- Indian businessman clones Govt IT System and sells it to LEA
- Trail of E-mail correspondence exposes rot in the system
- LEA pays P6 Million to Oracle in license penalty fees
- Annual Audits exposed to manipulation
- System amenable to fraud and non-compliance
- LEA drags SAiS to court
LAWRENCE SERETSE & SONNY SERITE
Local Enterprise Authority (LEA) is facing a multi million Pula lawsuit from an American based software developing giant after a local IT company supplied it with customized and cloned database software violating user licenses, a serious crime under both the US and Botswana piracy and copyright laws.
Not only is LEA paying Oracle Systems over P6 million on charges of using a database with manipulated software, the poor organisation has already coughed out over P43 million for database creation, software application, systems maintenance and refurbishment over the last 7 years.
It has been discovered that LEA bought hardware at over P15 million whose market cost was less than 4 million, supplied by SIT Group to LEA as part of the contract. The Dell Equipment has hardly ever served its full purpose of providing data recovery and backups for the organisation and performance. Part of the P43 million was apparently spent as consulting services from the Indian owned company over the first 5 years of their support contract. It gets worse, for the millions of public funds that LEA has already spent paying the software supplier, due to over 80% customizations of the system, it has never functioned to its fullest expectations to date, documents and email evidence reveals Oracle’s Senior Technical Architects stating this in his findings.
In this comedy of chaos, LEA has in turn dragged the local supplier of the IT database software before the courts demanding repayments because Oracle refused to take responsibility for customizations that now affect LEA’s daily operations.
HOW DID LEA GET IN THIS MESS?
Software Application and Information Solutions (SAiS), an Information Technology company owned by Indian businessman Bhaskar Nalamalapu was contracted by LEA in 2009 to design, develop and implement a database system termed the ‘core IMIS’ which comprised of Human Capital Management (HCM & Payroll, Financial Management System (FSM) (and SCM), Business Intelligence, and Performance Management System. Of these modules, the Business Intelligence and Performance Management System have never functioned from the day of inception but LEA has been paying licenses for these unused to date.
The project commenced in August 2009 and completed in 2010. This was followed by an initial one (1) year Support and Maintenance contract from SAIS at a cost of P27, 620,946.28 which included the production of the Statement of User Requirements (SOUR) , project management support, the design, development and implementation of the ‘core IMIS’ and other related and ancillary costs. Of this amount, P21.5 million was the direct cost for the ‘core IMIS’ software, hardware and associated services. The support and maintenance cost for the database is currently P84, 672 per month or P1, 016, 064 (VAT inclusive) annually for the following years.
The implementation of the full scope of this database system was expected to yield improved efficiency and effectiveness as LEA was moving from manual to automated processing, improved knowledge sharing, platform for consolidated performance management and monitoring at both tactical and strategic levels and a single data source for management report processing and analysis.
The Botswana Gazette investigations reveal that email correspondence between LEA executives and officials from SAiS, Oracle Consulting and Nexim Solutions raised questions as to how LEA may have been duped into paying millions of Pula for a system that has become unfit for purpose.
Investigations also reveal documentary evidence that the system that SAiS sold to LEA was cloned from the Botswana Government Accounting and Budgeting System (GABS) and has been showing deficiencies since 2010 leading to operations such as salary processing being done manually and on Excel spreadsheets. IT experts say that customization is allowed but SAiS is accused of not following the Oracle universal standards of operation and also refusing with the customization “script code” for LEA to troubleshoot its system.
The government of Botswana procured GABS from Tata Consultancy Services and RPC Data in 2003 at a cost of P54million. Tata Consultancy Services is the same company that was in 2013 awarded the tender by Central Transport Organization’s (CTO) to Design, Develop and Implement the Interface between the Fleet Tracking Management and Maintenance System and Government Accounting and Budgeting System (GABS) at a cost of P3 million.
Nalamapu’s consultants who helped create the cloned system were part of Tata at the time the company implemented GABS at government enclave, documents reveal.
Email correspondences shows that LEA experienced challenges with the system acquired from Nalamapu’s company (SAiS) but could not ascertain where the problem was, the cause of the problem or how the problem could be resolved and who could be associated with the problem until LEA was ultimately advised by its new consultant what the issues were.
Documents indicate that LEA had long sat on a 2013 report from DCDM Consulting who had advised that ‘‘SAiS did not follow Oracle standards for customisation schemas, table design and control files’’.
In their findings, captured in a report dated 14 June 2013, DCDM reported that password security management practice at LEA was not in accordance with Oracle standards and was therefore a high security risk.
Oracle Consulting was also engaged by LEA to execute a CEMLI Analysis on the database and advice on whether the implementation was completed in line with Oracle Standards. In their findings, Oracle discovered that no Training and SOP (Standard Operating Procedure) documentation were in place and completed to acceptable levels and that report the system was prone to security vulnerabilities.
According to a letter dated 27 January 2016 written by Nexim Solutions to LEA executives titled ‘State of the ERP System and Support Contract at LEA’, the IT System at LEA was found to be wanting in many areas including the integrity of the data hosted in the system. Nexim Solutions was awarded the tender to take over from SAiS on April 2015 whereupon they claim to have discovered some anomalies in the system that was installed by Nalamapu’s company.
Nexim referred this publication’s enquiries to LEA while SAiS was not available for comment as the phones rang unanswered.
However, intercepted communications and records from our sources have unearthed a confidential letter authored by Nexim Solutions and addressed to LEA Chief Executive Officer Tebogo Matome, raising concerns about severe data integrity issues in the multi million pula system. ‘‘Tax Computations for the Financial Year 2014/15 were done manually by Nexim and HR Department due to failure of the system to handle the process. This had to be computed externally in Microsoft Spreadsheet for each employee’’, reads part of the confidential letter from Nexim. He also indicated that such a process led to high risks of data exposure, errors and/or perceived fraud as this was done outside the system.
‘‘Historically, this has been indicated to be an annual trial and error process and this is a huge risk for LEA as it has the potential of causing serious reputational damage as ex-employees are affected by the process. The last Audit performed by PWC was inundated with issues pertaining to data quality, data completeness and data integrity issues during extraction’’, continues the letter from Nexim Solutions to LEA CEO Tebogo Matome.
Nexim alerted LEA that they have failed to extract usable reports from the system as most of the data was either showing strange patterns and/or computations until previous supplier, SaiS was brought back on site to run their custom external scripts to extract the required data. This essentially meant that LEA could not operate the database unless SAiS is in the building to troubleshoot the system every now and then, hours which they still billed LEA heavily for.
Nexim Solutions also raised concern over the failure by SAiS to submit official handover notes and “script key” for the system to assist Nexim as the new consultant for the database. In its court documents, LEA confirms that Sais continues to be in possession of what does not belong to it, the handover notes.
Prior to that, LEA had engaged another company, DCMD Consulting in 2013, for the ‘Provision of Oracle Post Implementation Review’.
DCMD Consulting’s scope of work involved among others,the review of system completeness, effectiveness, correctness, solution design and overall implementation. In their report dated 26 April 2013, DCMD Consulting remarked to LEA that the database system implemented at a significant investment of P21.5 million was underutilised. ‘‘The ultimate result of this scenario is that LEA is not achieving much Return on Investment (ROI) since LEA is not a revenue generating entity’’, reads part of the report.
Information gathered by this publication indicates that upon discovery of gross license violations from 2009 to 2016 it slapped LEA with a P120 million lawsuit which LEA negotiated and pointing the blame on the supplier. Oracle only settled for P6 million in penalties which LEA is demanding through the courts that SAiS pay for.
LEA SUES THE SUPPLIER
Angered by this LEA engaged in a legal brawl with SaiS and in its 2015 confirmatory affidavit of CASE NO.UAHGB – 000224 – 15 former LEA IT employee Ephraim Kentse told court that, “ even ORACLE Company (owners of the system) have been unable to resolve its problems because of the customization by SaiS.”
“The system worked for the past years when the SaIS was engaged. During that period the Applicant never had to run or maintain the system without the assistance of the SaiS. However, it is admitted that SaiS met with me to try to tender an explanation but I was not aware that certain deliverables had not been submitted which ought to and would help identify the cause.” Kentse stated in an affidavit where he also remarked that Sais refusal to handover the notes indicated their bitterness as they had lost the contract to Nexim.
“The Applicant is bitter that it was not a successful bidder” hence the withholding of the required “script key” information stated the affidavit.
In subsequent contempt of court proceedings for failing to provide the “script key” to render the system operational, LEA sought the imprisonment of SAiS director _Second Respondent in the matter. In its affidavit answering SAiS opposition to the contempt proceedings LEA stated that “denied that there is no reason for the order for imprisonment sought against the Second Respondent. The Second Respondent as stated in the founding affidavit is the controlling mind of the First Respondent –SaiS Company. He is the only person who could deliver the requested documentation. The source code is admitted, it might be in the system. It is impossible for the Applicant to know or identify the source code. It must be noted that a source code consists of the programing statements created by the programme in this case the First Respondent and its agent.”
Boikhutso Kgomanyane, Director – Corporate & Stakeholder Communications at LEA said she was unable to comment stating that, “The issue you are referring to is currently undergoing legal processes, hence the Local Enterprise Authority is unable to comment on it until discussions are complete and decisions are made.”