The world's largest networking company, Cisco Systems, has pulled out of President Thabo Mbeki's international technology advisory group, it emerged last week. The think-tank was launched in 2001 so Mbeki could seek advice from world leaders on using information and communication technology (ICT) to boost social and economic development.

Cisco apparently pulled out because its former GM in SA, Clive Flynn, saw a conflict of interest in advising the government, then trying to sell its technologies to state departments and parastatals.

"Our GM left the committee because it was a conflict of interest to be making recommendations of policies for the South African government about ICT and at the same time being in a company selling technology," said Julian Lighton, Cisco's vice- president of business development. "There is a natural conflict if you are bidding for a contract on which you are also advising the government.

"We wanted to be open and clean in the way we were doing business. We wanted to remove ourselves so we can be an honest adviser to the government and at the same time maintain our commercial arrangements with the State IT Agency and other parts of the government that are buying technologies from us."

The decision to withdraw may also have been influenced by frustration that the advice of world leaders was not turned into action. Other members of the committee have expressed that grievance in private, although none of them criticises the think-tank openly for fear of wounding their chance of winning public sector tenders.

The Presidential International Advisory Council on Information Society and Development was launched with high-profile members including Oracle CEO Larry Ellison, previous Hewlett-Packard CEO Carly Fiorina, Teledesic CEO Craig McCaw and South African billionaire Mark Shuttleworth.

Such IT luminaries are used to working at light ning speed, as their survival depends on spotting the next trend and jumping right in. They have little patience with advising politicians who will not listen, or who listen but procrastinate. Oracle's Ellison has given Mbeki advice in the past that was not heeded.

Ellison advised Mbeki to fully privatise Telkom years ago when telco stocks were soaring, and to license multiple phone companies to provide high-speed, low-cost calls and internet access.

Likewise, the committee has repeatedly urged the government to privatise and deregulate the telecoms sector, give tax breaks to hi-tech companies, welcome skilled foreigners, subsidise internet access for schools and throw money into IT education more closely matched to the skills needed in the jobs market. Every year the same advice is repeated.

Lighton acknowledged that Cisco had clashed with the government on the process of creating the second network operator, Neotel. Cisco had disagreed with how Neotel was set up and the technologies it would use "based on the needs of the government and what it was supposed to do," Lighton said.

Cisco was far from alone in criticising the inclusion of state-owed enterprises Transnet and Eskom Enterprises in Neotel's consortium. The subsequent inclusion of two failed bidders and the long-winded searches for foreign investors was also widely slated. "I don't think many people are overjoyed" with the outcome, Lighton said. "In the final analysis it wasn't our place to tell them how to do it."

Since pulling out of Mbeki's advisory committee, Cisco has changed its structure in SA. It now has a non-executive chairman separate from the operational managers to avoid any conflict that could arise when Cisco was asked for advice, Lighton said. That would let Cisco "participate much more healthily in advisory roles" if asked to do so.

The restructuring of its operations in SA saw Flynn step down last year. Cisco is forming two new divisions, Cisco Capital, to help customers fund their technology purchases, and Cisco Advances Services, to handle its most sophisticated products.

Both will be 25% black owned, although the black shareholders are yet to be selected. Cisco SA GM Steve Midgley, said the process was on track. "We are in the discussion stage. There is a whole project on the go and we are steaming along." He said Cisco would emerge as an empowerment leader compared to other multinational hi-tech players once its equity deals were concluded. "We have made great strides in our employment equity because 55% of our are staff are previously disadvantaged and 30% of all our employees are female," Midgley said.

Business Day