A technology development centre punted by Durban’s eThekwini municipality is threatening to implode after a fallout between its founders.
The former leader of the project, Theresa Davies, issued letters of demand to municipal manager Mike Sutcliffe and his head of economic development, Fred Pietersen, as well as others drawn in to the battle over the "technology hub", dubbed SmartXchange. In a summons served on Pietersen, Davies demands damages of R4,1-million.
Adding to the controversy is the revelation that the man chosen by the city to manage the project, Martin Cele, is facing fraud charges relating to alleged corruption in the award of a large Portnet IT contract to Siemens.
Cele has denied being charged for any crime. However, the National Prosecuting Authority has confirmed it is preparing an indictment.
Davies alleges that Pietersen issued instructions for the council’s auditors, PricewaterhouseCoopers, to conduct a forensic investigation of: her personally; the company that initially ran the SmartXchange project and; the trading company of the Durban Institute of Technology (DIT) which had advanced R1-million towards the project.
She claims the audit was launched on the basis of bogus allegations and was designed to force her to abandon attempts to investigate the affairs of SmartXchange and the actions of Pietersen and Cele.
All the parties have indicated they reject and will contest Davies’s claims.
The conflict appears to stem from moves by the city to gain control of the SmartXchange project, which was originally led by Davies.
Last year she secured a R1-million grant from the Department of Trade and Industry to help establish SmartXchange. The DIT was to provide skills training as part of the project.
The grant is paid out retrospectively and the DIT invested about R1-million on the understanding that it would be reimbursed.
Now the DIT could end up without its money as the struggle for control has seen the project, so far, fail to meet the grant requirements.
Initially, eThekwini municipality was merely an informal partner in the project. Gradually, however, Pietersen, on behalf of the city, began to take control — to the extent that he ended up as sole director of SmartXchange and ceded the assets of the company to a new entity created by the city.
The conflict appears to have come to a head in April after Davies sent an e-mail to members of the DIT council and to the office of the eThekwini municipality speaker, setting out her reasons for resigning from the technology hub and for her refusal to support the appointment of Cele, who reports to Pietersen and is being paid R50 000 a month as CE of SmartXchange.
In her e-mail she referred to Cele’s "history" with Siemens and raised serious queries about his performance.
Cele responded to the Mail & Guardian: "At no stage, have I been made to believe that my perfor- mance was anything other than above expectation."
In her e-mail Davies also raised concerns about a perception of an alleged "bias" in favour of one of the technology hub’s first tenant, Willy Govender.
Govender, a respected IT entrepreneur, rejects claims of any favouritism from the city.
The Metro decided in October 2003 that all the city’s future corporate software applications would be based on software supplied by a joint venture between Govender and an Indian company Ramco Systems.
It is to replace its revenue systems at a cost of up to R150-million over the next four years, using SmartXchange and Govender’s company Cityworks to manage the process of subcontracting work to emerging software companies.
On May 28 the city provided Davies with a response to her e-mail, dismissing her concerns — but 12 days later the disputed forensic audit was launched with, Davies alleges, herself the whistle-blower as prime target.
The eThekwini municipality insists there is no problem at SmartXchange.
Regarding Cele, who has been paid some R840 000 over 18 months, city manager Mike Sutcliffe says this was fair value.
With respect to Cele’s legal difficulties, Sutcliffe says: "At the time of his appointment Martin Cele did disclose to the directors of DIT Tech Hub that there were such allegations against him.
"Accordingly, the City took such a disclosure in good faith. We do not see this as an impediment."
Davies denies any knowledge of such disclosure. Cele asserts that he did make a verbal disclosure.
Sutcliffe maintains the hub is working well: "We have not had any, nor foresee, any problems with SmartXchange."
