/ 5 May 2005

Schools’ computer deals turn sour

Several schools in Gauteng have fallen prey to a computer company whose promises have left them offline and in debt, writes Julia Grey

Debt amounting to millions has been added to the burdens of at least four Gauteng schools which found out too late that their trust in a computer firm was misplaced. On the face of it, Pinnacle Business Systems (PBS) seemed to be a credible outfit. For one thing, its name is linked to Pinnacle Micro, one of the biggest suppliers and distributors of information technology products in South Africa.

The deal offered by PBS also seemed like a manageable, affordable way for schools to set up a computer facility. PBS was to equip and furnish a classroom as a computer room, provide additional machinery such as photocopiers, as well as consumables and maintenance free of charge for a three-year period.

PBS referred the schools that bought into its idea to a finance house called Finsa, which specialises in funding such school-based initiatives.

The money for the schools’ computers, as well as a three-year advance for the maintenance of the computers, was paid out in a lump sum to PBS. The schools were responsible for repaying Finsa, while PBS undertook to help recoup the money by collecting a monthly fee from parents for their children’s use of the computer facilities. But, as the school principals were soon to discover, PBS was good at making promises and terrible at keeping them. These schools are in dire financial straits after investing in PBS’s scheme, and school governing bodies – as the legal entities which signed the contracts – might be sued for the money owed to Finsa.

A principal of a township school, who did not want to be identified, says: “They came and posed as people who would help, but they only wanted to rip us off.” The school is now R171 000 in debt to Finsa, and has defaulted on its monthly repayments.

As a result of Finsa trying to recover the money, the movable assets – which, according to the South African Schools Act, belong to the school – have been attached by the sheriff of the court. First to go were the computers.

South View High School in Lenasia is similarly facing major problems, having taken out a loan of R600 000 from Finsa for PBS to set up a computer centre.

According to principal Bangs Naidoo, the deal started to sour after only two months, when PBS failed to pay the R18 000 a month it was supposed to pay for the loan from Finsa. He also claims that contractual obligations, such as providing free consumables (ink for printers and the like), have not been met by PBS.

Naidoo says the school has spent more than R25 000 in legal fees to get back the furniture and computers attached by the court.

Diane Snyders, principal of a third school, has a similar tale of betrayed trust and financial woes. She says PBS currently owes the school R164000 and is in breach of contract, and that these “unscrupulous business people, with promises to assist the school to set up and run the computer centre for us, have left the school facing financial ruin”. Snyders also claims that the computer centre has never been fully functional, with new problems occurring daily.

The shoddy workmanship from PBS allegedly includes cabling that was so badly installed that it had to be redone, and the installation of a server incompatible with the computers.

Finsa director Chris Klopper confirms that the debts incurred by the schools “is in the region of millions of rands”, but that Finsa is not able to sue PBS because contractually the school governing bodies are liable for the loans.

Klopper adds: “We will never again do business with any school that approaches us through PBS,” and he questions some of PBS’s business practices” on the basis of the problems that have been experienced by schools”.

And Finsa is not the only company that will no longer do business with PBS. Arnold Fourie, CEO of Pinnacle Micro, the company that sold PBS most of the equipment it installed in the schools, says “PBS owe us R600 000, and they’ve defaulted on their payments. We are now taking legal action against them.” He says PBS “can’t deliver on their promises. They’ve got no business – they’re fly-by-nights.”

the Teacher tried for two weeks to get a response to these allegations from PBS representative Priscilla Petersen and a colleague known only as Walter. Petersen failed to respond, while her colleague never answered his cellphone. A man who refused to identify himself and who answered Petersen’s cellphone stated that Petersen “was instructed not to talk [to the Teacher]”, before adding: “We don’t wish to comment. We aren’t in any way responsible for what is happening”.

– The Teacher/M&G Media, Johannesburg, October 2001.