South Africa, Business

ANALYSIS : Gijima’s Groundhog Years

By Mandy De Waal 19 May 2012

Another year. Another massive government contract stalled. Another anti-corruption agency investigation. More staff retrenchments. The more things change, the more they seem to stay the same for tech billionaire Robert Gumede’s Gijima. By MANDY DE WAAL.

AD2012 looks set to be another annus horribilis for Gijima, the ICT company owned by ANC benefactor Robert Gumede and run by Jonas Bogoshi.

Gijima started the year with the share-dropping news that the public protector would probe one of its government contracts.

A month after the anti-corruption agency’s announcement, Gumede’s tech company filed an urgent interdict against the State IT Agency after Sita cancelled Gijima’s hardware and support services contract with the South African Police Services. Gijima and Sita reached an out-of-court settlement on the SAPS contract toward the end of February, which amounted to R20-million or a month’s notice.

On 2 March, JSE newswire SENS announced that Gijima’s Debbie Zwane-Chikura was stepping down as Chief Operating Officer and an executive board member, to “pursue other interests with immediate effect”.

Three days later, more SENS news. This time Absa was cleaving Gijima’s multi-million rand outsourcing contract in half. There was a brief respite in April, but as May arrived, reports broke of Gijima’s involvement in the South African National Roads Agency Limited’s  Gauteng e-tolls.

This week, more bad news as Gijima employees learned they’d be getting the chop. But Gijima didn’t quite call it that – the company said it was embarking on a “people optimisation process to improve efficiency”.

“The ICT industry landscape has changed dramatically,” the tech company’s statement read. “ICT spend globally is under pressure and commoditised offerings have become the most price-sensitive. At the same time, clients, particularly those in the financial sector, have come under pressure to be even more competitive following global acquisitions. For Gijima to adequately respond to these changes, the Company will also be streamlining its operations focusing on efficiency, nimbleness, and human resources optimisation. Focus will be on ensuring that Gijima’s cost structures remain relevant to its growth plans, market expectations, and are in line with turnover targets.”

Bogoshi said he would be enhancing “business competitiveness, and that of our valued clients, and this optimisation strategy will enable us to do just that, without compromising our track record of quality service delivery”.

The streamlining “enhancement” would see 8 to 12% of the company’s about 3,000 people lose their jobs. In numbers this means that anywhere between 250 to 350 people will be “optimised” to improve efficiencies.

The carefully worded statement may have impressed investors, customers and anyone else who had been living under a rock and wasn’t aware that Sanral’s e-toll project had come to a bruising halt. Everyone else knew that a civic action group called Opposition to Urban Tolling Alliance had won a temporary court order to stop Sanral from rolling out Gauteng e-tolls, and that the suspension was effective pending a full revision of the system, contracts and other decision making by Sanral.

Gijima was to create and run Sanral’s IT system for the e-tolls project before Outa et al put a spanner in the works.

Then there’s the public protector’s preliminary investigation into “allegations of tender irregularities and improper relationship linking the company that won the E-toll system tender with the Arms Deal company”, after three separate complaints lodged by the DA Institute for Accountability and former Sanral CEO Nazir Alli.

This latest round of retrenchments comes a week after Parliament was told that Sanral only had enough resource to continue in business for another six months.

While Bogoshi pointed a finger of blame for Gijima’s bad fortunes at IT markets externally, internally the song didn’t remain the same. In a staff email leaked to ITWeb Bogoshi wrote: “We have to take into consideration revenue forecasts for the new financial year, the investment required in new service offerings aligned to Vision 2025, and the investment needed to secure the company’s sustainable future.”

Bogoshi added that Gijima needed to remain competitive by optimising “resource capability and utilisation”, particularly in view of “the loss of the SAPS contract for desktop computers and Barclays’ decision to in-source more than half of our contract with Absa”. 

People were “optimised” during the Absa cut as well. That time Gijima said that of the some 200 employees working on the contract, a “significant number” would be transferred to the red bank. The rest would be… well, it didn’t say what would happen to the remainder, but Gijima is well known for retrenching when contracts go awry.

That was certainly the case in 2011, a year after Gijima’s multi-billion rand contract with the Department of Home Affairs called Who Am I Online imploded. Awarded in October 2007, the contract was mired in controversy and delays.

The Waio project was supposed to revolutionise home affairs’ manual and paper-based processes by making them real time and online, and was meant to pave the way for smart-card technology. It was also supposed to streamline processes for the 2009 Fifa Confederations Cup and the 2010 Fifa World Cup.

When the contract was awarded Gumede made sweeping statements about what Gijima’s systems would do: “… it is estimated that over half a million people will enter the country for each of the events. This is over and above the normal flow of people to and from South Africa. We are thrilled and humbled to be working with the Department of Home Affairs and State Information Technology Agency to deliver a technologically advanced system that provides immigration officials, the SA Police Services, National Health and Emergency services, Transportation and Revenue services, to name just a few, with a single view of information for each and every person that enters and leaves the country. This will eradicate red tape (in other words, manual processing) in the issuance of visas and other permits and is therefore a crucial component in the drive for organising the best Fifa World Cup ever held.” Just 50 days before the 2010 Soccer World Cup, home affairs was forced to turn to South African Revenue Services, which launched a major rescue mission to save the day. Gijima was struggling to even deliver on part of the system (border control) ahead of the World Cup, despite the fact that the project costs had doubled.

Gijima bid R2.1-billion for the tender in 2007, but when the deal was signed in 2008 the asking price had ballooned to R4.5-billion. Despite this, SARS had to step in and supplement the project so that South Africa wouldn’t have egg on its face. SARS had to run the project while Gijima was largely relegated to hardware and support.

In April 2010, home affairs declared Gijima’s contract with them invalid because of a “failure to perform”. Gijima hit back with a claim stating it had “fulfilled its obligations” and said the problem rested with the department’s insufficient human resources and incompetent staff.

A former Gijima employee who worked on the Waio project and spoke to Daily Maverick on condition of anonymity called the project a “comedy of errors”. The source said the project started in 2008 but by December 2009 not one component developed by the Waio project team was in use.

“This represents hundreds of millions of rands that have been spent for nothing,” the source said. He stated that well over a hundred Gijima staff occupied an entire floor  at home affairs at huge cost – to essentially produce nothing. The source said millions of rands worth of taxpayer funds had been spent on useless IBM software licensing, some of which didn’t even work with the hardware chosen for the project.

“This was eventually replaced by free, open-source software which did work.”

The source said expensive overseas vendors who had little local expertise, and who took unreasonably long to develop basic and simple applications, were selected.

Home affairs and Gijima staved off lengthy court action on the Waio debacle by settling out of court. This meant that contract details and two separate forensic investigations wouldn’t be opened to public scrutiny. But insiders were of the opinion that Gumede’s tech company was perceived to be too important to be allowed to fail. In terms of the settlement, the project budget was reduced to R2.5-billion, shaving a cool R2-billion off the 2008 figure.

The public protector has yet to release a report on her findings related to Gijima, Bogoshi and the Waio contract. In January City Press reported that Thuli Madonsela had appointed “a team of investigators to probe the controversial “Who Am I Online tender” and to focus on Bogoshi’s role in the awarding of the multi-billion rand deal.

Bogoshi was Sita’s chief director of strategic services from 2004 to 2007. In 2006 he lobbied for the home affairs IT budget to be increased. In July 2007 Bogoshi was appointed CEO of Gijima. Four months later home affairs formally announce that Gijima had won the Waio tender. At the time it was the largest tender Sita had ever awarded. DM

Read more:

  • E-tolls and the arms deal: another play, same actors in Daily Maverick.
  • Gijima cagey about e-toll ‘mega deal’ on BusTech.
  • Name e-tolling profiteers in Pretoria News.
  • Gijima of South Africa to Fire 200 Workers, Union Says on Bloomberg.

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