Read Part One here.

In January a Maverick Citizen investigation was the first to uncover that R431-million had been spent by the Gauteng Department of Education to sanitise public schools. This led to the expenditure being referred to the Special Investigating Unit (SIU).

Fortunately, the news here is better than in relation to the Gauteng Department of Infrastructure Development (GDID). Prompt investigation by the SIU led to preservation orders being granted, freezing funds of more than R60-million in the hands of nearly 20 companies. This decision was recently confirmed by the Special Tribunal after a number of the companies brought an unsuccessful reconsideration application that aimed to unfreeze their profits. 

Linked to this, an application to review and set aside the contracts of 49 of the companies has now been filed at the Special Tribunal. This unusual application is seeking the “disgorgement” of all the profits made from these contracts. A senior lawyer told us that the precedent for this was set by the Constitutional Court in the AllPay case concerning social grants and the tender that was unlawfully awarded to the company Cash Paymaster Services. According to him, the principle is that “where a court declares a contract unlawful, a company may not profit from it and must therefore ‘disgorge’ its profits”. This principle, if successful, is an approach that could be used to recover billions stolen during the Covid crisis. 

A date for the Special Tribunal hearing has not yet been set. However, the founding affidavit of the SIU, deposed by Isaiah Nkuna, the chief forensic investigator in the case, goes a long way to revealing what happened in what it describes as “​​an unlawful and invalid procurement process”.

The affidavit details how Hudson Baloyi, Chief Director: Physical Resource Planning and Property Management, was given permission to deviate from normal procurement procedures by the head of department, Edward Mosuwe. Thereafter, the Supply Chain Management (SCM) department was bypassed and a list of service providers compiled with prices that would be paid for cleaning schools was allegedly “decided on the spot” by Baloyi.

These prices – between R250,000 and R300,000 per school – were offered regardless of the size of the school. 

According to the SIU: “The fee was not broken down into a price per metre – it was a round figure that was offered to the service provider solely on the basis of whether the service provider had been directed to work at a primary or secondary school.”

Making matters worse, the list of companies which were offered contracts was also decided on what appears to be a completely random basis. According to Nkuna, there was no checking if the companies were on the Central Supplier Database (CSD), or whether they had experience or capability. Names of companies were reportedly sent to the director of auxiliary services by Baloyi via WhatsApp.  

The director of auxiliary services told the SIU he discovered that, “The service providers had not already been contacted by SCM to request quotations, check their capacity or for any other reason related to the project”, and that “SCM processes were not followed in the procurement of service providers”. 

As a result, says Nkuna’s affidavit, the SIU’s investigation found that: “None of the 280 service providers… were sourced by SCM officials from the CSD, as was required by the deviation. Of the 280 service providers, 173 were not registered on the CSD at the time of the appointment.

“At least 263 service providers submitted invoices and were paid accordingly.”

Nkuna’s affidavit also reveals that the SIU carried out what it called a “verification exercise” in two schools “​​to determine whether the services were in fact rendered and the possible value of the services”. It found that, whereas before the special contracts schools were paying about R10,000 for “deep cleaning the entire school”, after the contracts the newly appointed companies were paid more than R250,000. 

The SIU concludes: “This verification exercise shows that the fees paid to the service providers… were not market related. The fee was grossly inflated. The profit made by the service providers was therefore significant. This is relevant to the remedy that the department seeks [being the disgorgement of profits].”

Finally, according to a News24 report on 17 August, Education MEC Panyaza Lesufi told the Gauteng education portfolio committee that he had received a “preliminary report” in which the SIU recommended disciplinary action be instituted against several of the implicated officials, with an independent legal practitioner appointed as the presiding officer. 

The wheels of justice are turning slowly but, unlike in the Gauteng Department of Infrastructure Development, they are at least turning. DM/MC