By Selby Makgotho
Tobie Wiese, in his book Corporate Governance in South Africa with International Comparisons, warns of the dangers and adversarial effects of financial scandals and the repercussions on the country’s stability and growth.
The release of the first and second reports of the Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector including Organs of State, as well as the release of the 700-odd page Special Investigations Unit (SIU) report into allegations of irregularities, unlawful as well as irregular procurement of the Covid-19 pandemic personal protection equipment (PPE) stand in sharp contrast to what Wiese warns about.
The two reports point in one direction: collapse of ethical governance in public and private institutions. While mindful that the veracity of the allegations still have to be contested and won in courts, at face value the picture painted is gloomy.
At the Special Tribunal, there are more than 45 applications brought by the SIU to review and set aside the multitudes of contracts with a financial value of R2.1 billion.
Special Tribunal Judge Lebogang Modiba, correctly, observes that this court has been inundated with review applications to set aside tenders for the supply of PPE items.
The Tribunal is a breather in the sense that, had it not been in existence at this time, the SIU would be in the queues at the high courts trying to obtain the dates for hearings.
In one of the matters before her, SIU v MEC for Department of Treasury: Free State Province, Judge Modiba reminds us that news of rampant corruption and irregularities in the Covid-19 related procurement began to surface shortly after the various levels of government, in haste, procured PPE items to combat the spread of Covid-19.
It is unprecedented that a single Presidential Proclamation (R23 of 2020) has unravelled so many financial irregularities in the procurement of goods and services as well as payments made in a manner that is not fair, competitive, transparent, equitable or cost-effective.
These ills are contrary to the applicable constitutional, statutory and regulatory provisions in relation to the State of National Disaster declared on March 15, 2020.
The SIU, following on its investigative work in various state organs, instituted several legal proceedings in the Special Tribunal to have the tenders reviewed and set aside for lack of compliance with the applicable constitutional, statutory and regulatory requirements.
The contracts that are before the Special Tribunal are instituted in this context. In some of the hearings related to the PPEs, there has been significant progress.
These include the review and setting aside of the R10.1 million Eastern Cape scooter project; the R38.7m Ledla Structural Projects (Pty) Ltd – Ledla lost its attempt to appeal against the Special Tribunal ruling at the Supreme Court of Appeal; the AngloGold Ashanti Hospital where the costs ballooned from R50m to R500m; and the R39.1m Free State PPE contracts.
The Anglo Gold Ashanti companies last week lost their bid to have the Special Tribunal reconsider its initial preservation order. The matter is ripe for a review application hearing.
Judgments have been reserved in the R431m Gauteng Department of Education schools decontamination tender and in the R21.8m Beitbridge border fence saga.
The SIU v Digital Vibes and 29 Others case is also in the pipeline. Bundles of affidavits filed at the Special Tribunal paint a picture of high-ranking officials letting their guard down.
An amount of R22.4m has been preserved pending the institution and finalisation of review proceedings and the joinder application which has recently been instituted.
The financial value of the contract amounts to R150m. Divesting of profits on the tenders paid (and yet to be paid) has been explored in the majority of the contracts.
Based on the evidence, it is common cause that the contraventions were avoidable and could have been averted in the interest of public funds. In the SIU v MEC for Provincial Treasury: Free State and Others, it was found that only three out of the 36 service providers had complied with the technical requirements and provided correct surgical gowns.
This led to the conclusion that the respondent entities be divested of the profit they have or stand to derive from the tender. The SIU should enlist the services of independent experts to assess the fair value of the surgical gowns and report back on their findings.
This is while the department has already paid R9.5m of the R39.1m contract with R23-odd million worth of invoices still to be remitted. This is just one of the many incidents in these PPE procurements.
Judge Modiba makes the correct assertion that “the relief must fit the injury”. She directed the accounting officers to invoke the provisions of the Public Finance Management Act against the implicated departmental officials to recover any fruitless and wasteful expenditure incurred or to be incurred. It is time that we take the words of Wiese seriously and to stop the corporate failures and scandals.
* Selby Makgotho is an advocate and a PhD candidate in Public International Law at Unisa and spokesperson of the Special Tribunal
** The views expressed here may not necessarily be that of IOL.