PANDEMIC FEEDING FRENZY
Final SIU Covid-19 corruption report released — now comes Ramaphosa’s time for tough action
The SIU final report into Covid-related procurement irregularities names names, points to how corruption has become a web, and is a ticking clock for President Cyril Ramaphosa to act.
The extent of the feeding frenzy of taxpayers’ money meant for procurement of Covid-19-related goods and services in state departments and institutions has been set out in gobsmacking detail in the Special Investigating Unit (SIU) report released on Tuesday.
This final of six reports marks the end of 18 months of investigation by the SIU. The report lists the names of those implicated and investigated. These include ministers, mayors, MECs, captains and colonels as well as chief financial officers, directors and heads of department.
In total, 224 government officials have been referred for disciplinary action, 386 people have been referred for prosecution by the National Prosecuting Authority (NPA) and 330 companies have been recommended for blacklisting. The report stems from the investigation of 5,467 contracts awarded to 3,066 service providers. Of these, 62% were found to be irregular.
The contracts investigated involved R14.3-billion and made up about 9.4% of the total amount of R152-billion that the state spent on Covid-19 expenditure between April 2020 and September 2020.
Behind the broad strokes, however, the detail in the 737-page report paints a picture of how corruption and corrupt practices have become an almost impenetrable web. Its sticky edges are held up by dirty officials and politicians, from those in senior positions to paper-pushers.
There’s a deliberate flouting of rules, blind eyes turned, a lack of oversight and accountability, tentacles of political influence, an entrenched culture of deals for pals regardless of competence or intention to deliver, and moral rot demonstrated by a willingness to steal even as South Africa faced the darkest despair of a pandemic in the past two years.
The staggering scale of the alleged corruption spans the provinces, municipalities and departments and the deals cut range from personal protective equipment procurement to fumigation, catering, water supply, temporary homeless shelters and field hospital construction.
The report also lists the businesspeople and the companies the SIU has investigated and implicated. They include flash businessmen who routinely make headlines, established corporations and random companies set up with no track record, but who nevertheless scored off Covid-19 disaster management monies.
The report confirms what the media and watchdogs have been flagging for months. This includes companies that were only registered on the Companies and Intellectual Property Commission (CIPC) when the national lockdown was imminent and “thus would and could not have had demonstrable track records”. There were companies awarded contracts when they were not registered on the government’s Central Supplier Database (CSD) and the type of goods and services supplied were not consistent with the nature of the business registered on the CIPC and CSD.
The SIU noted the splitting of bids to meet quotation thresholds, suppliers not registered with the South African Health Products Regulatory Authority supplying medical equipment, and companies that were not tax-compliant being awarded contracts.
The report points to cases where product specifications were ignored and products that were not suitable for their intended purposes were procured.
“It appears that persons in positions of authority within provincial government believed that the declaration of a ‘national state of disaster’ meant that all procurement is automatically now conducted on an ‘emergency’ basis, and without compliance with any of the normal prescripts regulating public sector procurement,” the report states in its opening.
The SIU investigation was undertaken by presidential proclamation in July 2020. The report sets out how each case before the SIU was investigated and the unit’s recommendations in each case. Measures include disciplinary action, criminal referral to the NPA, blacklisting and intervention from the SA Revenue Service.
The public release of the SIU report sets the clock ticking for President Cyril Ramaphosa to turn tough talk on corruption into speedy and decisive action.
In his statement on the release of the report, Ramaphosa said: “This investigation targeted individuals and institutions who believed they could exploit a moment of national vulnerability to enrich themselves and those with whom they colluded to abuse public resources.
“It is unacceptable that so many contracts associated with saving lives and protecting livelihoods were irregular, unlawful or fraudulent.”
The statement from his office didn’t set out Ramaphosa’s what-next, stating only: “As regards prosecutions, the Presidency trusts the NPA will exercise its discretion diligently and expeditiously.”
But the SIU will need more than just statements to finalise the 18% of the cases it is still investigating. The unit is considering applying for an extension of the president’s initial proclamation to expand its scope of investigations.
The report, signed off by advocate Andy Mothibi, the head of the SIU, details the limitations of their investigations. It raises alarms that holding the line against corruption is under significant strain.
The report refers to stumbling blocks faced by investigators, including the absence of paper trails, lost or deleted files, intimidation of whistle-blowers so cases could not be built, deliberate non-cooperation by officials and backpedalling by those meant to sign statements.
The unit has also suffered the loss of staff members claimed by Covid-19. The disruptions caused by the looting and rioting in July 2021 also stalled investigations.
“In many instances the SIU received only partial records and had to go back for more comprehensive records…”, “there was also a delay in the submission of some documents by the state institutions”, and “Witnesses fear victimisation and/or feel unsafe and are hesitant to be interviewed, provide statements and/or evidence”, the report states.
Clear too are limits to the SIU’s actual powers. Its recommendations have not been taken seriously in some cases, with the report noting that disciplinary action drags on interminably and there remain seemingly no consequences for ignoring SIU recommendations.
The report concludes by setting out the SIU’s bills that still need to be paid by the state. The SIU can recover fees from state institutions for the investigation services rendered.
“Currently the fees recovered in this way make up around 45% of the SIU’s total annual operational and capital expenditure budget, whilst the other 55% is funded by way of a Government grant.”
The costs of the investigation stand at R310.2-million. Of this, R216-million is outstanding and the SIU estimates that costs will climb with ongoing litigation of some cases. This comes against budget cuts to the unit of R150-million, which will continue for the next three years.
The SIU justified its costs with the successes of 45 cases before the special tribunal for corruption, fraud and illicit money flows with a combined value of R2.1-billion. It has recovered R34.2-million and set down actual cash and assets to be recovered at R551.5-million. It says the value of potential loss prevented by the investigation amounts to R114.2-million and contracts set aside add up to R170.4-million.
The SIU has expressed an intention to share its investigation lessons and findings as the basis for an awareness campaign focused on re-emphasising accountability, proper checks and balances and consequences for state departments and institutions intent on cutting corners and creating loopholes to steal from the public purse. DM