Blooming impunity: Update on PPE irregular expenditure and graft
From dodgy deals to missing millions, ongoing investigations into South Africa’s Covid-19 personal protective equipment scandal reveal shady procurement practices and a lack of accountability within government channels that could be regarded as wholly unsanitary.
On 11 October, Maverick Citizen reported that SARS had convicted 11 companies for not declaring taxes on PPE they had supplied to government departments.
In a response to questions from Maverick Citizen dated 19 October 2021, Anton Fisher, from SARS Media Unit, listed the “11 convicted and sentenced companies” referred to in their media statement as:
- Insimu Consulting (Pty) Ltd
- Insimu Projects (Pty) Ltd
- Mangaliso Projects (Pty) Ltd
- Zendalo Consulting (Pty) Ltd
- Lisondalo (Pty) Ltd
- Ngome Steam Pot (Pty) Ltd
- Ntente Trading (Pty) Ltd
- Umunyeovou Trading Pty Ltd
- Velakabusha General Trading 2 CC
- Info Tech Evolution Pty Ltd Bhomela General Trading Pty Ltd
- Glen Vida Footwear CC
According to a statement by SARS, three of these companies (Umunyeovou, Velakabuha General Trading 2 cc, and Bhomelela General Trading Enterprise (Pty) Ltd had failed to register for VAT with SARS for tenders jointly worth more than R6-million. For this, they received slap-on-the-wrist fines ranging from R4,000 to R8,000 from the Pietermaritzburg Magistrates’ Court.
This may be why SARS insists that after conviction and sentencing it “reserves the right to take further civic remedies in furtherance of our mandate to collect revenue due to the state.”
Significantly, the first three entities on the list are companies that have as their director Dr Bright Mhlongo, the KZN doctor who scored big from some of the contracts in the R431-million fogging scandal of Gauteng Department of Education (GDE) schools that Maverick Citizen was the first to expose. So too did Zendalo Consulting and Lisondalo, which notched up contracts of more than R6m and R4m respectively from unnecessary sanitising of schools, according to the Treasury database.
The GDE says it has now instituted disciplinary action against some of the officials implicated. However, on the whole, the Gauteng Provincial government continues to be extremely tardy in its response to Covid-19 corruption. It’s almost a year since Gauteng Premier David Makhura promised fire and brimstone against corrupt politicians and officials (see our report here). He repeated these pledges after the murder of Babita Deokaran. But little has happened.
Inaction and indecision
The Gauteng Treasury is still not publishing its Covid-19 expenditure disclosure reports — unlike other provinces — and its media spokespersons no longer respond to emailed questions.
In this context, it is perhaps not surprising that, as reported by Fin24, none of the convicted companies — and many others — have yet been barred from doing business with the government. In a recent report Corruption Watch pointed out that a Tender Defaulters Database, established in 2004, remains empty.
A second database, the Restricted Suppliers Register, is sparsely populated. None of the suppliers such as Royal Bhaca Projects, that have been implicated in Covid-19 corruption, appear in the register. In addition, the organisation, OpenUp, working in collaboration with Maverick Citizen, has found that three “restricted suppliers” are still doing business with government — despite being on the list.
In response to Fin24, the National Treasury defended itself, saying that “while it hosts the Tender Defaulters Register, as well as the separate Database for Restricted Suppliers on its website, it is not responsible for submitting names to be added to either list.
“It is the responsibility of accounting officers at national and provincial departments, municipalities and other state institutions to send it the names of suppliers or contractors found guilty under the Act. If no names are sent on, it cannot add any under its own initiative.”
This in turn requires that “a court has to rule that a supplier is prohibited from doing business with the state and should be added to the list.”
Red Roses Africa and the SAPS PPE splurge
Maverick Citizen has previously established that Red Roses Africa (RRA), the company that we revealed got R515-million in contracts from SAPS, is being investigated by the SIU and Competition Commission — despite claims to the contrary by both RRA and SAPS.
Fisher declined to say whether SARS was investigating RRA because “we are prohibited from commenting on confidential tax affairs, including whether or not companies and or their directors are under investigation or the subject of tax administrative action.”
However, our ongoing questions about RRA have continued to raise questions. Our investigation reveals that the 2.250 million litres were all delivered to SAPS HQ in Pretoria.
One question, being raised by cleaning industry insiders, is whether they did actually deliver such a huge amount of hand sanitiser to SAPS.
According to one source in the contract cleaning industry, “Our enquiries in the market regarding the 90,000 x 25-litres of hand sanitiser that Red Roses supposedly sold to the SAPS have turned up absolutely zero. This has only served to heighten our suspicions regarding the transaction.”
Our source drew attention to the logistics of delivery of hand sanitiser on this scale. He said:
“A ‘super link truck’ would typically be used for such large deliveries. A fully loaded truck/trailer can take 36 pallets, packed in two layers. Coincidentally, a total of 36 x 25L can be packed on each pallet. A full load on a truck/trailer will therefore be 1,296 x 25L. The 90,000 x 25L delivery would therefore have required 70 x truck/trailer combinations.”
Maverick Citizen has written to Blessing Qwabe, the Director of Red Roses Africa, three times requesting the National Regulator for Compulsory Specifications (NRCS) number for the hand sanitisers he supplied. The NRCS has told the Professional Body for Environmental Hygiene that Red Roses Africa is not listed on its “approval database”.
Making the truth even harder to come by, Red Roses Africa’s lawyer, Brian Kahn, the manager director of Brian Kahn Inc Attorneys, refuses to answer questions on whether the hand sanitiser that was supplied to SAPS was accredited by the SA Bureau of Standards (SABS) and the NRCS.
Kahn’s response states that he and his client “are constrained to point out that as an investigating journalist we would have thought that you would be well aware that government procurement laws are such that before any service provider is able to supply products and/or services to government — or to be paid by government — that service provider/supplier:-
“needs to be suitably and lawfully qualified and listed on a central supplier database (“CSD”) and for that listing to occur, the service provider/ supplier needs to be both tax compliant and the holder of an appropriate BEE certificate — both requirements of which are mandatory; our client satisfies both requirements; and
“all sanitising products (which is what is part of your investigation) supplied to government must be accompanied with their specific compliant product material datasheets, failing which:-
“the product will be rejected; and
“the supplier will not be paid.
“Lastly; it seems to our client that if you took the time and trouble to acquaint yourself fully with regard to the processes relating to CSD and what government’s requirements are — and also what government will and will not accept/tolerate — much of the information you seek will be answered from that source and you need not ask our client to fill the gaps in your knowledge.”
Putting aside his unfortunate tone, surprisingly, what the lawyer Kahn and his client seem to fail to notice is that it is precisely the flouting of all the above legal requirements that first drew the attention of SAPS Internal audit executive, and which has prompted investigations by the media, SOU, Hawks, the Auditor-General and SARS which have revealed hundreds of millions of rands in irregular expenditure.
Unfortunately, Maverick Citizen has discovered a possible loophole in the law here: while disinfectants must be NRCS approved, it appears that hand sanitisers need not.
No ‘foggy’ local government elections
On 17 September, Daily Maverick first reported on the IEC plans to distribute 126,000 disinfectant foggers to voting stations for the 1 November elections. The IEC seemed determined to fog the voting stations despite scientific advice from government experts and world authorities such as the CDC and WHO to the contrary.
On 4 October, Maverick Citizen was able to report that the IEC had abandoned plans to buy the disinfectant foggers for the elections. By doing so the IEC was able to make significant cost savings without compromising the safety of voters. Early post-election Covid-19 infection data appears to confirm that the election was not a “super spreader” event.
The cause for public concern that underlies our investigation is best illustrated in a judgment handed down in October by the Pretoria High Court against a company, Vex Hygiene, that was found to be unlawfully using the SABS logo on PPE disinfectant products that SABS had not approved.
According to a media release issued by SABS:
“Products that falsely claim to be SABS approved can cause a myriad of problems for consumers in SA, with the most concerning impact being the health and safety of consumers. The SABS is happy with the judgment which is against the unlawful use of the SABS Approved trademark, which is a win for consumers.”
The company was ordered to remove the trademark and pay a fine of nearly R500,000.
Maverick Citizen contacted Vex Hygiene, whose Facebook page proudly boasts its expertise in fogging and its capacity to transport huge volumes of disinfectant. Its CEO was reluctant to speak, but in a letter received from its lawyers we were told that the use of the SABS logo arose from a misunderstanding: it had purchased “certain SABS registered products from a SABS registered supplier in bulk” and then repackaged the product in their branding “for distribution and sale”.
“Upon Vex Hygiene’s packaging they placed the SABS logo … unbeknownst that they had to be registered with SABS if they intended distributing SABS certified products…”. On this basis, they state that “the packaging did not contain false information pertaining to the registration status of the product.”
Last week Maverick Citizen requested the name and SABS registration of Vex Hygiene’s bulk supplier, but has not been provided with it. DM/MC
This is part of an ongoing investigation and series of updates that aims to ensure that all Covid-19 PPE corruption is identified and does not go unpunished.
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