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Accountants uncover 'parallel' PPE procurement system in Eastern Cape

As oversight bodies examining the plundering of COVID-19 emergency funds have uncovered a sophisticated 'parallel procurement system' in the Eastern Cape, while in KwaZulu-Natal, the legislature says the evidence points to "only a few individuals" having benefited from the large amounts stolen.

 

In the Eastern Cape, COVID-19 funds are plundered to the tune of millions a day by a supply chain management (SCM) system so corrupt it could be said there is a parallel system operating in OR Tambo District Municipality. A Daily Dispatch report says this is according to accounting consultants Ayanda Peyane and Co, also known as Apac, hired by the municipality to probe allegations of financial mismanagement and irregularities.

The findings were presented to a special council meeting yesterday by Apac project manager Msekeli Nqabeni. He warned that the district municipality would continue to “bleed millions” unless it fixed its supply chain system which flouted policy and ran a parallel system.

“The entire SCM process was subverted,” he said. The distortion was so bad that any disciplinary hearings could result in the entire SCM workforce being fired, he added. “Every passing day, the municipality is losing millions. It is an emergency that has to be addressed.”

According to the report, the Hawks and SIU were investigating tender corruption valued at R160m.

 

Provincial governments are said to be losing millions daily on dubious COVID-19 tender procurement as reports from both KwaZulu-Natal and the Eastern Cape indicate. Disguising the identities of beneficiaries of PPE tenders and the paying of exorbitant prices to ensure massive kickbacks are some of the tactics used by KZN provincial government officials to raid the public purse during COVID-19 procurements.

The Witness reports the officials’ tactics were evident in COVID-19 procurement documents released by Premier Sihle Zikalala. Containing details of all the provincial government’s COVID-19 procurement deals, the documents have now become the focus of the KZN legislature’s Scopa.

Provincial Scopa chair, Maggie Govender, said a preliminary investigation had revealed a number of irregularities in COVID-19 procurements by three departments: Health, Education and Social Development. Govender said some of the trends picked up by Scopa in the provincial government’s COVID-19 deals showed that only a few individuals had benefited from the contracts.

By July the three departments had spent close to R2bn on COVID-19, with the Health Department accounting for close to R1.5bn of the total expenditure. However, both internal and external investigations had since confirmed that a substantial amount of the COVID-19 provincial government spending was irregular. Scopa, Govender said, has since given the three provincial departments until the end of the month to provide it with reports on how they had dealt with matters raised by the committee on COVID-19 procurement irregularities.

 

The Special Investigating Unit (SIU) is investigating R5bn worth of contracts allegedly improperly awarded to various companies in the procurement of personal protective equipment (PPE). According to a report in The Citizen, this was revealed by Deputy President David Mabuza during his response to oral questions in the National Assembly. The amount under investigation, notes MedicalBrief, has been previously published, with the SIU as the source of the information.

Mabuza said President Cyril Ramaphosa had ordered the SIU to investigate corruption in COVID-19 spending, “including allegations of impropriety in the awarding of tenders”.

The SIU was probing contracts awarded by the national government, provincial departments and municipalities for PPE procurement, Mabuza said. In recent months more allegations of COVID-19 related corruption have been referred to the SAPS and other law enforcement agencies for investigation, Mabuza added.

 

Pumza Poshee Gambula, whose company allegedly defrauded the OR Tambo District Municipality in the Eastern Cape out of R4.8m, has been released on bail of R20,000, notes a TimesLIVE report. Gambula made a brief appearance in the Mthatha Magistrate's Court on two charges of fraud.

The Hawks arrested Gambula after a three-month investigation into COVID-19 awareness services. Gambula, through her company Phathilizwi Training Institute, which has also been charged along with her, had a contract with OR Tambo District Municipality to conduct awareness workshops on an ongoing basis, NPA spokesperson Sipho Ngwema said.

Between March and June, the company invoiced the district municipality for just over R3m and a further R1.8m. The state alleges that the accused and their employees visited the wards in Port St Johns, King Sabata Dalindyebo and Mhlontlo local municipalities but members of the community were asked to write down their names for COVID-19 social grants.

“No COVID-19 awareness workshops were conducted,” Ngwema alleged.

Gambula's bail conditions include handing in her passport and reporting to the Madeira police station twice a week until the trial is finalised. The matter was postponed to 30 October for further investigation and for the case to be transferred to the Regional Court.

 

The recent arrests of those allegedly involved in corruption and the looting of COVID-19 social relief funds are a testament that no one is above the law. Polity reports that Minister in the Presidency Jackson Mthembu said: "(It also) demonstrates government's commitment to hold to account those who continue to break the law by robbing poor South Africans of much-needed government assistance and aid.”

Mthembu said the cases included those related to the looting of COVID-19 social relief funds.

(It also includes) the fraudulent procurement of COVID-19 personal protective equipment, the scandal related to the asbestos housing project and (the) failure to report or underreporting to the South African Revenue Service. Cabinet fully appreciates and supports all endeavours to recover public funds from all those who have engaged in these fraudulent activities," he said.

 

Former Gauteng Health MEC Bandile Masuku and President Cyril Ramaphosa's spokesperson, Khusela Diko, are, meanwhile, heading to the African National Congress's (ANC's) disciplinary committee (DC), Polity reports that the ANC's provincial executive committee (PEC) in Gauteng has said.

ANC Gauteng secretary Jacob Khawe said the outcome of the disciplinary process would determine if the two would continue being PEC members. Masuku faced allegations of involvement in unlawful personal protective equipment (PPE) supply contracts in the Gauteng Health Department.

A SIU report, dated 1 October, found that Masuku knew about the irregular procurement processes in his department, because senior officials – such as the CFO and head of supply chain management – had kept him informed at every step of the process, as early as April 2020.

It was previously reported that forensic report by Paul O'Sullivan, however, found no evidence to suggest that Masuku interfered in any PPE procurement processes.

Diko, Masuku and Loyiso Masuku, who serves as an MMC in the City of Johannesburg, were all granted a leave of absence following reports of tender corruption at the Gauteng Health Department. Diko's husband, Chief Madzikane II Diko, was awarded a R125m tender to supply PPE to the department, News24 reported.

While Gauteng Premier David Makhura hoped to reinstate Masuku should he be cleared in a final SIU report, the ANC has drawn a line in the sand that he must be replaced.

 

[link url="https://citizen.co.za/news/south-africa/parliament/2374120/siu-investigating-r5bn-worth-of-ppe-procurement-contracts-mabuza/"]Full report in The Citizen[/link]

 

[link url="http://thewitness.newspaperdirect.com/epaper/showarticle.aspx?article=9763b6d6-b4da-4815-9a24-98f17d8524bc&key=IvNaoo8k%2b4PhKub27Q8WSQ%3d%3d&issue=69122020102200000000001001"]Full report in The Witness (subscription needed)[/link]

 

[link url="https://dispatch.pressreader.com/@Lucille_Faro.3/csb_lCjVPuCmLY_wjqrS_YXBwhPH7dXgputNvon1tIcBF-ftnO_Rt5ihBJefSbDLKAsZ"]Full Daily Dispatch report (subscription needed)[/link]

 

[link url="https://www.timeslive.co.za/news/south-africa/2020-10-22-director-of-company-which-allegedly-defrauded-or-tambo-municipality-out-of-r48m-granted-bail/"]Full TimesLIVE report[/link]

 

[link url="https://www.polity.org.za/article/cabinet-says-no-one-is-above-the-law-as-covid-19-fund-looters-are-arrested-2020-10-22"]Full Polity report[/link]

 

[link url="https://www.polity.org.za/article/anc-gauteng-recommends-masuku-diko-head-to-provincial-dc-over-covid-19-corruption-allegations-2020-10-22"]Full Polity report[/link]

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