Maverick Citizen

Coronavirus Spending

Gauteng’s Covid-19 Expenditure Disclosure Report adds murk to troubled waters

Gauteng Premier David Makhura. (Photo: Gallo Images / Sydney Seshibedi)

Gauteng Premier David Makhura’s first Covid-19 Expenditure Disclosure Report is meant to be a clean-up act on transparency and accountability. But it’s opaque, full of holes and raises more questions than it answers.

Gauteng’s Covid-19 Expenditure Disclosure Report, circulated on Monday, is a 30-page document mostly of lists of vendors who have provided services and goods to the Gauteng provincial government. It sets out the split of the spend that has come in at over R2.101-billion across 13 departments in the period between April and July. The Department of Health accounts for 91.78% (or about just under R1.939-billion) of the total amount spent. 

It also gives details of the top 15 items of goods and services procured and lists where infrastructure projects of refurbishments and upgrades took place at hospitals and clinics. 

But it’s the list of vendors that raises worrying red flags that there are a number of the companies that appear to have been set up just in time to benefit from the Covid-19 procurement funds. It also deepens concerns about these companies’ expertise, capacity and ability to deliver during the pandemic and leaves questions about who in government signed off on the deals and what oversight exists in vetting transactions. 

Many of the 358 listed vendors have no web profile or presence or are listed to provide business services and goods completely unrelated to what they’ve been listed as having provided to the province. There is no readily available information on many of the companies – from the most basic information of addresses and phone numbers to details of registration, compliance certifications, ownerships and directorships. Some of the companies have Facebook pages as their business pages, and some of them made their first posts around the end of March, when the first lockdown came into place. Despite this, many of the companies were given contracts worth considerable sums. 

In responding to the report, Outa (the Organisation Undoing Tax Abuse) flagged concerns that 55 of the suppliers (15%) were only registered as government suppliers after 1 March; 48 of these companies received contracts worth at least R10-million each and together collected R1.825 billion.

“This gives the appearance that many of these companies were registered as government suppliers deliberately to benefit from procurement related to the pandemic relief fund process.

“All contracts with companies with last-minute supplier registrations – more so those with large values – are a strong motivation for an investigation into all the Gauteng Covid-19 procurement,” says advocate Stefanie Fick, Outa’s executive director in their accountability division. 

Fick adds that Outa’s initial assessment has shown that a company called Dinaane Consulting Services was paid R116.95-million in one contract. Dinaane was registered as a government supplier on 29 April. 

“According to the CIPC database, Dinaane was deregistered and its registration was restored only on 16 June 2020. It has one director and is based in a house in Naturena,” she says.

Dinaane Consulting appears on a company listing page but there is no contact phone number or email address.

… These, Outa says, include R10.06-million for Shwabada Holdings, which was registered on 29 July and has an office address that appears to be the backyard of a house in Meadowlands; R4.01-million for HSB Mercantile Investments, registered on 25 July and under investigation by the SIU in connection with Covid-19 procurement, and R36.50-million for Ikusasa Telecoms which was registered on 17 July. 

Other big contracts Outa points to are those with Olee Telecom Solution that received a tender worth R79.48-million and was only registered as a government supplier on 25 June. Olee’s website has a telephone number, but it rings and then cuts off. Their online query form doesn’t work and there’s been no response to questions emailed to them. Olee’s attorney, Kenneth Matabane, responded to questions by email saying: “the supply agreement has been entered into with the Gauteng Department of Health and is public record, kindly refer all questions to the department.”

Maponya Medical Solutions, which received a tender for R74.54-million and was registered as a supplier on 24 March was contacted for comment and verification of its deals with the government. They said someone would respond to queries but didn’t do so by deadline. 

“This report covers the period April to July 2020, but the Gauteng government managed to contract eight suppliers who registered only in July for a total of R58.45-million,” Fick adds. 

These, Outa says, include R10.06-million for Shwabada Holdings, which was registered on 29 July and has an office address that appears to be the backyard of a house in Meadowlands; R4.01-million for HSB Mercantile Investments, registered on 25 July and under investigation by the SIU in connection with Covid-19 procurement, and R36.50-million for Ikusasa Telecoms which was registered on 17 July. 

Fick flags other anomalies in the report, including that Royal Bhaca Projects (linked to President Cyril Ramaphosa’s spokesperson Khusela Diko via her husband) reportedly obtained R125-million for PPE from the Gauteng Department of Health, but is not listed in the report. Royal Bhaca Projects has previously said that the tender was cancelled and no public money was paid over to the company.

Fick said the total cost of setting up the Nasrec field hospital was also not clearly set out in the report. There was a transaction of R432.06-million listed under health infrastructure for the facility, but elsewhere in the report there are contracts to the Johannesburg Expo Centre, which owns Nasrec, listed for R30.43-million to lease the centre and another R61.61-million for upgrading and buildings. There are also a number of what appear to be double entries in the report that Fick says also need clarification. 

There are dozens of transactions in the report that leave more questions for Makhura’s office. It’s the likes of a transaction at the Department of Sports, Recreation and Culture with a company called Crème de la Crème Media Agency that was paid R124,210 for providing toiletries. No media agency company by that name is listed in South Africa. Another company, called Gentagystix, received R490,150 for surgical consumables. There are no web details for any company called Gentagystix. Another company called XploreIT received R493,800 for surgical/medical supplies and surgical consumables. Their website says they provide web design, domain hosting and logo design services. The person who answered the cellphone number given on their website said “there’s a division that deals with medical supplies” and said someone would call back to answer questions about this, but no one did. 

Even in the Office of the Premier there are listed entries in the report that raise alarms. About one-seventh of the department’s total expenditure in the disclosure report has gone to catering. One transaction with TSA Africa Catering alone was worth R1.36-million. The department hasn’t answered questions on how it justifies this expense during a time of lockdown when staff would – by lockdown regulations – have been mostly working from home and social gatherings would have been prohibited. 

Fick adds: “We believe the entire expenditure of catering across all government departments is an issue worth investigating as this is a questionable expense when we should be cutting costs and not providing lunches to staff.”

The report details the vendors’ Central Suppliers Database (CSD) registration numbers and dates of registration. But the CSD numbers held in the National Treasury’s database don’t link to any company information that is disclosed.

The report also doesn’t detail specifics on how they collected their data, only stating their reporting methodology comes from their “SAP enterprise resource planning system”, “basics accounting system and CSD details”. 

Fick says: “The report falls far short of providing sufficient information and detail needed to scrutinise and unpack the extent of corruption or maladministration that may have occurred with regard to the procurement. More important is the scrutiny around who received this business, the people connected to these businesses and whether we received the best value for money from these suppliers.”

Vuyo Mhaga, spokesperson for Premier Makhura, and Thabo Masebe, head of communications for Gauteng Province, both confirmed receipt of questions from Maverick Citizen but failed to communicate further or to respond even after an extended deadline. DM/MC

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