A Special Investigating Unit (SIU) investigation has uncovered procurement irregularities in two contracts awarded by the Lejweleputswa District Municipality in the Free State to Biomass Equipment (Pty) Ltd for hand sanitiser and disinfectant. 

The municipality failed to ensure the prices charged by Biomass were in line with the prices for personal protective equipment (PPE) determined by National Treasury, resulting in irregular expenditure amounting to R198,792.74 incurred by the municipality.

This is according to the SIU’s supplementary “final” report on its investigation into allegations of corruption in the procurement of goods and services during the National State of Disaster. 

The SIU’s final report on its Covid-19 investigations into possible corruption in procurement was made public in January this year, after it was submitted to the Presidency in late 2021, Daily Maverick’s Ufrieda Ho reported. However, not all investigations were finalised, necessitating a supplementary “final” report on outstanding matters being handed to the President in July 2022. 

Reard in Daily Maverick: “Latest SIU report reveals billions more rands of unlawful and dodgy Covid-19 spending exposed” 

Lejweleputswa District Municipality

The Lejweleputswa District Municipality area is in the northwestern part of the Free State and is made up of five local municipalities: Matjhabeng, Masilonyana, Nala, Tswelopele and Tokologo.

The Auditor-General’s (AG) report on the 2020/21 municipal audit outcomes revealed that Lejweleputswa Municipality received an unqualified with findings audit outcome. This means the municipality was able to produce quality financial statements “but struggled to produce quality performance reports and comply with all key legislation”. 

Both the AG and the local governance ratings agency Ratings Afrika (RA), in its annual municipal financial sustainability index (MFSI), have identified Free State municipalities as the worst-run in the country. Not a single municipality in the province has received a clean audit in the past five years. The dire situation in the province has already led to a breakdown in service delivery which has fuelled unrest in many communities, as residents have grown increasingly dissatisfied with pothole-riddled roads, having to go for days without water, and refuse sometimes not being collected for weeks.

Read in Daily Maverick: “AG slams failing Free State municipalities after no clean audit in 5 years”

The SIU investigation into Lejweleputswa District Municipality was triggered by allegations from a whistle-blower who claimed in November 2020 that municipal officials were abusing Covid-19 regulations in the appointment of service providers. But because of a lack of information, the SIU hit a stumbling block and was unable to proceed with the investigation at the time, and the matter was temporarily closed.

On 14 June 2021, the SIU obtained further information pertaining to the complaint by the whistle-blower and other Covid-19 related allegations, which pointed to the irregular appointment of service providers by Lejweleputswa. This enabled the unit to reopen the case and proceed with its investigation. 

Read in Daily Maverick: “SIU investigation reveals PPE procurement irregularities in KZN’s Newcastle Local Municipality”

Read in Daily Maverick: “Latest SIU report reveals billions more rands of unlawful and dodgy Covid-19 spending exposed”

The investigation into 24 of the contracts awarded by Lejweleputswa to Biomass Equipment (Pty) Ltd was concluded and the findings were detailed in the report submitted to the President in late 2021. No irregularities were found in respect of these 24 contracts, according to the SIU. 

However, the investigation into two remaining contracts awarded to Biomass and valued at R198,792.74 required further investigation. The two dodgy Covid-19 contracts for PPE identified for further scrutiny were: 

• Electrostatic sprayer valued at R159,215.49; and
• Virus Gobbler valued at R39,577.25.

With regard to these contracts, the SIU found that the procurement process followed by the municipality in procuring the goods and services from Biomass was irregular, “in that it was not fair, equitable, transparent, competitive and cost-effective”. 

The irregular expenditure amounted to R198,792.74 being incurred by the municipality – which is the total value of the contracts awarded to Biomass. 

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In this case, the SIU made three referrals for disciplinary action to the executive mayor of the municipality on 8 March 2022, and one criminal referral to the National Prosecuting Authority (NPA) for corruption.

The disciplinary referrals were made against municipal manager Palesa Kaota, chief financial officer Pantalo Pitso and supply chain manager Bankitsa Baloyi, for acts of criminal misconduct in that they “deliberately or negligently made or permitted Lejweleputswa to make irregular and fruitless and wasteful expenditure”. 

Read in Daily Maverick: “Final SIU Covid-19 corruption report released – now comes Ramaphosa’s time for tough action”

The disciplinary referrals, the report says, are under consideration by Lejweleputswa. 

Additionally, a criminal referral was made to the NPA on 14 March 2022 against Koata for corruption. The referral is under consideration by the NPA. 

The SIU added that it is considering civil litigation “to recover potential losses” by the municipality. DM