South Africa: City of Johannesburg owes tech supplier millions


Masana Technologies is owed millions by the City of Johannesburg, after 1,200 invoices have not been paid, the liquidator says. Masana filed for provisional liquidation on 20 August, as it was unable to pay creditors the roughly R100 million they are owed.

Liquidator Rubin Miller, from RMG Trust, says the company would have been able to continue running had the city paid it the R64 million that both parties agree is owed. He says Masana believes it is actually owed R90 million. In addition, a failed project for the city left the technology company carrying the can for R40 million a few months ago, he adds. “If they had been paid on time, they could have carried on and covered their losses.”

According to Masana's Web site, it took over outsourcing of the city's IT in 2005. The SAP project was delivered in 2006 as was the human resources implementation. It was also involved in the SAP solution to collect revenue and put a customer relationship management system into place. The project was called Phakama, but has not yet gone live.

Last week, the city denied it owed any outstanding money. Gabu Tugwana, director of communications at the city, stated: “We do not accept that the city has not been paying Masana.” He said the city pays its service providers. However, because the city has failed to pay in a timely fashion, staff will lose their jobs as the company will fold, says Miller.

Masana's contract with the city was cancelled the day it filed for liquidation, which means there is no reason that it may be bought out, he adds. Miller adds that the company had a new management team in place, which was turning the company around.

At the moment, the City is trying to put a stop gap solution into place, while it negotiates with another supplier, believed to be Dimension Data, to continue the contract for another year. The deal is worth R18.5 million a month, says Miller.

Most of the IT staff, about 120 employees, are likely to move with the contract, but 26 sales and marketing staff have been retrenched. Some of the 20 administrative staff will retain their jobs as the books need to be sorted out, adds Miller.

The matter returns to the South Gauteng High Court on 29 September and – if a final order is granted – the company will be wrapped up, says Miller. The city did not respond to queries about the liquidator's claims.