Hlongwa’s R1.4bn ‘corruption ring’
Johannesburg - Gauteng ANC heavyweight Brian Hlongwa faces imminent, and would face multiple charges of corruption and money laundering related to two tenders worth over R1.4 billion, sources have told The Sunday Independent.
Hlongwa, the former MEC for health in Gauteng, has emerged as a central figure in the tender scandal that threatens his career as well as that of other officials implicated. He allegedly received kickbacks from both firms.
Allegations have also been made that the ANC in Gauteng benefited from the kickbacks.
The R1.4bn has become a honeypot in a tug-of-war between the government’s Anti-Corruption Task Team (ACTT) and two companies, 3P Consulting and the Baoki Consortium. The two companies allege that they are owed the millions for services rendered in terms of two separate tenders granted by the Gauteng Department of Health.
However, the ACTT – made up of the Hawks, the Special Investigating Unit, the Asset Forfeiture Unit and the National Prosecuting Authority (NPA) – contend the millions that the two companies claim belong to them, are, in fact, proceeds of crime.
The NPA this week asked the South Gauteng High Court to place preservation orders on any claims 3P and Baoki have filed, ensuring that if it was unable to forfeit the claims altogether and the companies are successful, they would still forfeit the money.
In 2007, 3P won a tender to set up a Project Management Unit at R120m. But 3P contracted 144 entities to provide services to the department and extended their contract by three years, eventually paid R392m by the time Health MEC Qedani Mahlangu cancelled the contract in 2009.
In 2008 Baoki was given a R1.2bn tender to set up a health information system and electronic health record.
It was paid over R400m without installing any system by the time its contract was cancelled one year later.
Should the NPA’s preservation orders be finalised, it will come as a massive reprieve for the Gauteng Department of Health, which has been embroiled in legal battles with the two companies since 2009, when Mahlangu replaced Hlongwa and cancelled the two contracts.
Both are demanding the financial remainder of their contracts.
They will be allowed to oppose the application and – according to sources within the task team – the State’s toughest litigators are preparing themselves for a lengthy and gruelling battle to ensue as the companies attempt to recoup their gains.
Firm 3P Consulting, which is currently in liquidation, is claiming over R100m from the department.
This week liquidator Kevin Chow from the Harvard Corporate Rescue Services referred queries to attorney Alec Brooks of Brooks and Brand Incorporated, who is handling the insolvency inquiry into 3P on behalf of the liquidators.
Brooks, however, told The Sunday Independent that he could not comment on the matter as he was still awaiting the orders.
Attorney James Haydock, speaking on behalf of the Baoki Consortium, said the consortium was still considering its position.
The department has been unable to resolve an arbitration with the Baoki Consortium for over R650m it claims to be contractually owed.
Baoki and the provincial health department have been in arbitration since June last year when they hit a stalemate.
Haydock said that the arbitration by nature was confidential.
The companies will have eight days to lodge their appeals.
The NPA’s court action this week is the culmination of four years of investigating by the SIU and the Hawks.
Hawks spokesman Paul Ramaloko declined to disclose who the criminal proceedings would target first.
Task team sources have told The Sunday Independent that Hlongwa is top of the list.
The application for the restraining order has lifted the lid on an intricate web of corruption, allegedly indirectly co-ordinated by Hlongwa and his friend Richard Payne, who owns 3P Consulting. As part of the evidence submitted to the court, reports and affidavits have detailed the two allegedly orchestrated a system where their officials and employees would inflate bills, double invoice the department, claim for services not part of the account and extend the contracts.
They would also create fraudulent claims to siphon money off the department in exchange for all expenses-paid overseas trips, construction, large-scale renovations and lavish furniture for their homes.
Hlongwa is alleged to have pocketed over R3.5 million in cash, been sponsored the use of a chartered helicopter and given the use of a 3P executive wing as offices for him and his officials.
As part of the restraining |order, the National Prosecuting Authority also placed a preservation order on a R7.2m Bryanston mansion, which Hlongwa bought with the help of a R1.6m cash injection from 3P Consulting director Richard Payne and another R1m from businessman and friend Niven Pillay.
Aside from several overseas trips, Hlongwa also received chauffeur-driven trips with his wife |Joeline to a Sandton boutique hotel for an R8 000 spa treatment.
Neither Hlongwa nor Payne answered calls on Saturday.