Hell hath no fury like an obscure California county that feels completely gypped (to the point that they feel it’s fraudulent) by the largest professional services on Earth.
Marin officials fired another salvo in an escalating $105 million legal war with international computer consultants, filing a new lawsuit Thursday accusing them and a former county official of violating racketeering law in a bid to rip off taxpayers.
The new suit was filed against Deloitte Consultant LLP, software developer SAP and former assistant auditor-controller Ernest Culver, who served as project director of the county’s troubled computer installation before quitting to join SAP.
As you may recall, Marin County’s original suit against Deloitte for $35 million involved allegations of “fraud, misconduct and misrepresentation” which included using ‘neophytes’ on the implementation of the county’s ERP system. The new racketeering charges are especially interesting and the Marin Independent Journal has the details:
It alleges a conspiracy, asserting consultants wined and dined Culver and interviewed him for employment at the same time Culver was approving deficient work on the project, approving fee payments and helping line up new contracts.
“County taxpayers were charged for millions of dollars in services that Deloitte failed to properly perform” and residents were “defrauded of the honest services of a high-ranking county official,” according to County Counsel Patrick Faulkner.
Deloitte denied the allegations of the original suit, saying that Marin County was actually responsible for the snafu. However, and unfortunately for Deloitte, new shit has come to light:
Faulkner disclosed that the county has combed through its computer system to retrieve thousands of e-mails issued by consultants and Culver while they worked in county offices, providing a backbone for accusations leveled by the latest suit.
The complaint alleges six violations of the federal Racketeering Influenced and Corrupt Organizations Act by Deloitte and SAP, and three counts of illegal conduct against Culver, including a violation of the state anti-corruption statute.
So it doesn’t sound like there’s a smoking gun per se but enough back and forth that adds up to this:
The lawsuit, the county said in a press release issued late Thursday, claims that when problems with Deloitte’s work surfaced, Deloitte and SAP engaged in a “cover-up that included bribing Culver to falsely ‘approve’ Deloitte’s defective work, and silencing an SAP employee who tried to intervene on the county’s behalf.”
So, in other words, pretty bad stuff. The MIJ reports that “Settlement talks are expected and while the parties remain at odds, the latest court filing could spur negotiations.” Using our best translation skills, this more or less says, “Deloitte, SAP and Culver realize they’re fucked – begrudgingly – and will be going to the table any day now to sort things out.”
The Independent Journal also reports that SAP, Deloitte or Ernest Culver “could not immediately be reached.” Our own messages with Deloitte spokemen Jonathan Gandal and John La Place were also not immediately returned.
Earlier in the summer, we told you about Marin County California, who was pretty displeased with Deloitte throwing a bunch of ‘neophytes’ at their ERP implementation project or in the County’s words ‘a trial-and-error training ground.’
As a result of Deloitte’s amateur hour, the SAP system – that Deloitte claims was just fine and dandy where they left it – is now being thrown to the scrap heap by the county because fixing it will cost more than replacing the whole system. And God knows Arnie won’t be helping them out with the bill, so they have to save on costs where they can.
The system is the subject of a lawsuit Marin County filed against system integrator Deloitte Consulting earlier this year. Deloitte used the project as “a trial-and-error training ground” for inexperienced employees, and the result was a “costly computer system far worse than the legacy systems it was intended to replace,” according to the county’s complaint.
Deloitte has filed motions against Marin County’s “completely unfounded allegations,” as well as a complaint seeking unpaid fees, a spokesman said via e-mail. The system “was working properly and could perform all the tasks consistently with the standards set forth in the written contract,” according to a Deloitte court filing.
Marin County tells a different story. The SAP implementation dates to 2006, but today only 50 percent of the functionality is in place and working properly, according to a county report.
The county hasn’t decided on who they’re going with for the new system but if you’ve got a one-person shop with no experience and present your RFP using overhead transparencies, you’ll still have an edge on Deloitte.