Pretoria - The R100 million personal protective equipment (PPE) contract controversially awarded to Zakheni Strategic Supplies (Pty) Ltd by the Gauteng Department of Health has been set aside by the Special Tribunal.
The Special Investigating Unit (SIU) had approached the tribunal in a bid to review and set aside the multimillion-rand contract on the basis that it was unlawfully awarded and tainted by procurement irregularities.
The tribunal concluded that chief financial officer Kabelo Lehloenya, who singularly issued the tender to Zakheni in April 2020, was not authorised to do so. Judge Lebogang Modiba said according to Gauteng Circular 3, the head of department was “resposible and accountablef or Covid-19 procurement decisions and the implementation thereof”.
He said the circular established a committee to co-ordinate procurement in the province. “It does not authorise the CFO to singularly make decisions on the procurement of the supplies. I therefore find, as contended by the SIU, that the CFO lacked the authority to singularly award the impugned contract to Zakheni,” Judge Mothibi said.
Lehloenya issued the commitment letter to Zakheni to supply the equipment to the department to the value of R103 770 000. The judge further pointed out that “the irregular manner” in which the contract was awarded violated the constitutional values of fairness, transparency, equity, effectiveness and cost effectiveness.
“Therefore, it is just and equitable to set aside the contract,” the ruling said.
In its application, the SIU alleged that Zakheni director Thembile Sangoni had family relations with former president Cyril Ramaphosa’s spokesperson, Khusela Diko. It further said that “Sangoni is a politically exposed person”.
The SIU suggested that “the contract was awarded in furtherance of a corrupt scheme”. The awarding of the contract was also found to have been out of keeping with Treasury regulation.
According to the SIU, Zakheni priced the face mask items it supplied to the department in excess of the maximum price set by the National Treasury.
The judge said Zakheni was not entitled to profit from an irregular contract.
“I find no basis to exercise my discretion to permit Zakheni to benefit from the contract under the present circumstances. It is therefore just and equitable that Zakheni is ordered to account to the department for the profits it has earned or stands to earn from the impugned contract and to be divested of such profits,” the Judge said.
The company was divested of “all the profit that has or will (have) accrued to it under the contract the Gauteng Department of Health awarded it on April 20 2020 for the supply of PPE items”.
Zakheni opposed SIU’s application and also counter-applied for an order declaring that the department and the company are bound to give effect to the contract.
However, its case was dismissed and it was ordered to pay the legal costs.