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R114.2m saved by probe into allegations of corruption, misuse of public funds for Covid-19 PPE

President Cyril Ramaphosa has released a report of the Special Investigating Unit's probe into allegations of corruption and misuse of public funds related to personal protective equipment. Picture: Elmond Jiyane/GCIS

President Cyril Ramaphosa has released a report of the Special Investigating Unit's probe into allegations of corruption and misuse of public funds related to personal protective equipment. Picture: Elmond Jiyane/GCIS

Published Jan 26, 2022

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Pretoria - The Special Investigating Unit (SIU) probe into allegations of corruption and misuse of public funds related to personal protective equipment (PPE) for the Covid-19 pandemic had saved the state a potential of R114.2 million. As a result of the investigation contracts set aside for being irregularly awarded amounted to R170.4m.

The report, which implicated President Cyril Ramaphosa’s former spokesperson Khusela Diko, former health minister Dr Zweli Mkhize and erstwhile Gauteng health MEC Dr Bandile Masuku, among others, was compiled following an 18-month investigation.

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Ramaphosa finally released the report to the public yesterday and hailed it as “an important step in our fight against corruption in the public and private sectors, and against maladministration”.

He said: “This investigation targeted individuals and institutions who believed they could exploit a moment of national vulnerability to enrich themselves and those with whom they colluded to abuse public resources.”

The report highlighted how many PPE contracts awarded by different state institutions were irregular, unlawful or fraudulent. It also outlined steps taken against those implicated in wrongdoing and imminent actions to be instituted.

Ramaphosa said: ”The final report details matters referred by the SIU to the National Prosecuting Authority (NPA), departments and entities in the public sector and other parties, who will finalise the process of bringing wrongdoers to book and addressing weaknesses identified by the SIU investigation.”

At least 330 referrals were made by the SIU to departments and State entities for the purpose of taking administrative action and in some instances included blacklisting those involved as part of punitive measures.

An amount of R551.5m in value of actual cash and assets would be recovered as part of the investigation.

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So far, a total of R34.2m in cash and assets value have been recovered.

Royal Bhaca Projects, a company managed by Diko’s late husband Madzikane II Thandisizwe Diko and its sister company, Ledla Structural Development, were found to have contravened Section 8(1)(a) of the Competition Commission Act by providing goods and services but charging excessive, unfair and unreasonable prices.

The Gauteng Department of Health then under Masuku awarded contracts to the total value of approximately R125m to Royal Bhaca and a contract to value of approximately R139m to Ledla.

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The report found that both Royal Bhaca and Ledla were not registered with the South African Health Products Regulatory Authority and “may not deal in medical devices”.

“Ledla is directly linked to Royal Bhaca, and the directors of Ledla were actively involved in negotiating for and on behalf of Royal Bhaca with manufacturers and suppliers to source the PPE that Royal Bhaca had to deliver to the Gauteng DoH, while also conspiring with one or more of such manufacturers or suppliers artificially to inflate the price(s) of the PPE goods with an agreement to share in the artificially created profit,” the report said.

According to the investigation, both Royal Bacha and Ledla were irregularly awarded contracts without following any competitive bidding process. The department suffered losses as a result of the actions of the directors of Ledla and Royal Bhaca overcharging on PPE items purchased.

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Masuku, according to the SIU’s investigation, “failed to fulfil his obligations to comply with the Constitution; with his general oversight responsibilities in respect of the department which contributed thereto that the department failed to comply with the prescripts of the Constitution, and his obligations in terms of the PFMA”.

The SIU referred to head of supply chain management, Thandi Pino, for disciplinary action to be taken against the department.

Ramaphosa had already disciplined Khusela Diko and given her a final written warning.

The report also probed the awarding of National Health Insurance (NHI) media campaigns and the subsequent Covid-19 communications tender to Digital Vibes while Mkhize was in charge.

“The Gauteng Department of Health irregularly concluded a contract with Digital Vibes (Pty) Ltd for the procurement of a media awareness campaign in respect of the National Health Insurance (NHI) for R14m in terms of which R25m was paid thus far, which was irregularly extended to include a Covid-19 awareness campaign in terms of which R125m was paid thus far,” the report said.

It said that in June last year the SIU successfully applied for an interim preservation order

or interdict “to freeze a total of R22m held in 10 accounts, pending the outcome of a review application to be brought by the SIU before 29/07/2021 to review and set aside the appointment of Digital Vibes in respect of both the NHI and Covid-19 media campaigns for a total value of R266m”.

The presidency said the SIU has investigated 5 467 contracts awarded to 3 066 service providers with a total value of R14.3 billion. “Investigations have been finalised with respect to 4 549 contracts, of which 2 803 contracts were found to be irregular. This amounts to 62% of the finalised investigations,” it said.

At least 45 matters collectively valued at R2.1bn have been enrolled with the Special Tribunal on corruption, fraud and illicit money flows.

“The Special Tribunal has a statutory mandate to recover public funds syphoned from the fiscus through corruption, fraud and illicit money flows, and engages in civil action that is more flexible and less time-consuming than adversarial,” said the Presidency, adding that 224 referrals were made by the SIU for disciplinary action against officials in government departments or entities.

At least 386 referrals were made to the NPA and three for executive action.

The report did not include “details of ongoing investigations into allegations received by the SIU after the timeline set for matters to be included in the final report”.

“The SIU expects these matters, which are covered by the proclamation, to be completed between March and April before the submission of a supplementary report to the president at the end of June,” said the Presidency.

Pretoria News

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