace Mathe, Timothy Nherudzo, Chipo Ndudzo and Beatrice Ncube, into restoring the cancelled software system contract that cost Nssa US$10 445 582.00. T his resulted in Nssa taking legal action against TTCS and a counter lawsuit.

Fundira wanted the court cases to be hastily withdrawn and a new contract issued without responsibility and care for pensioners’ funds already sunk into the botched deal. T he abortive Nssa-TTCS tender was widely described as a grand heist.

Nssa paid over US$10 million for the dysfunctional system, but has nothing to show for it. Documents show Fundira used his power — through what is called “chairman’s action” — to pressure the board into reviving a deal in which the pension fund has already lost more than US$10 million.

He wanted the contract restored at all costs and has been forcefully demanding that it be done urgently, suggesting a vested personal interest.

The issue divided Nssa management and rattled government officials aware of the attempt to create further exposure for the US$1.2 billion pension fund through a contract which could fail again.

What was alarming, according to the documents, is that Fundira also wanted Nssa to stop its court action against TTCS, while paying it more money.

Court papers show Nssa argued that the contract was invalid or alternatively there was a breach of the agreement signed on 31 October 2013, hence the invalidity.

Nssa wanted US$10 million payment in damages for breach of contract plus interest at a rate of 5% per annum with effect from 31 December 2017.

For its part, TTCS claimed US$7 369 326 against Nssa for maintenance fees and software licences. T he matter went through pre-trial confeence stage and is still pending.

Despite these two cases, which have been consolidated by the court due to similar cause of action by related parties, Fundira, until the then Public Service minister Paul Mavima stopped him, wanted Nssa to revive the old deal and immediately pay TTCS about US$2 million extra to come back amid unresolved previous complaints of failure.

A ministry of Public Service official told The NewsHawks:

“On 7 December 2023, the board met with TTCS representatives to discuss the SAP system that Nssa had acquired sometime in 2013 for a cost in excess of US$10 million. Nssa paid for the system in full. At the meeting, TTCS indicated they were ready to resuscitate the system at an estimated cost of US$1 880 000 and would require about 1 054 days to restore the system. The provision of annual maintenance would be 22% of the value of the software — which means about US$880 000.”

Further, Fundira wanted Nssa to drop its legal action against his close associate Henry Chikova, a former director of benefits, scheme planning and research at the pension fund.

Nssa was suing Chikova, who now works in the Public Service ministry, for deliberate misinformation, impropriety and gaslighting colleagues which led to the awarding of the tender to an undeserving supplier — TTCS, which had lost to against another company, Integra, but later clawed back as it charged US$10.4 million as opposed to its competitor’s US$17.8 million.

Fundira wanted charges against Chikova dropped so that he makes him Nssa general manager — the management boss — to implement his new US$10 million deal.

Nssa management has already been told to drop charges against Chikova in preparation for his return as the boss at the company where he left under a cloud of impropriety and corruption suspicions, costing the company millions.

The pension fund is in the process of recruiting a new general manager to replace Arthur Manase who resigned last year facing over 30 charges of corruption.

Applications closed on 31 March. Charles Shava, Nssa director of occupational safety and health, is the acting general manager.

He is one of the applicants for the substantive top job, together with Chikova and Nssa director of corporate affairs David Makwara, among a few others.

Fundira is pushing for Chikova to become Nssa boss through a manipulated recruitment process.

He has even tried to hire some human resources consultants to conduct sham interviews to legitimise his imposition of his own person to implement the US$10 million deal.

After his appointment as Nssa chair in May last year, Fundira has been aggressively trying to revive the US$10 million contract, directing this must be done together with an immediate payment of US$1.9 million to TTCS, a company in the courts with the pension fund over non-performance and failure of the system.

TTCS installed various systems in state enterprises amid controversy, forcing the government to stop using its services, particularly around 2019 when it was still in a partnership with listed South African technology solutions group, EOH Holdings, one of Africa’s largest technology service providers.

EOH is facing a series of corporate governance failures and irregularities, including unsubstantiated payments, tender irregularities and other unethical business practices which are primarily limited to the public sector business centralised in EOH Mthombo and some EOH employees.

A number of rogue and corrupt former EOH Holdings employees and directors almost destroyed an entire group through tender fraud with state organisations such as the SA National Defence Force and the Department of Water and Sanitation.

TTCS is also entangled in controversy with its other former partner, German multinational software giant SAP, amid allegations that it used codenames and set up a shelf company in Botswana to circumvent European Union sanctions imposed on the Zimbabwean government from 2002.

TTCS is claiming approximately R1 billion (US$54.2 million) from SAP for revenue losses resulting from the software giant terminating their agreements in 2019.

The Harare-based TTCS wrote to the United States Stock Exchange in 2021, accusing SAP of being involved in a scheme to circumvent EU sanctions against it.

“To date, TTCS Global does not have a single Botswana customer. Its sole purpose was to contract with SAP to supply SAP software solutions to Zimbabwean customers, through TTCS.” AP global public relations head Marcus Winkler told the Sunday Times of South Africa that the termination of its agreements with TTCS in 2019 was the result of an extensive investigation.

“SAP is currently in litigation with TTCS over SAP’s decision to terminate them. We do not comment on pending litigation,” he said.

The German-based software giant has also been in trouble in South Africa recently. In January 2024, court documents revealed how SAP allegedly bribed Eskom officials to retain business with it and other parastatals.

The United States government brought the allegations against SAP. Nssa itself is redolent with rot.

“Nssa and TTCS entered into an agreement in 2013 for the supply and installation of an ICT system for the pension fund. However, due to some disagreements during the implementation process, Nssa terminated the contract in December 2017 over failure by the service provider to deliver and overpricing issuesdespite numerous pleas from TTCS for more time to implement the SAP system,” one document says.

“After the appointment of Fundira in May last year, the board met on 7 December 2023 to discuss the issue. Fundira imposed the TTCS issue on the meeting, which was not on the agenda, and used what is he calls ‘chairman’s action’ to foist a resolution which says the deal must be revived with US$2 million paid immediately. TTCS and Nssa management then met on 11 January 2024 for further engagement. The Nssa board met again on 13 February 2024 and resolved that the pension fund should engage TTCS to resuscitate the SAP system. Pending litigation against TTCS and Chikova is now going to be withdrawn to facilitate the deal. The way Fundira is pushing for the revival of the contract and clearance of charges against Chikova whom he wants as general manager shows he has a vested interest in this. It’s abuse of office, cronyism and corruption writ large.”

Background

Essentially, there is a raging dispute between Nssa and TTCS dating back to 2017.

In 2012, Nssa advertised a public tender for the supply and implementation of ICT social security system.

As a result of the bidding process, Nssa andTTCS signed a supply and implementation contract on 31 October 2013.

After that, Nssa paid TTCS a total of US$10 445 582.00. Disagreements, however, erupted over implementation.

Subsequently, Nssa sued TTCS in HC 7384/20 seeking a declaratur that the contract entered into by the parties is unlawful and invalid and for restitution of the amount paid pursuant to the alleged illegal contract.

Nssa is also suing Leadbake Enterprises, Blessmore Chanakira, Auxillia Danayi Munyeza and Chikova in a bid to sell properties in Borrowdale suburb which were used as collateral. Liability on Chikova was based on negligent performance of duty.

The alternative claim by Nssa is based on breach of contract, that is, in the event the court finds the contract to be valid.

The defendants raised a special plea and exception to the summons.

The special plea was struck off the roll High Court Justice Joseph Chilimbe on 26 October 2022.

In respect to case HC 1148/22, TTCS sued Nssa based on a deal born out of the 31 October 2013 contract, that is the end-user licence agreement entered into by the parties on 20 December 2013.

The two cases have been consolidated and are pending in the courts.

Fundira has directed Nssa to withdraw the cases and concentrate on giving TTCS a new deal.

The project, which was started way back in 2016, experienced a two-and-a-half year delay.

The ICT SAP system specifically relating to the National Pension Scheme went live eight years ago with the remaining module relating to the Workers Compensation Fund projected to go live on 1 May 2016. The contract was cancelled in 2017 due to non-performance.

The revived tender is bound to gobble up more millions from Nssa, while pensioners continue wallowing in poverty.

When contacted for comment, Fundira said he was travelling on transit and could not respond to questions sent to him.

Nssa acting general manager Charles Shava said he could not comment and directed questions to Fundira.

Twenty Third Century Systems head of sales Eugene Muzvidziwa invited The NewsHawks for an interview but could not make it.