AMABHUNGANE CASE STUDY

Lack of due diligence at the heart of Covid-19 corruption

By Tabelo Timse for amaBhungane 11 October 2020

Photos: Gallo Images/Sharon Seretlo | EPA-EFE/KIM LUDBROOK | Adobe Stock

Weak oversight and poor due diligence enabled Northern Cape companies to qualify for Covid-19 emergency procurement.

Mystery surrounds how a politically connected, Northern Cape-based property company obtained a R13-million order to supply 1 million surgical masks to South African Police Service (SAPS) headquarters in Pretoria.

The deal was awarded shortly after the country went into lockdown in March, apparently when Kimberley-based Kamo Training & Consultancy was handpicked from the national treasury database. 

Although the company was issued a travel permit to deliver the goods to Pretoria, both the SAPS and Kamo claimed that the delivery never took place and no payment was made.

This is where the story might have ended. 

But amid growing concerns over widespread corruption involving funds meant to deal with the Covid-19 pandemic, amaBhungane investigated the contract and red flags emerged relating to a possible conflict of interest and irregular award.

What we found, and the response we got from SAPS, spoke volumes about the state’s resistance to transparency and accountability.  

Meanwhile, another tender that caught amaBhungane’s attention was a R16-million contract to provide personal protective equipment (PPE) to the Northern Cape health department, given to a politically connected nightclub owner.  

Both awards demonstrate the weak controls that, in other cases, clearly allowed politicians and crooks to take easy advantage of the crisis.

For both companies it appears their main qualification was simply to be registered in the national treasury’s central supplier database. It seemed no other due diligence was done to test their suitability, such as experience in PPE, or having the financial muscle to pull off a contract requiring millions of rand.

After several amaBhungane interviews with companies awarded PPE contracts, it appears that the random selection and lack of scrutiny is one of the major contributing factors to Covid-19 corruption. 

An order and a permit, but no delivery. Instead, a suggestion of a conflict

According to an SAPS purchase order dated 29 March in possession of amaBhungane, the contract was awarded to Kamo Training & Consultancy based in Kimberley and owned by Mandisa Shushu, the wife of former Northern Cape agriculture MEC Norman Shushu. 

Norman Shushu is also the current provincial general secretary of the SACP and a special adviser to the premier, Zamani Saul.  

A source with intimate knowledge of the police procurement process contacted us and raised a red flag concerning an alleged relationship between Norman Shushu and Major General Japie Riet, the SAPS national procurement chief. According to the source, they are friends and are both from Kimberley.

“Shushu and Riet are both in the SACP… It is very concerning that Riet moved from Northern Cape as head of procurement to the national office recently and then boom a company of his friend’s wife with no history of working with the SAPS or PPE gets a huge tender,” said the source.

The source provided us with a photo of the signed 29 March SAPS purchase order – as well as an image of an “essential service permit” signed by an SAPS officer the next day and valid for March 30-31 to allow Kamo to break the lockdown travel ban in order to deliver stock to the SAPS headquarters in Pretoria. 

According to a police official, who cannot be named as she is not authorised to speak to the media, Kamo was granted the permit after confirming that delivery was to take place, but that Kamo never delivered the stock.

However, when we asked SAPS spokesperson Brigadier Vish Naidoo about the order in early June, he told us: “According to the SAPS records the SAPS did not procure any personal protective equipment including masks from the mentioned company, nor did the company make any such deliveries to the SAPS against any payment.” 

Naidoo denied that Riet had any links to Kamo, saying: “The insinuation that General Riet has links to the company is false and should be substantiated with proof of such.”

He added that allegations against Riet were “malicious and frivolous to say the least”.

In June, Kamo’s general manager, Shaun Veeran, denied flat out to amaBhungane that Kamo had been “awarded any tender from [SAPS] to supply one million masks as per your allegations”.

He also dismissed claims Riet and Norman Shushu’s alleged relationship influenced the awarding of the contract. 

“Kamo Training & Consultancy has no link to any member of the SAPS and our company operates independently and without any third-party influence,” he said.

AmaBhungane asked Norman Shushu to comment on the allegation he was friendly with Riet and that this helped his wife get the SAPS business. 

He replied, “There is no such,” but did not respond when pressed on whether they were friends.

However, Norman Shushu was quoted in a Sunday Times article published in August that when he became aware of the contract he instructed his wife to cancel it.  

“When I became aware of it, I impressed on [my wife] to cancel it because of the position I hold in government. I knew that it was a matter of time before it became controversial.” 

Mandisa Shushu had a different explanation, telling amaBhungane back in June that the deal fell through because her supplier let her down at the last minute.

However, amaBhungane has a copy of a video where Mandisa Shushu repacks surgical masks from a big cardboard box into a smaller box. In the background, one can see many other big cardboard boxes. 

She asks, “So this is all hundred thousand?” to which another person off-camera confirms.

Veeran and Mandisa Shushu refused to comment or give clarity on whether Kamo supplied anyone else around the same time as the SAPS contract.

Riet did not respond to calls and text messages.  

No history or experience as a PPE supplier

Another red flag Kamo and the SAPS did not address was that according to the company’s website, its core business is “property management”.

According to another source familiar with big business and political circles in Kimberley, the company was a well-known real estate business. AmaBhungane could not establish any experience relating to the company providing PPE.    

The SAPS’s Naidoo did not answer amaBhungane questions relating to Kamo’s experience in PPE and whether there was any vetting process to determine if the company was able to deliver. In an emailed response, he stated that companies on the SAPS database were approached to provide quotations to supply PPE. 

“After receiving their quotation, the mentioned company indicated that they could not supply us with the PPE and, therefore, their order was cancelled. 

 “Other companies, whose names cannot be disclosed, were able to honour their contracts,” Naidoo stated. 

He added that the procurement of PPE at that time was urgent and this demanded that the SAPS embark on an emergency procurement process. 

Secrecy 

The brigadier’s response raised more questions than answers as he refused to respond to repeated follow-up questions highlighting the considerable public interest of revealing details around the contract.

We asked basic questions concerning the date on which the SAPS issued the request for quotation; how many companies were approached and what criteria were used to select them – as well as asking when Kamo had indicated that they could not deliver?

He refused to provide a list of the companies that actually delivered: “Please be advised that I have responded adequately and will not be responding further.”

Kamo’s Veeran also refused to respond to further questions relating to providing clarity on what happened on this contract and why if there was no award there was an SAPS stamped and signed permit to deliver the masks.  

Nightclub owner also gets a slice of the PPE pie

Another tender that raised eyebrows in the Northern Cape is a R16-million PPE contract awarded to MKV Investments owned by nightclub owner McDonald “Khindo” Visser. 

The company delivered 300,000 surgical masks, 50,000 coveralls and 5,000 body bags. There is no suggestion Visser’s goods did not meet quality or price requirements, but a simple internet search might have raised doubts about whether Visser was really a suitable counterparty.

Visser was one of 13 people charged with being part of an illicit diamond-dealing syndicate who were originally arrested in August 2014. The syndicate was busted after police obtained evidence by using an agent to trap diamond dealers into illicit transactions in an undercover project dubbed Operation Darling. Transactions amounting to R28-million were involved.

The case had been thrown out by the Northern Cape High Court in 2019, but the ruling was appealed. On 2 July this year the Supreme Court of Appeal ruled in favour of the director of public prosecutions, allowing the prosecution to be reinstated. 

By 28 July, when the provincial health department placed the order, there had been a news report in the Diamond Fields Advertiser naming Visser as one of those affected by the ruling.  

The source familiar with big business and political circles in the Northern Cape also claimed that Visser was given the contract because of his political connections. 

Visser defended his appointment.

He said after he received a request for the quotation he responded like any other businessman: “How they select or appoint those are internal issues and processes that I can’t even interfere… All I know is my business is registered within the [central supplier database for] all types of business my company can offer and I have done business with different departments before.”

Asked about MKV’s experience in supplying PPE, health department spokesperson Lebogang Majaha stated that criteria used for placing orders using national treasury instructions allowed departments to approach any supplier on certain specified conditions, which included price and quality. 

“The maximum price is set in the instruction note and this criteria was met. In terms of quality, the department requested samples of items offered by service providers including from this supplier. The quality was deemed appropriate,” he said.

PPE a specialised field 

AmaBhungane contacted several companies who operated in the PPE space and most of them expressed shock and anger after the publication of national and provincial PPE awards.

One company owner who provided surgical masks to a national department said it hurt him that as a person whose core business is to supply medical, cleaning, and PPE supplies, he only made one emergency contract. 

“How come a construction or IT company wakes up one day and decides ‘I will provide PPE’. Like any other industry, you have to know good and bad suppliers; as someone who works in this field I know who provides good quality and charges reasonable prices.” 

He said he received a call from a department enquiring whether he could provide surgical masks and he agreed, although at first he thought the request for quotation call was a tender scam. He agreed after he made his enquiries.

“This was an emergency indeed. I was given a couple of days to deliver; I was like a headless chicken running around looking for good quality because I understood that this was critical in the fight against Covid-19. I also understood that [because] the PPE was mostly going to frontline workers, I had to deliver.” 

Too little too late

Finance Minister Tito Mboweni struck a belated blow for transparency when he instructed government departments to publish details of PPE contract awards.

Some of the damage could have been prevented if the government had taken heed of warnings that the emergency procurement process would enable corruption. 

Corruption Watch raised the alarm in a letter dated 7 May 2020 to the national treasury, warning that the opacity in Covid-19 emergency procurement measures had created legal uncertainty and increased the risk of corruption.

Although President Cyril Ramaphosa has instructed the Special Investigating Unit to investigate dozens of companies and individuals who are believed to have benefited from dodgy Covid-19 tenders, the probes come after billions have already bolted. DM

The amaBhungane Centre for Investigative Journalism, an independent non-profit, produced this story. Like it? Be an amaB Supporter to help us do more. Sign up for our newsletter to get more.

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