Not so Choice ConvergeNet!

ConvergeNet CEO Pieter Bouwer Laments - "This is our first exposure to the black art of liquidation in this country".

I say kak man!

On 13 December 2009 I sent out a rather tongue in cheek Newsletter.

Quote: “Ruminating over these pages (SAICFM) and the Newsletter in general soon after reading this mornings electronic Sunday Times I was struck by a strong sense of déjà vu as the following headline caught my eye -Absa has bad news for its shareholders; BankNotes Dec 12, 2009 11:09 PM | By Stuart Theobald.

What struck a chord were the following paragraphs – “Apart from Blue, it also has a 26% stake in investment company Sekunjalo - that's carried at R71-million on the balance sheet but is now worth only R39-million. The last of the four headaches is ConvergeNet, on the balance sheet for R58-million but now worth R41-million.

When added to the first six months write-offs, the total for the year will be R1.5-billion of write-offs linked to the single stock futures debacle.” 

As my wife says, “The problem with free advice, is people attach no value, because it’s free and as such carries none”. 

Vesta Technologies Holdings, in which the majority of shares are owned by the Morrison Family Trust, was to be acquired by its CEO, Fred Morrison.

Vesta's performance over the past few years has been poor and its net asset value at the end of its last financial year was only R1,6 m.

But I notice this about some of the architects behind the revival of Vesta.

Deon van Rooyen, a chartered accountant (CA), resigned from ConvergeNet soon after the reconstruction of Vesta into ConvergeNet Holdings quote “happily retaining his shares in ConvergeNet Holdings” unquote.

Well why he left is apparently because he had some or other “conflict of interest” emerging.

So naturally I follow the accountant and find him taking up first a “consultant” position at Sekunjalo and then an “Executive Position” at a company in the Sekunjalo stable called…  “Synergy”.

Listed on the Board is one LC Jones?

In March 2007 ConvergeNet acquired 100% of the issued share capital of ConvergeNet SA (Pty) Ltd, 51% of the issued share capital in Structured Connectivity Solutions (Pty) Ltd in April, 51% of the issued share capital in Sizwe Africa IT Group (Pty) Ltd in June and 74% of the issued share capital in Telesto Communications (Pty) Ltd also in June.

Sometime later ConvergeNet Holdings acquire a further 5.2% in SIZWE Africa IT.

Then the entire matter starts becoming more convoluted than a re-run of Dallas .

On or about April 2006 Frederick Morrison, founder of Vesta Technologies, offered to buy out Bevdev, after which the company will change its name, restructure its capital and try to acquire new assets in order to maintain its JSE listing

Follow BevDev and you find more losses and failed deals than even Cliff Barnes could pull off.

I arrived at the appointment of two names to a company that appear directly linked to the Board of a company called ConvergeNet Holdings that grew from a company owned by the same man who left a similar trail of wanton destruction under another stock on the JSE - Vesta.

In fact the architect of the “ Phoenix ” ConvergeNet Holdings is a “Deon van Rooyen” a Chartered Accountant who promptly resigns from ConvergeNet Holdings on “conflict” grounds to act as consultant to Sekunjalo where he winds up on the Board of Synergy.

If it’s the same guy because I’m getting both a Martin Deon van Rooyen and a Deon van Rooyen.

It also seems that behind Marcape (Pty) Ltd as a nominee for Eagle Fund Managers (Pty) Ltd (EFM), “has acquired control of Emergent in terms of an agreement dated 15 February 2008” is, you guessed it again, a Mr. MD van Rooyen registered with the FSB as “Compliance Officer”.

Also on the Board of ConvergeNet Holdings appears a Sandile Swana also on the Board of Emergent.
It seems while confusing to some, to me at least that there are sinister forces at play on the Boards of ConvergeNet Holdings, Synergy (Sekunjalo), SIZWE Africa IT (and a host of Subsidiaries) and BevDev CC.

That “fleas” analogy springs to mind.

What’s my point in all of this?

The recent article by Nicola Mawson in ITWeb - JSE-Listed ConvergeNet is being sued for R37 million for pulling out of an 11th-hour deal to rescue the now defunct Choice Technologies about two years ago.

ConvergeNet CEO Pieter Bouwer laments – “This is our first exposure to the black art of liquidation in this country.”

Hogwash, I say Mr. Bouwer, you are surrounded by able bodied people who have left a trail of devastation in their wake for over a decade.

The cost to investors of all kinds, private and institutional, has run into the tens if not hundreds of millions.

So suck it up Mr. Bouwer . I’m sure you’ll defend the claim against Choice, who themselves weren’t, well very choice.

Just don’t pretend you’re not very good at it.

So what’s the free advice folks?

I just gave it.

In a State of suspended animation

There are probably only three stories that can remotely be regarded as hard news in the IT space currently, that being the state of IT at the Companies and Intellectual Property Commission (CIPC), the state or lack thereof of Governance at SITA, and the fact that there has been no GCIO since April.

Of course there are other glaring challenges in the IT space in Government but these seem to have been driven “under the radar” with little being reported in the media.There are rumours of investigations into contracts and tenders in the ICT space at the SAPS, however there is very little being given away there either.

It’s as if the “off button” has been hit.

I’m not sure what it all means but there are signs of a catastrophic battle brewing somewhere in Government, preceded by two defining indicators, namely the Hawks setting out rather publicly to raid the Department of Mineral Resources seizing computers and documents from department and Imperial Crown Trading in a probe relating to Kumba Iron Ore’s fraud allegations last week.

This was almost immediately followed on Sunday by the revelation that two Hawks investigators having been told to informally approach relevant authorities in Sweden (the Swedish National Anti-Corruption Unit) and the UK (Serious Fraud Office) to assess information to determine whether there’s a criminal case to be answered in South Africa in relation to the Arms Deal.

Now call me paranoid, neurotic, narcissistic or just a plain rightwing, left wing, blerrie agent or fool, but damn if the raid against ICT isn’t a full frontal assault on the son of the current President, the grandson of the ex-President and allegedly the companion of the current Deputy President?

Now, I’ve also been reading the armchair and mainstream Political commentary surrounding the move by the Hawks to send investigators to Sweden to “informally” approach relevant authorities.

There is a high level of cynicism, justly so, in regard to the spirit, intent or chance of something actually coming from this visit.

The statements are after all extremely wishy-washy and without much substance.

I’m also a victim of Verwoed, Brezhnev, Reagan, Castro, Njoma, Savimbi, Hani, Derby Lewis and the rest to the extent that I am probably more wide awake than any would wish to give me credit for.

So much so that the signals sent in these two seemingly disparate events ring in my ears a warning claxon as loud as any on a Bullet Train and just as meaningful.

The President has warned before he will expose all in the Arms Deal when he was attacked previously through the charges brought against Shaik and dropped against him.

The current move against ICT by the Scorpions may not be against the President in office but it is most certainly an attack against him in name?

I am left with the ominous sense that while the wishy-washy Hawks statement may seem, well, less than OMO, there is an underlying potent message, a deadly message, a declaration of intent that simply pulses with menace.

It is the manner in which these two matters clatter ahead in parallel that leaves me glued to the news in anticipation of what is to come as the ruling party once again aligns itself and prepares to battle itself for supremacy.

The massive sparkle and spend that has been a hallmark of the ANC administration in the late 1990’s and throughout the 2000’s in the IT space has almost reduced to a fizzle.

The inertia that has seemingly crept in is I deeply suspect a consequence of the massive upheaval within a Political Party on the precipice of an all out debilitating war with itself.

Any contract of any consequence with the remotest possibility of impropriety is immediately pounced on by a vigilant, opportunistic opposition and strident media, alerting the Ruling Party by proxy and consequently providing the factions at war in the Ruling Party with valuable intelligence on their internal foes and their activities.

The apparent quiet in most sectors creates an impression that this may very well be the consequence of a new found collective conscience, or the worst economic downturn since the Great Depression.

Don’t let that fool you.

The Public Protector’s report is being studied; there are this investigation and that investigation, while the Ruling Party and its deployed Cadres in Government keep their heads down across the country to avoid the inevitable shrapnel.

It’s as if I am looking at a Government in suspended animation.

There is in this seeming calm, a quiet before the storm, a storm that is inevitable.

Having said this, it’s important to plan ahead.

Don’t expect improvement in investment spending, don’t expect great strides in service delivery, and don’t hope for improved infrastructure spending either. In fact don’t expect much of anything.

For the foreseeable future.



© IWeek Magazine

The sheer buggery of it

ITWeb reports “a consumer protection body created by the CPA is ready to force mobile operators to allow SA's 10 million subscribers to carry over minutes and data bundles for three years, getting rid of the current “use-it-or-lose it” policy.

The National Consumer Commission (NCC) says the Act's provision that vouchers can only expire once fully used, or after three years, applies to data bundles and the so-called free minutes that are sold with contract packages.

However, despite the three-year rule, call centre staff are telling subscribers that bundled free minutes can be carried over for a maximum of six months, while data can only be rolled over for two.

SA's largest mobile operators will not officially clarify when bundled minutes and data expire, or whether they will comply with the commission's standpoint.

Instead, the operators argue, clarity will be provided after the Independent Communication Authority of SA's (ICASA's) exemption application – to have some parts of the Act fall under its jurisdiction – is finalised.

The CPA, which came into effect on 1 April, states a “prepaid certificate, card, credit, voucher or similar device” does not expire unless it has been redeemed, or until three years after the date of issue.

Arthur Goldstuck, MD of World Wide Worx, says

It took the networks years before they allowed data to be carried over for just a month,

 “They've turned deaf ears to the criticism that they are in effect creaming a huge proportion off the top of customer payments for bundled services.”

I like most of you, am a “data bundle” user.

I can never determine what portion of my “bundle” I will use.

In fact, when the time comes to “lose” my remaining data bundle, do I do a “bundle dump”?

Here’s the thing, I pay for the data bundle, and it’s mine. Why if I don’t use it within a predetermined time should I lose it?

Apart from the pure muggery of it, I am equally concerned with the attitude of the mobile operators.

It seems to me they are displaying the same complete disregard for the rules as those that have come to make ignoring norms and values a national sport.

From the Board through management and stakeholders such as employees and shareholders, these operators are populated by citizens who have families.

In fact the beneficiaries of these operators largess must run into the tens, if not hundreds of thousands of people, people who will be quick to bleat about this abuse or that abuse of State, or this or that level of crime or disregard for the law on the part of Government.

They are the first to shout about an injustice against them, loudly.

“Someone must act to stop the corruption”, “someone must stop the crime”, “someone must do something about healthcare” etc.

Always “someone”... someone else yes!

I’ve asked the question before, how is it we shout so loudly about corruption and crime, when we are happy as a society to live with the perpetrators in our families and in our communities.

It seems we only moan about the buggery of our society when we aren’t the beneficiaries of the proceeds?

The underlying greed that underpins the pursuit of profit supersedes all logic or sense of fair and equitable.

Protecting the bottom line at all costs and then making an entire organisation complicit in your attempts to deny the rights of tens of millions is nefarious to say the least and is as odious as any Politician or government employee taking a bribe or violating procurement processes.

Look, I generally just grin and bear it. I have many fires to put out and battles to wage. I can afford to write off R50 or R60 or R100 worth of data bundle.

The thing is, I was not born with a silver spoon in my mouth, in fact, I got the wooden spoon.

I feel deeply connected with anyone fighting for their piece of sunshine, so when I think about how important data communication is today and value inherent in the access to information this affords I naturally think about the millions for whom R50, or R60 or R100 worth of data means the difference between empowerment, or disenfranchisement, success or failure.

The mobile operator’s stance as set out in the ITWeb article is repugnant, reprehensible and morally corrupt.

I have a word of advice for the mobile operators and all the beneficiaries of their profits, the next time you find yourself on the receiving end of an injustice, of a violation of your rights, do me a favour, put up or shut up.

Don’t use my Fraud Report Hotline and stop expecting “someone else” to defend you or protect you when you’re shafted.

Bleating about your rights as a “tax payer” does not absolve you of your duty to be human beings?

There are hundreds of thousand of subscribers in essential services that rely on your service, that pay to stay in communication out their own pockets, if not for me, for them, show some class man and demonstrate at the minimum good corporate citizenship by complying with the reasonable request to let people own what you sell them and use it when they want.

Loopy da Duisberg loop

This week I read the Sunday Times story, “Another bomb drops on the dodgy arms deal”, I assimilated and digested but didn’t seem to learn anything.

I discovered a few new titbits, but learn, nope?

That got me thinking, what’s the purpose of reading all these damned depressing news articles or the papers at all?

I decided to justify the sheer waste of my remaining time on earth to try justifying what has always been a favourite pastime, reading the papers, by trying at least to suck some juice from the information I was “assimilating”.

According to the prescient article, in terms of the strategic defence package signed on December 3, 1999, BAE/Saab incurred an offset obligation under NIPP.

The NIPP programme, administered by the dti, required any state purchase in excess of US10 million from firms selling foreign products to effectively reinvest in South Africa.

BAE/Saab, who supplied the 24 Hawk and 26 Gripen fighter jets, were obliged, in terms of the contract, to reinvest a total of US7.2 billion in South Africa by 2011.

Apparently the dti is responsible for monitoring the NIPP.

Two reports commissioned by the dti suggested that there were problems relating to BAE/Saab's compliance with the NIPP.

A report, prepared by SAB&T Chartered Accountants, relating to BAE/Saab's involvement in a defence department demilitarisation project, found that 'government was not getting ‘optimal value', while another report, prepared by NAD Auditors, relating to BAE/Saab's involvement in Denel Saab Aerostructures, suggests that there was a failure to meet 'key performance areas'."

I guess this is information designed to inform, not to instruct or teach.

Usually one needs to be kept informed to enable objective decision making, assuming a decision is expected or required.

When it comes to the arms deal I’m not sure what the point is because there has been neither decisive expectation nor requirement it seems, from Government at least and more than half the South African population?

I figure if BAE/Saab, who were obliged, in terms of the contract, to reinvest a total of US7.2 billion in South Africa there must be some evidence of this and visited the BAE website in search of some information in this regard.

I found an article, a Press Release, “The BAE Systems-Aerosud strategic alliance forms part of the reciprocal Industrial Participation programme flowing directly from South Africas procurement of Hawk and Gripen fighters from the UK defence and aerospace group and its Swedish partner, Saab.”

Ah, evidence of the much vaunted NIPP, yes.

Aerosud, a South African company were involved in manufacturing the Rooivalk attack helicopter and hold deals worth hundreds of millions from various foreign defence companies.

Airbus Military spokesman Linden Birns confirmed that Aerosud, along with Denel-SAAB Aerostructures are full industrial partners in the A400M project.

ANC heavyweight and Speaker of the National Assembly Max Sisulu held shares in a multimillion-rand defence and aerospace company which is set to make a killing out of the controversial R47-billion deal to purchase eight Airbus A400M transport planes.

Sisulu, along with Jackie Mufamadi, “the wife of the former local government minister”, and Herman Mashaba, a tycoon entrepeneur are listed as shareholders of the company along with Foreign Affairs spokesman Ronnie Mamoepa and Titus Mafolo (Thabo Mbeki’s former presidential adviser).

These esteemed leaders held the shares in Aerosud through a company called Phatsima Aviation.

The Chairman of Aerosud is none other than Defence Minister Joe Modise’s wife.

The Industrial Development Corporation acquired the shares in 2003 when they injected capital into Aerosud.

Shakeel Meer, IDC divisional executive: industrial sectors is quoted as confirming that the shares the corporation had transferred to Phatsima in 2005 had been warehoused for Aerosud, as part of an agreement that the company would undergo a BEE restructuring. 

He said that the IDC did provide funding for the transaction, but said this money was put up by Aerosud. 

So the question is, were these Politicians doled out free shares in arms deal companies on the back of the arms deal?

Maybe they paid for them?

Strange though that the NIPP programme is administered by the dti, and that Phatsima Aviation address happens to be Berea Terrace Office Park, 3 Berea Terrace, Berea 5201, PO Box 19376, Tecoma, East London 5214?

Strange because this is also the address of a company called True Group Investment Holdings (Pty) Ltd, a company that targets and provides funding to the niche middle-to upper segment of the SME market.

Strange because Khula Enterprise Finance (Ltd) lists True Group Investment Holdings (Pty) Ltd as a Retail Financial Intermediary on their behalf?

Strange because Khula Enterprise Finance (Ltd) is a dti entity?

What’s not so strange is the fact that Aerosud is a cash cow, that in discovered documents in the International Tax Law Institute (ITLI) vs FirstRand matter, Aerosud’s CEO Pierre Dippenaar relied on his boet Laurie’s company to invest some of his moola in a Duisberg loop in the Caymans.

So what does this week’s column have to do with IT?

It was made possible by Google.