IT outsourcing company Lefatshe Technologies is pondering taking action against the Bitou Local Municipality, after the city canned a deal with it, publicly blaming the company for not performing.
Bitou cancelled the contract with Lefatshe earlier this month, claiming the financial system was a waste of R10 million as it did not work. However, Lefatshe argues the cancellation letter it received did not mention non-performance.
In an open letter, mayor Memory Booysen said the Belgian Cipal system, which Lefatshe was implementing, was a failure and a waste of money. Booysen was looking back at the council's first 100 days in office. Bitou, previously known as Plettenberg Bay Municipality, is located in the Western Cape.
Booysen says the municipality had forked out about R10 million by the end of June, a rate of R139 000 a month, for a system it does not use, because it does not work. “The town has paid millions for something it has never used and will never be able to use.”
The situation has “placed our municipality in great jeopardy”, says Booysen. However, Dimension Data executive chairman Jeremy Ord, who owns property in the area, has allegedly offered to step in and assist with an evaluation of the city's technology and suggest a plan forward, at no cost. Ord was not available to confirm this.
Booysen also alleges that the South African Police Service's elite unit, the Hawks, is investigating the company nationally. However, ITWeb has ascertained that Booysen was referring to the Special Investigating Unit, and not the Hawks, and the SIU is not investigating the company.
However, the city is adamant that Lefatshe is under investigation, and will not provide any information about the contents of the termination letter it sent to the company. Lefatshe has a licence to sell Belgian state-owned Cipal's municipal finance IT system in SA.
Contradictions
While Bitou publicly stated it canned the deal because the integrated management system was not working, Lefatshe has been told the city did not have enough money for the project. The IT firm is now pondering action against the city for damaging its reputation.
Lefatshe's group communications officer, Mbuso Thabethe, says the official cancellation letter from the municipality says the contract was canned because the region did not have the budget for it in the 2011/12 year.
The letter contains “nothing about non-performance”, says Thabethe. He says the Cipal system has been implemented in Mogale and Westonaire and works well in those regions, and any allegations to the contrary have been disproved.
Thabethe says the mayor's open letter was “quite upsetting” as the company initially heard about the cancellation from the public space. “Does the right hand not know what the left is doing?”
The letter damages Lefatshe's reputation, and the company will discuss what to do about it and will not just “sit back”, says Thabethe. He says the company will decide what action to take in “the next week or so”.
Lefatshe is not aware of any investigation into the company by either the Hawks or the SIU, says Thabethe.
Cutting back
Bitou is struggling financially and has had to trim expenditure by R13 million. It is also looking into a R30 million loan from Standard Bank that it can tap into as needed, says Booysen. “We are walking a tightrope, but know we cannot borrow ourselves out of trouble.”
Booysen says the Lefatshe deal is “one of the most troubling facts to emerge so far out of Bitou.
“We have unfortunately not achieved all that we set out to achieve. In retrospect, our plans were perhaps a bit over ambitious and we had certainly not bargained on what needs to be fixed before we can really move forward.”
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