An investigative team of seven well-qualified senior officers began a review process on 3 January, dating back to the Auditor-General’s findings for the 2018/19 and 2019/20 financial years.

In the Attorney-General SA’s 2020/2021 report, fruitless expenditure in the South African National Defence Force (SANDF) accumulatively over a few years reached about R7.9-billion. The Auditor-General referred a number of the irregularities to the Hawks for investigation.

The SANDF and Department of Defence’s (DoD) logistics division have ordered the internal investigation to conclude its investigative process by 31 March 2022.

In 2021, Auditor-General Tsakani Maluleke cited the DoD again for not implementing consequence management. The department in turn claimed it could not effect further action because some contracts involved members of the military command council. Maluleke said in her last Public Finance Management Act (PFMA) report for 2020/21 that SANDF Chief, General Rudzani Maphwanya, should do so or the Secretary of Defence, Sonto Kudjoe, should report it.

The DoD was also one of three entities against which Maluleke issued remedial actions in 2021. The others are the Passenger Rail Agency of South Africa (Prasa) and the Free State human settlements department.

Maluleke told a council meeting of the SA National Editors’ Forum at the weekend that “the remedial action issued to the two departments included a directive to deal with the financial loss by the stipulated date, which, if not implemented, could result in a certificate of debt being issued. This is the last step towards the much-talked-about certificate of debt.”

Daily Maverick has seen a letter issued by SANDF Deputy Chief of Logistics, Major-General Xolani Ndlovu, in January which stipulates the details of the cases that will now be concluded by the team. It refers particularly to earlier investigations at the Central Procurement Service Centre (CPSC), which handles all the main contracts and payments for the DoD and the Defence Works Formation.

“[The division] finds itself in a precarious position with specific reference to the Audit Findings… for FY2017/18, FY2018/19 and FY2019/20 have not been dealt with to date,” the letter reads.

The CPSC was also implicated in a number of referrals by the Auditor-General in her investigation of PPE irregularities.

The qualified audit reports against the DoD are among the factors considered when future defence allocations are determined by National Treasury.

The investigative team will deal with 26 cases amounting to a staggering R720-million where no consequence management was implemented nor any of the money recovered. They include six cases of lease payments for unoccupied buildings which the Auditor-General said in 2021 amounted to financial losses of at least R108-million.

In one instance, according to the letter, the DoD signed a deal for the Eco Glades office complex in Centurion in 2017, but only occupied the building in November 2021. Some units had still not moved into the building while the empty offices were being paid for.

The team also needs to determine who is financially responsible for procuring Microsoft software licences for R387-million in 2017, but which have not yet been installed. The Auditor-General singled out this case in her PFMA report because the DoD did not even submit the contract files for auditing.

According to the letter, the team leaders will summon witnesses to report for questioning and they will also act against those who fail to report. Among them will no doubt be retired generals and lower ranks since they were still in the employ of the DoD at the time of the alleged irregular spending.

Ndlovu states that the Covid-19 national lockdown and restrictions “stifled attempts to undertake the long-outstanding investigations”.

In her input into the DoD’s annual report for 2020/21, Maluleke said:

“I was unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against officials who had incurred irregular expenditure as required by section 38(1)(h)(iii) of the PFMA. This was because investigations into some irregular expenditure were not performed.

“Disciplinary steps were not taken against some of the officials who permitted irregular expenditure, as required by section 38(1)(h)(iii) of the PFMA.

“I was unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against officials who had incurred fruitless and wasteful expenditure as required by section 38(1)(h)(iii) of the PFMA. This was because investigations into some fruitless and wasteful expenditure were not performed.

“Disciplinary steps were not taken against some of the officials who permitted fruitless and wasteful expenditure, as required by section 38(1)(h)(iii) of the PFMA.”

No doubt this is what Ndlovu alludes to in his letter explaining the purpose of the investigators’ work.

SIU report

The lack of consequence management was also cited in the recently released report into alleged PPE irregularities within the Defence Department by the Special Investigating Unit (SIU). The procurement centres in Pretoria (CPSC) and in Simon’s Town are implicated in the report for non-compliance with the SANDF and National Treasury’s instructions.

According to some sources inside the SANDF there have been no disciplinary actions or military prosecutions instituted against any of the more than 20 officers named in the report.

The SIU has referred them for criminal prosecution to the National Prosecuting Authority.

At least one of the most senior officers on the SIU list, Colonel TK (Thembekile) Sibene, has been promoted to brigadier-general while the SIU investigation was under way. Sibene was the commanding officer of the CPSC in Pretoria at the time of the alleged irregularities and has since been transferred to the Logistic Support Formation.

Members of the South African National Defence Force patrol during a joint South African Police Service and SANDF patrol in Yeoville and Hillbrow, Johannesburg, during the national Covid-19 lockdown in April 2020. (Photo: EPA-EFE / Kim Ludbrook)

A number of other officers on the list have also been promoted, while the majority are still serving at the same centre.

In Simon’s Town, the SIU listed the exorbitant prices the SANDF’s health services paid for personal protective equipment (PPE), such as R380 for a box of gloves while the maximum price prescribed by Treasury was R90 per box. The total profit made by four of the service providers amounts to R141-million.

The SIU states that one civilian official in Simon’s Town’s procurement office, Richard Kunene, was the only one to source the suppliers. Correspondence was forwarded to a Gmail account, while the then acting commanding officer of the centre, Naval Captain Phumzile Grace Nkosi, signed off the preferred quotations.

Nkosi has since been permanently appointed as commanding officer, while Kunene is also still in his post.

Both Sibene and Nkosi’s respective promotion and appointment were confirmed in internal bulletins of the Department of Defence in October and March 2021.

Daily Maverick has repeatedly sent a number of inquiries to the SANDF media offices, as well as to Siphiwe Dlamini (head of communications) and Cornelius Monama, spokesperson for Defence Minister Thandi Modise, to ascertain whether any formal disciplinary steps have since been instituted against any of the officials listed in the SIU report. However, no response has been forthcoming.

According to the report, the DoD paid R250-million for masks and R76-million for gloves. Senior procurement officers had already questioned the exorbitant amounts paid for PPE in May 2020, but that did not stop the alleged irregularities from continuing.

The report states that Sibene made a submission to the former secretary of defence, Dr Sam Gulube, in the same month to use certain suppliers for the procurement of gloves and masks. Gulube approved the submission in June 2020.

The five main companies involved have since been cited for alleged irregularities with PPE orders in other state departments too:

• Nyathela Consulting;
• Zakheni Strategic Supplies;
• Murunwa Consulting;
• Xhumana Trading and Business Solutions; and
• Mavuba Investments.

The SIU has since started civil litigation to be brought before the Special Tribunal for an amount of R276-million to have the contracts set aside in an attempt to recover the money.

Responding to an earlier inquiry to the DoD about these companies and the officials involved, former spokesperson Brigadier-General Mafi Mgobozi said Gulube had signed off the procurement and “no actions were taken against any [DoD] official. The Accounting Officer [Gulube] retired in August 2020”.

Sonto Kudjoe was appointed in his position, while Gulube died less than a year later after an illness. A number of the generals on the military command council, including General Solly Shoke, then chief of the SANDF, retired in 2021.

Maluleke stated that the DoD is one department selected for implementation in her material irregularity process “to go beyond audit and reporting in an effort to strengthen the accountability mechanisms”.

That only happens when a department fails to implement the Auditor-General’s recommendations for material irregularities. The SANDF’s urgent task team, according to the letter by Ndlovu, is a direct result of Maluleke’s firm stance. Modise, as the new defence minister, with Kudjoe, will feel the brunt of the consequences of even further cuts to the defence budget if they don’t keep in step with Maluleke. DM