EXCLUSIVE - COVID-19 CORRUPTION REVELATIONS
Latest SIU report reveals billions more rands of unlawful and dodgy Covid-19 spending exposed
The latest SIU report into dodgy Covid-19 contracts uncovers new evidence of dodgy deals involving billions of rands, including over R2-billion spent on contracts for hand sanitiser and hospital upgrades that were first brought to light in investigations by Maverick Citizen.
On Wednesday the Presidency released the 7th progress report issued by the Special Investigative Unit (SIU) of its investigations into allegations of corruption in relation to Covid-19 and the National State of Disaster under Proclamation R23 of 2020. The latest report to be published was originally handed to President Ramaphosa in July 2022. It is a supplement and update on the SIU’s ‘final’ report made public in January 2022.
However, such is the nature of corruption and such was its scale during the worst months of the Covid-19 pandemic that even the SIU’s investigations are continuing on some cases.
A very final report is promised in December 2022.
Read more in Maverick Citizen’s earlier report here: “Net tightens as SIU submits ‘supplementary report’ on Covid-19 procurement corruption to president”
Read the latest SIU Covid-19 report in full here: https://www.thepresidency.gov.za/content/r23-2020-second-final-june-2022-consolidated-report-proclamation
The explosive new report records how on 30 June 2022 (the cut-off date for the present report), the SIU had investigated a total of 5,482 contracts. Only 9% of these investigations are now incomplete.
The completed investigations are into contracts valued at R15.2-billion, and a further R2.5-billion is still under investigation. According to the Head of the SIU, Adv Andy Mothibi, who has signed the latest report, a final report is due to be submitted to the President by 15 December 2022.
Although a significant number of contracts have been cleared, in total the SIU say they have uncovered irregularities in 2,951 contracts covering R8.2-billion.
The SIU also reports significant progress on action arising from its findings. Since December 2021 the number of matters enrolled at the Special Tribunal, which aims to invalidate contracts and recover funds after applications lodged by the SIU, has gone up from 45 to 55. The SIU is now seeking to recover over R2.2 billion.
The number of matters the SIU has referred to the “relevant prosecuting authority” has also increased from 386 to 408.
Several of their investigations are ongoing. They include allegations of corruption that were first brought to light by Maverick Citizen, particularly concerning the Gauteng Department of Health’s hospital infrastructure programme and the South African Police Services’ (SAPS) more than R1-billion splurge on hand sanitisers and other PPE in the early days of the Covid-19 pandemic.
Read more in Daily Maverick: “SIU investigation reveals PPE procurement irregularities in KZN’s Newcastle Local Municipality”
The latest SIU report is 349 pages long and is being carefully scrutinised by the Daily Maverick. Further reports on its findings will follow. However, in this article, we focus on the findings and recommendations made by the SIU in relation to two big investigations that we have focussed on in the past.
Gauteng’s billion-rand+ ICU ‘field hospitals’
The first is an investigation the SIU says it has now completed and concerns a R1-billion+ spending programme, using Alternative Building Technologies (ABT), that was supposed to rapidly expand the number of ICU beds by 1,400 in four Gauteng hospitals in time for the ‘first wave’ of Covid-19.
The hospitals are Chris Hani Baragwanath, Kopanong, Jubilee and George Mukhari.
Read more in Daily Maverick: “Gauteng’s ‘new’ R1.2bn Covid-19 ICU hospitals still lie abandoned, unfinished or underused”
In a series of articles published in 2020 Maverick Citizen first uncovered and questioned this expenditure, primarily through careful analysis of the Gauteng government’s Covid-19 monthly Expenditure Disclosure reports, but also by revealing how leading doctors in the province, such as Dr Nathi Mdladla (at the time the chief of ICU at George Mukhari), had questioned whether they were needed from the outset.
The Expenditure Disclosure reports covered the months April 2020 to January 2021. Without any explanation, the last report was for January 2021. Thereafter they suddenly stopped being published. But the brief open window was enough for us to spot and document several gross irregularities.
Despite what we revealed, the Gauteng government repeatedly dismissed claims of malfeasance in relation to the ABT hospitals. On April Fool’s day this year, 2022, the Gauteng Department of Infrastructure Development — several of whose senior officials are currently suspended and under investigation — issued a statement personally attacking Mark Heywood and Daily Maverick, claiming that the stories were “devoid of basic fact” and a violation of the Press Code. In the course of defending the ABT facilities, they claimed the articles to be “baseless and distorted” and that Heywood “has even gone as far as claiming widespread corruption without a shred of evidence.
But now the SIU’s findings largely confirm our suspicions.
In the section of the report dealing with Gauteng’s ‘infrastructure projects’ they record that the allegations were first reported to the SIU by the office of Gauteng Premier David Makhura. They list all the ABT contracts Maverick Citizen identified and point out that the Professional Service Provider, whose identity and exact role is unfortunately not explained, was appointed with “no proper selection process … in that only one service provider was approached by the DID on behalf of the Gauteng DoH.”
After interviewing “all role players and officials involved in the process” the SIU records that:
“All Supply Chain Management processes were followed with the appointment of contractors. However, The SIU is still to determine whether the State received any value for money for the contract. The SIU is in the process of appointing a Quantity Surveyor (QS) to assist in the quantification and evaluation of refurbishment and construction costs related to the projects.”
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Indicating that they know what they are looking for, the SIU adds that “The brief to the QS will also include commenting on the bill of quantities for each contractor.” This is an issue Maverick Citizen was also alerted to by sources who questioned why all the contracts were awarded on a turnkey basis.
In ‘Steps Taken’ on this matter the SIU states it is investigating disciplinary action against an official involved and “will consider instituting civil proceedings when the QS report has been received and reviewed.”
Given that this SIU report was penned five months ago, one can assume that this process — although not covered by the report — is well under way.
Red Roses Africa (Pty) Ltd
The entry point for Maverick Citizen’s investigation into a company with the arresting name of Red Roses Africa (Pty) Ltd, was a database and website maintained by the National Treasury (NT) on all Covid-19 expenditures incurred by all government departments in all provinces.
Read more in Daily Maverick: “South Africa’s Covid-19 expenditure unplugged”
This once again proves the value of transparency and access to information. Unfortunately, however, it appears that National Treasury has now removed the dashboard as the website too no longer exists!
We noticed (how couldn’t you with a name like that) that Red Roses Africa had scored contracts worth over R515-million and that the exact same amount also appeared to be recorded twice on the NT database under two different companies’ names, the second being Mainstreet 699.
Read more in Daily Maverick: “La Vie en Rose: A single Mpumalanga company robbed SAPS of hundreds of millions in Covid-19 PPE tender”
Read more in Daily Maverick: “Competition Commission and SIU investigate police’s disinfectant supplier Red Roses Africa”
This matter was directly drawn to the SIU’s attention by Maverick Citizen in September 2021. In addition, a whistleblower contacted the SIU.
In the latest SIU report, the current status of their investigation into Red Roses Africa is recorded towards the end of the report (on page 330) under the more than R2-billion of investigations that are still “MATTERS ONGOING”.
Despite this, it’s clear that the investigation is at an advanced stage and a surprising amount of detail is provided by the SIU.
The SIU report makes for very interesting reading. It points to a possible web of collusion that extends beyond the SAPS and Mainstreet 699 and into the Treasury and possibly even Dis-Chem. However, at its heart, says the SIU, is “a contract to the value of R596,720,800 … awarded without following SCM processes and approved by Brigadier Mahlangu.”
The report goes on:
“The whistleblower alleged there was a complete dereliction of duties and complete disregard of accountability by two senior managers. The SCM department is alleged to be involved in collusion, price inflation, flouting procurement processes and policies. The whistleblower also alleged that the following officials were involved in perpetrating these irregularities:
- Lieutenant General J Riet: SAPS Acting Divisional Commander: Supply Chain Management, and
- Mrs Duiker, Executive Manager: NT.
The dubious role of Lt Gen Riet in SAPS PPE corruption has previously been reported on by the Daily Maverick. However, the Hawks’ investigation into the allegations has been slow and opaque. As a result, according to the latest SIU report, Riet “took an early pension at the end of April 2022 … and as such disciplinary action cannot be instituted against him.”
The tale the SIU unravelled would be laughable were it not so tragic and costly. Read about it from the SIU’s mouth below:
In essence, it involved an “unsolicited bid” from Mainstreet 699 who made a fraudulent claim to SAPS that they had a non-existent Chinese company with an airbus ready to fly PPE to South Africa, to meet a glut in supply that SAPS couldn’t fill. But in fact, it reveals the SIU (after interviews with 24 members of SAPS and the National Treasury), there was no airbus and no company.
In fact, say the SIU, the purchases were made from Dis-Chem Pharmacy. The SIU reported that Dis-Chem were subpoenaed to provide all invoices for the medical products that were bought by Mainstreet 699 between 1 April 2020 and 30 May 2020.
The result was a festival of price gouging that will have made some people instant millionaires:
“Mainstreet 699 charged SAPS R5,400 per 25 L hand sanitiser … while they bought their 25l sanitisers locally at Dis-Chem for R1,150 including VAT.”
To add insult to injury, the SIU also found that the PPE that was purchased was “over and above the PPE that had already been purchased by SAPS to the value of R161,114,875 … and that it was [already] presumed that SAPS had sufficient PPE items for their members.”
Although this investigation was not complete by the time the SIU wrote this report, it seems likely that it will have been completed since then. For example, according to the SIU, the CEO of Red Roses Africa/Main Street 699, Blessing Qwabe was summoned to an interview with SIU in June 2022.
The SIU also record their intention “to refer the matter to the Special Tribunal to set aside the contract” and to the NPA “for possible corruption.”
Yesterday SIU spokesperson Kaizer Kganyago acknowledged the report, saying it is the President’s prerogative to publish it, but declined to comment on its contents.
Speaking on behalf of the Presidency Vincent Magwenya told Maverick Citizen: “We are encouraged by the actions that have been taken against various individuals and entities involved in the corruption outlined in the report. Where action has not been taken we expect due process to take its course.” DM/MC