Durban – A deal agreed to by the KwaZulu-Natal (KZN) health department to repair and maintain two state-of-the-art cancer machines that could cost taxpayers as much R58 million broke literally every rule governing the way government departments are meant to procure services.
There was no tender for the deal. It was never advertised. And to top it all, Dr Nkanyiso Johnson Zwane and his company KZN Oncology Inc are not the authorised agents of Varian, the company that manufactured the two RapidArc linear accelerators which were installed in Durban’s Addington Hospital in 2009.
Dr Zwane, who qualified as an oncologist in 2014, told senior health officials last month that he was an authorised agent of Varian in KwaZulu-Natal and would provide them with a letter of appointment.
However, Varian this week said that neither Dr Zwane nor KZN Oncology Inc is their agent. “Varian does have an established entity in South Africa and our long-time exclusive distributor in South Africa is TecMed Africa, who provide sales, service and support,” a spokesman said in an email in response to questions asked by African News Agency (ANA).
In written questions submitted directly to Dr Zwane, he did not claim to represent Varian, but said he represented a company called Oncology Services International (OSI), which Zwane described as “an industry leader in the USA and the world in post warranty maintenance and service of linear accelerators”.
He argued that it was up to the department to decide who it wanted to service its machines.
“Varian is at liberty to nominate whoever they would like to represent them in South Africa. Note that these machines were post warranty and as such the owner of the machines (KZN health department) is at liberty to choose whoever they want to service their machines.”
Even so, the health department’s own regulations at the time required that it deal with recognised agents for machinery and that it cannot deal with third party suppliers - which is exactly what KZN Oncology Inc is. It is also believed that the regulations in terms of the Hazardous Substances Act 1973 require that these machines may only be serviced by authorised agents.
A further problem stems from the decision of Dr Sifiso Mtshali, the head of the KZN health department (HOD), to give a company that legally did not exist at the time access to the two machines in July last year.
KZN Oncology Inc was only registered as a company with Companies and Intellectual Property Commission on August 25, 2015 - almost five weeks after Dr Mtshali sent a memorandum to the KZN health department’s acting chief financial officer Sihle Mkhize and Deputy Director General (DDG) Dr Millicent Lindiwe Beryl Simelane on July 10, 2015, instructing them to allow KZN Oncology Inc’s technicians to evaluate and repair the two machines which had been lying idle since 2014.
As early as August 2015, before it was registered, KZN Oncology Inc went ahead and did work on the machines to assess them and to quote. Some repair work was already being done before the quote went in. On September 29, 2015, Dr Zwane quoted and invoiced the department R5.49 million for the work to bring the machines on line.
Not only was there no written contract for this work, KZN Oncology Inc was at the time not an approved supplier to government.
A search of the KwaZulu-Natal provincial treasury’s supplier database website on April 6 for KZN Oncology Inc yielded no results and neither did a search of the new Central Supplier Database yield any results. It had though, according to one treasury official, been registered with the provincial treasury since September 21, 2015 with the temporary number PT110730, the same number that is quoted on the September 29 invoice.
Interestingly, Dr Zwane’s company was allowed to not only do this work without a written contract but also without an official order from the KZN Health department.
The contract that Dr Zwane and Dr Mtshali signed, was only signed on December 17 and the official order for the work, including everything done in August, was only generated in January 2016.
The contract is problematic in itself. It authorises R6.85 million for repairs but it is not exactly clear what the maintenance amount should be.
It reads: “The Service Provider (KZN Oncology Inc) undertakes to provide maintenance services at a monthly rate of R435 000.00 (Four Hundred and Forty Five Thousand rand) excl vat per month for the duration of five years to both machines after activation subject to maintenance terms and conditions to be agreed upon by both Parties.”
So whether maintenance service is R435 000 or R445 000 a month is not clear. Zwane referred all queries on the value of the contract to the KZN health department.
Added to that, a search on the South African Revenue Service website reveals that KZN Oncology Inc is not yet registered to pay VAT (value added tax).
And the order in January? Interestingly the order book has a space for a contract or tender number to be filled in and the number that has been filled in there is ZNQ 889/15/ with the last two digits being unreadable.
A search of the Government Gazette revealed only one tender with those numbers and letters. The tender ZNQ 889/15/16 appears in the Government Gazette of September 11, 2015.
It is not for the repair of two state of the art cancer machines detailed in order 0378066. ZNQ 889/15/16 is not for R5.49 million. According to the Government Gazette, that tender is for “Private cleaning service provider X2 cleaners to cover inside and outside of the Clinic”.
The Government Gazette reveals that the tender was awarded to a company called Athikonke Construction and Trading, whose two cleaners would have to clean Nsimbini Clinic at a cost of R32 604.42 to the health department. Nsimbini Clinic is a primary health care clinic located in rural Umbumbulu, some 50 kilometres away from Addington Hospital, and does not treat cancer patients.
However, while ANA has no evidence proving that the KZN health department has as of yet paid the R5.49 million, it does have evidence that TecMed, the authorised Varian agent, submitted a proforma invoice in June 2015 where it quoted R2.94 million including VAT to get the machines up and running. The TecMed quote for a little more than half the price that KZN Oncology Inc later billed the department was not unsolicited. The KZN health department requested it. However, it also detailed an arrears outstanding amount of R4.89 million for that part of the previous maintenance contract that had not been paid.
The cancer machines of Addington Hospital have had a turbulent history ever since TecMed was awarded the R120 million tender to install and maintain the machines in 2009. That included the five-year R433 000 a month maintenance contract inclusive of VAT, meaning the machines and their installation cost about R94 million while the maintenance contract was worth almost R26 million over five years.
On December 2, 2009, Eljo Smit, the Deputy Director: Ionising Radiation and Medical Devices Control, issued a licence for both machines to operate in terms of the Hazardous Substances Act.
The directorate’s reference is 31/0260 and the licence number is 4531.
In February 2011, following delays, the first cancer patients started receiving treatment at the Addington Hospital facility. The two machines were so efficient that waiting times for treatment were rapidly cut from eight months down to two weeks, with as many as 100 patients a day being attended to.
The facility, with all its accessories was the most modern in Africa at the time, making news headlines and being visited by scores of oncologists from around Africa.
At some stage the relationship between TecMed and the KZN health department went sour.
In a December 2012 interview with The Daily News newspaper, Dr Sibongile Zungu, the KZN health department’s then HOD, claimed that the department had been paying the maintenance contract, but that it could not find the contract detailing TecMed’s obligations.
She told the newspaper that some employees were fired in relation to the tender and that the department was investigating whether the machines had been sabotaged.
“This issue is a web of corruption, lies and deceit. But, we will get to the bottom of it,” she was quoted as saying.
However, it emerged that this was incorrect, because the department had in fact already stopped paying TecMed early in 2012 and while staff were indeed fired, it had been for other procurement irregularities happening at the hospital. Their dismissals had nothing to do with the two cancer machines.
TecMed was never given a reason and after nine months of not being paid, the company stopped servicing the machines.
Professor Ammo Jordaan, who was instrumental in getting government’s approval for the machines and who headed up Addington Hospital’s oncology department from 1980, resigned in anger and frustration at the department’s failure to keep the machines going.
He is adamant that none of the people he worked with at the hospital or department were dismissed over the tender, as Zungu had claimed.
“I am not aware of any accusations made in court or any person or company sentenced in court for corruption in the oncology contract,” he said.
Mashaka Enos Ravhura, who was department’s chief financial officer in 2012, said: “There was a lot of talk about this (TecMed) contract being corrupt. But I never saw anything. Nobody brought me anything to show this (corruption). Nothing.”
By late March 2013 both machines had stopped working and Addington Hospital cancer patients were being bussed to Durban’s Inkosi Albert Luthuli Hospital. According to one radiologist, who spoke to the South African Press Association (Sapa) at the time, the waiting period for treatment had increased from two weeks to five months.
Radiotherapists were so distressed at having to change patients’ care from being curative to palliative. A number underwent counselling at the department’s expense and, following Jordaan, a second experienced oncologist, Dr Neil Narsai, quit as did a number of radiologists.
The saga over the machines standing idle went public with a report by Sapa being widely published and both Carte Blanche and eTV broadcast reports on the saga .
Within days of the Carte Blanche broadcast, KwaZulu-Natal health MEC Dr Sibongiseni Dhlomo called a press conference announcing that the department would pay TecMed but that investigations would continue.
Only one payment was subsequently made and by February 2014 the machines were again standing idle after TecMed again refused to continue servicing the machines without payment.
It is not clear what happened with the original TecMed tender or if it is even currently being investigated.
Seven years of investigations by police (the Hawks) and forensic auditors have failed so far to show any crime, let alone led to charges. To date it is not known what the actual allegation is that the Hawks are investigating, and so far nobody from TecMed has been criminally charged. The company itself has also not been charged.
Complicating the matter is that it is not even clear if there is a police case number for the cancer radiotherapy machines tender that was awarded to TecMed.
A case of urinating in public was one of the case numbers that Dhlomo presented to the KwaZulu-Natal provincial standing committee on public accounts (Scopa), according to the Democratic Alliance’s health spokesman Dr Imran Keeka. Police confirmed this.
Not only that, the department has also provided the same two case numbers to Scopa for two different alleged crimes.
Dhlomo went further to claim at that Scopa sitting that TecMed had installed old machines. Exactly what he meant is uncertain as the United States Food and Drug Administration only approved the type of machines installed in Addington Hospital in January 2008. Varian only started shipping the RapidArc linear accelerators to customers in the Spring (April/May) of 2008. At best, the machines were a year old by the time they arrived on South African shores from the factory in Palo Alto, California.
In November 2014, Dhlomo then announced that patients were being sent to a private hospital for treatment. The cost of sending the patients or how many, was never revealed.
So just how did Dr Zwane get this lucrative deal to maintain Addington’s cancer machines?
“I’m a radiation oncologist by profession who was trained using these same machines (at Addington Hospital) by Professor Jordaan. When they went down some years ago because of an issue the DOH (KZN health department) had with the company (TecMed), we were left with a lot of patients who required treatment. We had to explain to these patients that there was an issue with the machines which as you can understand most patients didn’t understand or want to understand.”
After qualifying in mid-2014, Zwane left the KZN health department’s Inkosi Albert Luthuli hospital with what he says was the intention of getting the Addington Hospital machines fixed.
It was then that he found out about OSI. “I then contacted them and signed a sole agreement with them after which I wrote to the DOH (KZN health department) and offered them our services.”
Nine days after the Inkosi Albert Luthuli Hospital’s manager - Dr Mtshali - was appointed to head up the KZN health department, he received a letter from Dr Zwane offering to evaluate the machines. A day later he instructed Simelane and Mkhize to allow KZN Oncology Inc’s technicians access to the machines.
There is no hard evidence showing that Dhlomo or Zungu had anything to do with the current deal with Dr Zwane, but they were certainly very much against the previous TecMed deal, which despite seven years of investigations has failed to provide a shred of evidence of corruption as they have repeatedly claimed.
In terms of the current deal with Dr Zwane and his company, HOD Dr Mtshali, Deputy Director General Simelane, Acting chief financial officer Mkhize and the head of supply chain management, Mondli Mlangeni all played a role in ensuring it went ahead, despite the non-adherence to the department’s own rules and the fact that there was a more cost effective quote from the authorised agent of Varian in South Africa. The role of the KZN health department’s Health Technology Services in this deal is uncertain, but they are responsible for ascertaining the functioning of such complicated machinery before any payment is made. All were aware of the deal with Zwane and many were aware of the quote from TecMed, especially since the department had requested it.
The answer as to why the department flouted its own procurement processes may be in an April 8 circular (Circular G60/2016) that was issued by Credo Mlaba, the KZN health department’s chief director of supply chain management. It authorises exemption from obtaining quotes and advertising “in Respect of the Procurement of Proprietary Items/Services, Highly Specialised Items/Services and Implants not on Contract for 2016/17”. It was signed by Mlaba on Monday and claims that the exemptions were granted by Dr Mtshali.
It is not immediately known whether the Hazardous Substance Act of 1973 and the associated regulations have been contravened.
A document authored by Terry Downes, the national health department’s deputy director general of health technology services state that: “The onus is on the licence holder (in this case, Addington Hospital) to provide a document from the original manufacturer (Varian), naming and certifying the person(s) who have been adequately trained and also certifying that the maintenance and service facilities are acceptable”.
It is hard to see how Addington could have provided this document from Varian, especially since KZN Oncology Inc is not the agent for Varian, who quite clearly state that: “our long-time exclusive distributor in South Africa is TecMed Africa Pty, who provide sales, service and support.”
While KZN Oncology Inc’s Dr Zwane claims that genuine spares will be obtained from OSI in maintaining the machines, Downes wrote: “Any institution, hospital, clinic or business acquiring and using medical devices which outsources the maintenance and/or repair of some or all of its medical devices shall provide written certification that only genuine spares from the original manufacturer will be used.”
It is not clear where KZN Oncology will get such certification since Varian does not do business with it or OSI in South Africa.
Dr Zwane said that OSI is Varian’s largest customer in the US and that is how it would obtain genuine parts. “They have been providing this service in the USA and the rest of the world for over 20 years with over a 100 engineers and over 200 machines internationally under their care. They currently are the biggest consumer of parts from Varian.”
Initial questions emailed to the KwaZulu-Natal health department, sent in March have remained unanswered, despite a reminder in April.
Dhlomo, at a health portfolio Committee meeting in Pietermaritzburg earlier this year, said that a new service level agreement had been signed as the contract with TecMed had lapsed, but he did not name the company or provide any details.
ANA can confirm that one of the machines at Addington is up and running, but that the second is not. Permission for the machine to be used “for clinical purposes” was granted by Smit, the Deputy Director: Ionising Radiation and Medical Devices Control, on March 4.
Dr Zwane also confirmed that one of the machines was up and running. “As a new entrant (to the market) we had to make sure the machine was ready for patient treatment. So these are the steps we followed to allay those fears. We had a private medical physicist calibrate the machine and produce a report. Then we had the three medical physicists from the DOH (KZN heath department) calibrate the machine and produce a second report.”
But Smit’s department as well as the KZN health department will have to explain what happens in the event manufacturer failure of the machines causes excessive radiation that leads to deaths. Last year The Witness newspaper reported that the KZN health department was facing R5 billion in medical negligence claims. On an annual budget of R36.5 billion, it can ill-afford an increase in such claims.
TecMed is still owed R4.89 million, inclusive of VAT, for that part of the maintenance contract the KZN Health department failed to pay. The department could well find itself paying for more lawyers if TecMed decides to turn to the courts to get the KZN health department to pay up.
ANA understands that TecMed have already distanced themselves and warned Smit that they cannot be held accountable because the machines are being serviced and maintained by an unauthorised third party - KZN Oncology Inc.
Addington Hospital was KZN Oncology Inc’s first client, and the relationship between the KZN health department and TecMed appears to be at a low ebb.
But Zwane appears to be optimistic. “Due to the icy nature of previous companies relationship with their clients, private or government, KZN Oncology has been approached by a number of sites to take over the service and maintenance of their linacs,” he said.
But whatever the legal wranglings, current patients will be happy that at least one machine is back online and waiting times for treatment have started to fall.
It will, however, be of little solace to those who saw their loved ones wilt away from potentially curable cancers while the machines were not working. They will find Dhlomo and Zungu’s claims that no patients were compromised as a result of the machines being switched off hard to believe.
Michelle Steele was diagnosed with stage four cervical cancer in early April 2014. She was told that she urgently needed cancer radiotherapy treatment by the oncologist. She was booked in to receive treatment, but her appointments at Addington Hospital kept on being rescheduled.
“They didn’t tell us why (her appointments were being cancelled). Eventually a nurse told us that the machines were down. We didn’t even know,” said Brenden Steele, her son.
It was only a month after he and her mother made an impassioned plea through a local newspaper - the Berea Mail - in July 2014 that she finally started receiving cancer radiotherapy treatment at Inkosi Albert Luthuli Hospital. A full five months after cancer radiotherapy had been recommended.
When both machines were up and running, waiting times were down to two weeks.
Steele, who quit his job in Johannesburg to look after his mother, said that he and his mother understood that if she received the cancer radiation therapy treatment as soon as possible, there was a chance she could have beaten the disease.
Michelle Steele was told in January 2015 that that there was nothing more that could be done. She died on March 17, 2015.
“It’s her birthday today,” said Steele. She would have been 52-years old on April 7.
African News Agency
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