Software Futures probes employee conduct

Software Futures KKM claims it has launched a criminal investigation into the conduct of certain of its former employees.

CEO Arthur Brown declines to provide further details, saying the matter is sub judice and subject to further forensic investigation, although he says that in December the company's shareholders discovered "irregular activities" by a Software Futures salesman.

"The shareholders have initiated a forensic investigation into the historical financial and operational affairs of Software Futures KKM and have launched a criminal investigation into the conduct of former Software Futures KKM employees," he adds.

The shareholders are Fidentia Holdings and Kopano ke Matla, which bought Software Futures out of MGX Holdings about two years ago.

Brown says when the new shareholders took over the company the management team convinced them to retain the previous management strategy.

"Software Futures KKM then incurred financial losses during the 2004 and 2005 financial years," he says. "The shareholders have funded these losses and have continued to support the management team and its strategy."

Although Brown has not disclosed the extent of the losses, one source estimates that losses ran up to R10.5 million last year. However, the company is said to be profitable at present.

In addition to the "irregular activities", and financial losses, the company's woes have included a number of high-level resignations in the past few months. It has had five MDs since the consortium comprising Brown Brothers (now Fidentia Holdings) and Kopano ke Matla bought Software Futures.

It has also lost several other management staff, including directors and business unit managers.

The first MD to go was Derek Hughes, who, although he did not comment at the time, was widely reported to be unhappy with the sale of the company. Hughes is now the CEO of DVT Gauteng. When he left, Arthur Brown of the then Brown Brothers served as transitional MD.

His replacement, Vaughan Diedrick, stepped down as MD and moved to Fidentia on contract. He is understood to have left Fidentia in February.

Sean O'Connell left the company two months after being appointed MD, to join former marketing director Brian Harding in a new business. Business unit manager Trevor van Rensburg joined DVT in recent months.

DVT has also been attracting other Software Futures staff, including, most recently, Jaco van der Merwe, the head of Software Futures KKM's development division.

"There seems to be a war going on between DVT and Software Futures," says a current Software Futures staffer, speaking on condition of anonymity. "And many Software Futures staff are being recruited or approached by DVT.

"The problems for Software Futures do not end there, as clients are being approached by DVT as well."

Another source close to the company comments: "There has been a massive walkout of Software Futures staff into the market. We could see another software empire forming around Derek Hughes."

Brown adds that a former Software Futures KKM senior manager has, since his appointment at DVT, initiated discussions with several current Software Futures KKM clients on providing competing services.

However, Hughes says DVT has not been poaching staff from Software Futures. "DVT has been growing aggressively and has been recruiting staff through recruitment agencies and through our own recruitment network. People have also been contacting us and we are receiving unsolicited CVs."

In addition, he says, DVT is "conducting a normal sales campaign in the market". He says the company considers Software Futures KKM, among others, to be a competitor, and DVT will compete against it in the market.

Brown says that during the past three months of direct management by the shareholder team, Software Futures KKM has returned to profitability.

"The shareholders of Software Futures KKM have appointed a strong management team and have implemented measures to address the financial management and discipline of the organisation.

"The shareholders continue to support the organisation with management and financial support and are very excited about the future of the company."