Deloitte has spawned a clump of young IT consultants that excel in winning work from the state.




Yesterday, the Social Democrats called for an audit of all IT contracts negotiated by outgoing labour & social affairs minister Jaromír Drábek and his long term business partner, erstwhile first deputy minister Vladimír Šiška.

Under normal circumstances, this mandate, if it were ever awarded, would go to the Czech Establishment's most trusted supplier of such services, Deloitte Advisory.

If ČEZ needs an asset valued, it calls upon Deloitte. If the finance minister needs the use of EU funds checked, he appoints Deloitte. And so we might expect the new labour minister to ask Deloitte to investigate all the Šiška contracts, which total some Kč 2bn in the last two years.

Somehow, I do not think Deloitte should accept such a mandate.

Šiška’s colleague and now cellmate, the head of the ministry’s IT section, Milan Hojer, joined his team in February 2012. Before that, Hojer worked for an IT consultancy called Deepview (see his linkedin page.)

Deepview was established in 2010 although it was only incorporated in the Czech Republic in early 2012. It is led by three ex-Deloitte consultants. And like the firm that spawned them, these dynamic young entrepreneurs seem especially skilled at winning work from clients owned by the state. Deepview's website lists three clients of which two, ČEZ and Česká pošta, are majority-owned by the finance and interior ministries. Both are important clients for Deloitte.

It now seems that Deepview should have added the Ministry of Labour & Social Affairs to its client credentials. The nature and extent of the business dealings between it and the ministry is not clear. Apparently, there are at least 27 companies that were handed no-bid contracts by the ministry under the Fujitsu umbrella contract relating to the new centralised system of distributing welfare payments. It will be interesting to see if Deepview was one of them, and if it received the work before and/or after Hojer joined the ministry.

What is clear, however, is that the dealings between the ministry and Deepview should be examined in forensic detail, but perhaps not by Deloitte. Under normal circumstances, Deloitte’s potential conflict of interest would not bother anyone. After all, this is a small city and Deloitte is a big company, making conflicts inevitable and by no means necessarily bad.

Of course, Deloitte can hardly be held liable for the behaviour of its ex-employees. Nevertheless, until we know more about the nature of the relationship between Deloitte and Deepview, we might reasonably conclude that Deloitte is too close to the matter under investigation to be considered impartial.

It seems just as probable that Deepview and Deloitte are fierce rivals, rather than old friends, given the circumstances of two years back, when lots of Deloitters jumped ship because of the firm's slush fund scandal caused by a whistle-blower in the firm.

Deloitte and Deepview recently bid for an IT consultancy contract with the interior ministry, and Deepview was selected. Ironically, today's Deloitte may be delighted at the reputational damage that Deepview will suffer as a result of the arrest of their former colleague Hojer.

And this reinforces my point, which is that Deloitte may be considered an interested party in this matter and should not therefore be asked to audit the questionable contracts handed out by Hojer and his superior.