SITA board head under fire

Questions have again been raised about State IT Agency (SITA) chairperson Zodwa Manase and her fitness to lead an organisation, in light of her criminal conviction for late payment of employee tax.

This comes amid a ministerial investigation into SITA, by a task team established by public service and administration minister Richard Baloyi. The team's mandate is to probe the workings of SITA with a view to reposition the organisation as government's “IT agent of choice”.

]Manase is currently serving her second term as chairperson of the SITA board, previously holding this position from 2003 to 2005.

Fingers are increasingly being pointed at key people within the organisation, as an apparent rift between the board and executive has formed in recent times. The spat reportedly gained momentum with the acrimonious resignation of CEO Llewellyn Jones last year, with many within SITA feeling the board is interfering with the day-to-day running of the agency.

Several insiders and sources close to SITA have questioned why Manase, who received a 12-year suspended sentence in 2004 for failing to comply with the Income Tax Act, Act 58 of 1962, as amended, should hold a position of public office.

Manase has held various high-profile financial management positions at companies such as Shell SA, CG Smith (Smithchem) and Spoornet. In 1996, she set up an audit firm - Manase & Associates - of which she is the CEO.

It is in this position that Manase ran afoul of the law. In 2004, she was charged in the Durban Magistrate Court with, and pleaded guilty to, 12 counts of failing to pay employee tax to the South African Revenue Service (SARS).

She was eventually sentenced to 12 months on each count, suspended for five years, on condition she repays the outstanding amount of R1.4 million - broken up into instalments of R300 000.

Manase has, however, downplayed the seriousness of the conviction, saying it does not disqualify her from leading an organisation such as SITA, or sitting on the board of an institution such as the Reserve Bank. The conviction and sentence, she adds, was unduly harsh, as she had expected to pay an admission of guilt fine, instead of receiving jail time.

In this case, I found myself not being paid by government and I got shot. I submitted returns, but I was unable to pay the tax on time.

Zodwa Manase, chairperson, SITA

She explains the reason for her failure to pay employee tax was a result of her business experiencing financial difficulties, due to late payment received from clients.

“In this case, I found myself not being paid by government and I got shot. I submitted returns, but I was unable to pay the tax on time.”

She claims that, in terms of the Companies Act, conditions that disqualify an individual from being a director or board member of a company, usually related to a conviction for “dishonesty or fraud”, do not apply in her case.

“These issues were raised in 2004, when I was chairperson of SITA and a board member of South African Reserve Bank. Those questions were asked at the time and the conclusion was that I am still fit to be a board member.”

Financial misconduct, in terms of the Public Finance and Management Act, also does not apply, says Manase, as she had not been convicted of an offence relating to a public entity, such as SITA.

“The big thing is that I submitted returns and I couldn't pay - that is it. It is just unfortunate what happened after that... the prosecutor was asking for a fine of R500 [per count] and I don't know how it [the conviction] went through. I expected to go to court and to pay a fine, especially as I had already made arrangements with SARS to pay the money back,” she states.

“So, in terms of the law and even in terms of substance, it does not mean I can't lead an organisation.”

In fact, says Manase, both SITA and the Reserve Bank asked her to stay on last year when her term expired.

“The key thing is dishonesty and fraud, and not paying because you don't have money is not dishonesty. It is actually just saying you don't have money - and you are faced with either not paying or liquidation. In fact, most small companies will face this when exposed to government and it doesn't pay.”

So, in terms of the law and even in terms of substance, it does not mean I can't lead an organisation.

Zodwa Manase, chairperson, SITA

To support her claims, Manase gave ITWeb a copy of a letter written by SARS, to Manase & Associates, dated 11 November 2004, which states: “It is clear from the history of this case that the taxpayer had serious financial difficulties, hence failure to comply, fully, with the law. The taxpayer is currently adhering to the arrangements made and it is envisaged there will not be a repeat of the previous situation.”

Manase currently also serves on the board of state defence group Denel, where she chairs the audit committee, and is a board member of the South African Reserve Bank, where she is also a member of the audit committee.

According to an online r'esum'e, Manase is a qualified chartered accountant with BCom, BCompt Hons from the University of SA and Higher Diploma in Tax from the University of Natal.

The document notes Manase is “actively involved in ensuring the implementation of transformation, efficiency and good corporate governance in government-owned entities”.

In the past, she has served on the boards of the Central Energy Fund, Soekor, Mossgas and the Medical Research Council. “She chaired the audit committees of these boards and was instrumental in ensuring the implementation of the new Public Finance and Management Act, whose main objective is to ensure government entities are managed efficiently and effectively,” the r'esum'e reads.

However, sources close to SITA point out that Manase is charged with the task of oversight, governance and ethics in her various capacities on the boards on which she sits.

The fact that Manase is willing to argue a criminal conviction and downplay either the weight or import of the findings is indicative of the pervasive contempt with which some in high places hold the law.

A source close to SITA

“The fact that Manase is willing to argue a criminal conviction and downplay either the weight or import of the findings is indicative of the pervasive contempt with which some in high places hold the law,” says a source.

“Every criminal has a rationalisation and justification for his or her misdeeds; however, it is up to the criminal justice system to process these cases and reach a conclusion.”

Another SITA insider notes the fact that Manase is a chartered accountant and a holder of a Higher Diploma in Tax weighs against the findings and not in her favour.

“What Manase's continued involvement in her capacity on the various boards does is create a climate of hypocrisy and sends a message to labour that financial integrity, corporate morality, governance and ethics are buzzwords and lip-service and not something to take seriously.

What Manase's continued involvement in her capacity on the various boards does is create a climate of hypocrisy.

A SITA insider

“It is precisely this attitude that has given rise to the perceptions that have served to drive SA down the Transparency International Corruption Perception Index with monotonous regularity.

“It has become a blight on our country's image, nationally and internationally, where high-placed officials are convicted criminally and continue to serve in senior positions, while the poor are almost invariably sent to jail.”

It is likely that few, if any, of the current board members and executives will survive the task team's investigation, as Baloyi has foreseen “sweeping changes” across the organisation. Baloyi, speaking to ITWeb earlier this year, would not comment on any individuals in key positions at SITA, saying the outcome of the investigation would shed light on who was suited to serve the agency in any particular capacity.

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