Diko’s Royal Bhaca paid R80m through front company
Johannesburg - The Gauteng Department of Health has paid Royal Bhaca Projects at least R80 million for its personal protective equipment (PPE) services over the past two weeks alone through a front company known as Ledla Structural Development, the Sunday Independent can reveal.
The money was channelled through Ledla in 12 tranches of between R120 000 and R38m after the company invoiced for items that bear a striking resemblance in value, quantity and pricing to the ones supplied by Royal Bhaca, according to payment records, official documents and sources.
It’s unclear whether the R80m payment was the balance or a portion of the R125m contract controversially awarded to King Madzikane ll Thandisizwe Diko, the husband of President Cyril Ramaphosa’s spokesperson, Khusela Diko, in March.
Ledla, based in Boksburg, received the payments between July 20 and 27 even though it did not appear on the original list of 75 successful bidders who benefited from R2.2 billion worth of PPE contracts in Gauteng.
An independent company search indicated that Ledla is a family-owned business whose four directors include Nedbank senior manager Rhulani Lehong-Mboweni.
Previously, King Madzikane claimed he “walked away from the deal” after supplying PPE out of concern over a conflict of interest involving his wife, who is also a Gauteng ANC provincial executive committee member.
However, neither he nor Gauteng Health MEC Bandile Masuku, who also claimed the contract was cancelled, produced a cancellation letter. Instead, King Madzikane claimed he did not take legal action to recoup his money because he was willing to “assist” the government where possible.
“Royal Bhaca was never paid anything from the department in spite of having delivered. It’s amazing that there can be an assertion that there is R139 million that RB has with the department currently,” he said on July 17, in response to an enquiry about contracts.
However, a purchase order issued to Ledla on May 4 bears striking similarities to the two given to Royal Bhaca on March 30 and April 2, 2020.
A comparison shows that the two companies were allegedly awarded two contracts of the same value, supplied the same items, with the same quantity and prices.
The Sunday Independent has reported that King Madzikane was awarded two contracts valued at R78m and R47m to supply 1 million medical waste plastic bags, and 500 000 dust masks, sanitisers and surgical masks. Royal Bhaca charged the Gauteng Department of Health R58 per surgical mask, which has a regulated price of R12.48.
It also inflated other prices and charged R85 per 500ml unit of Actigerm alcohol sanitiser, which is regulated at R46.37, and R7 per medical waste bag, which has a regulated fee of R1.80.
The Sunday Independent was previously told the total value of Royal Bhaca’s contracts was R139m but only had proof for two orders worth R125m. Its contracts, excluding the one for the delivery of 1 million container infectious waste, is also worth R125m.
Like Royal Bhaca, Ledla charged the department R58 per surgical mask, charged R85 per 500ml unit of Actigerm alcohol sanitiser, and R7 per medical waste bag. Ledla’s purchase order shows that it sourced and delivered 3.5 million PPE items on the same day it received an order, on May 4.
The provincial Department of Health had given successful bidders between 14 days and three months to supply PPE in a staggered manner, apparently due to stock shortage in the country owing to demand internationally and the exchange rate issues.
Sources said Royal Bhaca’s payment was redirected to Ledla, which was suddenly given a purchase of the same value after nepotism concerns were raised internally.
“When people started making noise about Royal Bhaca, they quickly withdrew the purchase order and issued a new one to Ledla,” said a source.
Another source said Lehong-Mboweni and King Madzikane worked closely in the sourcing and delivery of the PPE.
On Friday, Lehong-Mboweni confirmed that Ledla was paid after supplying PPE but refused to reveal the value of the contract and the amount paid. She declined to respond to allegations she fronted for King Madzikane, that Royal Bhaca’s payment was redirected to Ledla, her relationship with King Madzikane; why her company did not appear on the original list of successful bidders; when was she awarded the contract; and how she managed to source and deliver 3.5 million PPE items within 24 hours.
King Madzikane said: “I believe that the Special Investigations Unit is currently investigating matters relating to Covid-19 procurement.
"Please may we respect that process and trust it to get to uncover the truth around this matter.”