Nssa chair in US$10m IT system scandal

STATUTORY pension fund, National Social Security Authority (Nssa) chairman Emmanuel Fundira (pictured) is embroiled in a US$10 million ICT social security system scandal involving local software company Twenty Third Century Systems (TTCS) (Pvt), documents seen by The NewsHawks show.

BRENNA MATENDERE

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

Now they are at war with each other.

Strategically placed sources say Fundira is accused of brazen and corrupt abuse of office as he railroads the Nssa board, which includes Merjury Chinyemba, Tarusenga Chitemere, Shepherd Mundondo, Grace Mathe, Timothy Nherudzo, Chipo Ndudzo and Beatrice Ncube, into restoring a cancelled software system contract that cost Nsaa US$10 445 582.00.

This resulted in Nssa taking legal action against TTCS and a counter lawsuit. Fundira wants the court cases to be hastily withdrawn and a new contract issued without responsibility and care for pensioners’ funds already sunk into botched deal.

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

The issue has 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 may fail again.

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

Court papers show Nssa is arguing that the contract was invalid or alternatively there was a breach of the agreement signed on 31 October 2013, hence invalidity. It wants 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 is claiming US$7 369 326 against Nssa for maintenance fees and software licences.

The matter is at pre-trial conference stage.

Despite these two cases, which have been consolidated by the court due to similar cause of action by related parties, Fundira wants 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: “Basically, Fundira wants TTCS to be given a renew contract even if they failed to deliver. Nssa paid above US$10 million, but must now pay again, with US$2 million immediately released to the same company which bungled the project. This is a brazenly corrupt deal.

“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 wants Nssa to drop its legal action against his close associate Henry Chikova, a former director for benefits, schemes planning and research at the pension fund.
Nssa was suing Chikova, who now works at the public service, 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 wants 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 due to recruit a new general manager next month 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 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 services 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, Germany multinational software giant SAP amid allegations that it used code names 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.

“This was a clear effort on the part of SAP to avoid having to comply with the various sanctions and to continue doing business in Zimbabwe despite the sanctions,” Ernest Zvinavashe, managing executive at TTCS, was quoted as saying.

“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.

Fundira’s deal also reeks of corruption. 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 issues despite 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 and TTCS 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 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 more millions from Nssa, while pensioners’ continue to wallow in poverty.

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

“I am currently out of the country and airborne as we chat and shall be away on business till the end of the month and therefore unable to assist in this regard. In this case, my vice chairman Ms M Chinyemba and or AGM Dr Charles Shava may be able to assist as they see fit. Kindest regards,” he told The NewsHawks via WhatsApp.

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.