For years, the Road Accident Fund (RAF) has been paying beleaguered software multinational SAP for work allegedly without a contract and without following procurement processes.
Sources in the fund said a red flag was raised after the acting chief executive, Lindelwa Jabavu, approved the payment of nearly R10-million to SAP last year. There are allegedly no records to show why this amount was paid.
But the RAF has claimed that one of the Mail & Guardian’s sources is a “disgruntled whistle-blower” and that there was nothing untoward in the RAF’s dealings with SAP.
The payment was apparently made in terms of a sole source contract, which did not follow procurement processes, to provide and maintain software for the fund, according to the sources.
But this seems to be only the tip of the iceberg. In 2016, a contract proposal for SAP was brought before the board for the software giant to provide services for the fund. But, again, no proper procurement processes were followed, according to a senior official. There are no records that the fund requested a deviation from procurement processes from the treasury or that they went out on tender.
Jabavu did not answer questions about these allegations.
According to documents relating to the 2016 contract, which the M&G has seen, the RAF board approved a deal with SAP worth R96-million over five years. The documents don’t mention any procurement process — just that the SAP model was being revised and that the chief executive should approve the new model.
One source in the RAF said there was no tender advertisement for the contract and no other companies were involved.
According to the documents, dated May 2017, during the discussions SAP increased the total amount to provide services to R121 536 000.
The fund rejected this.
But, instead of lowering the amount, SAP came back with an even higher price tag of more than R133-million to provide the fund with new software and to maintain new and existing software.
“RAF ICT [information and communication technology] management believes that this deal is still viable,” reads the document.
[Lindelwa Jabavu bemoaned that “whistle-blowers” were speaking about the SAP deal]
But because of the apparent secrecy surrounding the contract, there is no confirmation that SAP was awarded it the following year. What is apparent is that at the end of last year Jabavu signed off on millions of rands for SAP.
The spokesperson for SAP, Ansophie Strydom, said she could not comment on the allegations because of confidentiality regulations relating to their customers.
“We cannot divulge the details of any contract/s with RAF or related parties. SAP is dedicated to conducting every aspect of our business responsibly and in accordance with the highest global compliance and legal standards. SAP continues to investigate its public sector business in South Africa going back to 2010. If SAP identifies any further matters of concern, it will address them with attention and robustness,” Strydom said.
After three days of sitting with the M&G’s questions, Jabavu bemoaned that “whistle-blowers” were speaking about the SAP deal.
“It is disheartening that confidential matters, which are being discussed at the Road Accident Fund board in committee meetings and which are yet to be finalised are finding their way into the public domain through an alleged whistle-blower,” she said.
She would not say how much the state has paid SAP or what processes were followed.Instead, she said the M&G should submit a Promotion of Access to Information Act (PAIA) request for documents relating to how the fund as a state entity has spent its funds on SAP.
“With the aforementioned in mind, we are consequently not in a position to accede to your request and refer you to the RAF’s PAIA manual,” she said.
She said the auditor general investigated the matter last year and found no irregularities — although she also said the matter has not been finalised before the board.
“The RAF believes you are dealing with a disgruntled whistle-blower who would stop at nothing, including leaking board-in-committee meeting information dealing with incomplete processes. We are of the opinion that he/she has no intention of coming to terms with the fact that there is nothing untoward and are rather intent on pushing their own agenda by making unsubstantiated and untruthful allegations, for reasons unknown to the RAF,” she said.
The fund, which recently received a capital injection with the 30c a litre rise in the levy that contributes to its budget, has been dogged by allegations of irregularity for the past few years. These have included the RAF increasing salaries disproportionately and, in 2016, paying more than R130-million in bonuses to staff, with the former chief executive getting R1.9-million, yet the fund is said to be cash-strapped.
Some board members have also been accused of tampering with the selection process to hire a new chief executive officer to such an extent that the process had to be restarted.
Last week, the M&G reported that the fund was investigating its own head of legal affairs, Charlene Louw, for her alleged failure to disclose a personal relationship with Tim Rametse, the managing director of AfroCentric Health Solution, which owns Medscheme and which was contracted to provide services worth R130-million to the RAF.
Jabavu said this contract was also above board, although she confirmed there was an investigation underway.