Besides red flags such as payments to deceased people, duplicate payments and over-payments in the Unemployment Insurance Fund (UIF) COVID-19 Ters benefit scheme, Auditor-General (AG) Kimi Makwetu has flagged government officials applying and benefiting from the scheme, in the agency’s COVID-19 Relief Funds Audit.
Moneyweb report's some "damning findings" against the UIF and SA Social Security Agency (Sassa), in addition to the government’s other COVID-19 re-prioritised spending initiatives. Makwetu highlighted a glaring lack of control by government – government’s systems were simply unable to keep up with the number of applications and the disbursement of COVID-19 relief money.
Makwetu’s office said that it has undertaken “a real-time audit of 16 of the key COVID-19 initiatives introduced by government, which involved the management of R147.4bn of funds made available for these initiatives”. This is part of the government’s broader R500bn COVID-19 relief and economic stimulus package.
Makwetu said the COVID-19 Relief Funds Audit represents the first in a series of reports that will deal with the financial management of the government’s COVID-19 initiatives, covering R68.9bn (47%) of the R147.4bn spending.
The report covers the period to 31 July. Of the R68.9bn in spending covered in the initial report, the large majority of this (around R57bn) relates to disbursements made as part of the UIF Ters scheme and Sassa social grants payments.
“The lack of validation, integration and sharing of data across government platforms resulted in people – including government officials – receiving benefits and grants they were not entitled to,” Makwetu pointed out. “Some applicants could have been unfairly rejected as a result of outdated information on which assessment for eligibility was based,” says the report.
National and provincial departments of Health and Education paid up to five times more than they should have for personal protective equipment (PPE) to fight the spread of the coronavirus, says Makwetu. He said the departments did not stick to prices prescribed by the National Treasury and in many cases paid more than five times the Treasury’s recommended prices, reports TimesLIVE.
President Cyril Ramaphosa asked Makwetu and his office in April to audit the procurement processes followed by government departments and companies when buying goods, services and infrastructure to contain the pandemic. Makwetu notes that contrary to the Treasury’s instructions, “our analyses of orders placed by Health Departments identified that some items were priced at more than double and even five times the prescribed price. Similar instances were identified in the procurement of PPE in the education sector where the national and provincial departments are not procuring PPE at market-related prices”.
Makwetu’s preliminary findings reveal that in many cases officials dispensed of all procurement rules. “Teams are still busy auditing the procurement processes, but are identifying matters such as suppliers not having valid tax clearance certificates, quotation and competitive bidding processes not being correctly applied, inadequate or inaccurate specifications and evaluation criteria and the incorrect application thereof, conflicts of interest, and the awarding of a contract in the health sector to a supplier with no previous history of supplying or delivering PPE,” he said.
The AG also looked at the corruption around the construction of field hospitals and quarantine sites to combat COVID-19, noting they are riddled with weaknesses, irregularities and over-payments. According to TimesLIVE, on quarantine sites, Makwetu said: “The audit identified control weaknesses, over-payments, money spent on sites not yet activated (approved) by the Health Department, and state-owned properties upgraded for use as quarantine sites not being utilised.”
He revealed that there was an over-supply of quarantine and self-isolation sites. “It is unlikely that government will pursue the original target for quarantine sites as the demand for such facilities has been relatively low.”
The government had made more than R4.8bn available for field hospitals, he said. “For this purpose, 66 projects were identified across the country – the money would be used either to upgrade current hospitals or build/use temporary structures to increase hospital beds. By 30 June, only 18 of these projects had been completed. Potential fraud has also been identified in the appointment of community workers meant to assist the Health Department with screening.”
The Sunday Times reports that police awarded a multi-million-rand mask tender to an ANC donor who is being probed by the Special Investigation Unit (SIU) for irregularities in connection with the R2.7bn Giyani water project. In April, the police gave LTE Consulting a R77m tender to supply 3m masks. LTE is owned by Thulani Majola, who is at the centre of the SIU investigation of how a project to supply water to villagers in Giyani, Limpopo, ballooned from R100m to R2.7bn – and is still incomplete.
The report says bank statements show that on 15 April the police paid LTE R6.4m, followed by R70.6m on 24 April. Then on 6 July, Majola, a regular ANC donor, made two payments of R0.5m to the party. Majola reportedly told the Sunday Times the R1m was a donation to the ANC's Progressive Business Forum. “I am a member of the PBF and there is nothing wrong with a donation to the ANC.” He said there was no link between the donation and the PPE tender, nor to the other contracts his company had been awarded by government departments and state entities. “I delivered all 3m masks without any problems,” he said.
Majola also said LTE was not one of the companies being investigated by the Hawks for possible fraud, corruption and price-gouging in the supply of masks, sanitisers and other COVID-19-related goods. “I know that there are several companies under investigation, but I am not one of them,” he said. “I have been to the police's procurement headquarters in Silverton to find out if I am under investigation. They told me that I am not…”
Makwetu wants law enforcement agencies to arrest those who stole from the COVID-19 funds, reports Saturday Star. Makwetu told the Standing Committee on the Auditor-General in Parliament it was now up to the NPA, the SIU and the Hawks to follow up on some his team’s damning findings.
In one investigation the AG found that R800,000 of the UIF was paid out to people who were dead, under age or in prison. They also compared the database of the UIF and Sassa and found that there were people who were paid by both agencies.
Employment & Labour Minister Thulas Nxesi suspended senior officials at the UIF over the irregularities last week. Makwetu and his team probed the procurement of PPE and found many instances of inflated prices. They also found that 30,000 people had been irregularly paid the R350 unemployment grant by Sassa.
The AG told the committee they had identified a number of “high risk” PPE suppliers and some did not meet the criteria to supply the departments. There was no paper trail in some of the instances. “We have flagged these matters. Our data analysis points to the high risk of fraud and abuse of funds,” said Makwetu. He said they will continue with their investigation and will issue another report at the end of November.
One SMME with no website or online presence received just under half of the R682.5m that the Western Cape provincial government spent on PPE. A Cape Argus report says Masiqhame Trading 1057 CC, which made R322.8m, supplied over 95% of the Western Cape Education Department’s (WCED) PPE in response to the COVID-19 pandemic. It operates out of a residential address in Edgemead and has no website.
Asked about the department’s relationship with the company, WCED spokesperson Bronagh Hammond said the department had an existing contract with Masiqhame Trading 1057 CC for the supply of cleaning, gardening and electrical supplies. ‘It is a contract of convenience, and orders for supplies are placed as and when needed. The contract was concluded in 2017, through a competitive bidding process, and is awarded for a period of three years. It expires on 30 September,’ said Hammond.
Meanwhile, four companies have been charged and dozens more are being investigated for providing substandard PPE to healthcare workers. According to a Sunday Times report, the SA Health Products Regulatory Authority (Sahpra) confirmed that alongside the police's SA Health Products Regulatory Authority (Sahpra), alongside the police's Organised Crime Unit, the Hawks and the SIU, it is investigating PPE manufacturers and suppliers for “the supply of substandard or falsified PPE” intended for use in healthcare institutions, including aged-care facilities.
Sahpra spokesperson Yuven Gounden said the authority has opened criminal cases against “those who were claiming their PPE were medical products. We can confirm that as of Thursday, Sahpra has four cases opened relating to Medicines Act contravention.”
The investigation coincides with several probes of a multibillion-rand looting scandal linked to PPE tenders allegedly awarded to politically connected individuals, notes the report.
Hawks spokesperson Brigadier Hangwani Mulaudzi confirmed the elite unit is investigating more than 50 cases regarding substandard or falsified PPE. He said the Hawks are not yet able to quantify the amount of substandard PPE involved or the total value of the equipment.
However, it has emerged that 60% of medical-grade masks scrutinised by the SA Bureau of Standards (SABS) did not meet quality criteria. In damning findings, the SABS said the inspection was commissioned by Business for SA, a coalition formed to support the COVID-19 response, and found that consignments of masks did not meet quality criteria.
SABS lead administrator Jodi Scholtz said most of its inspections took place at warehouses before the PPE was dispatched.
[link url="https://www.agsa.co.za/Reporting/SpecialAuditReports/COVID-19AuditReport.aspx"]A-G report[/link]
[link url="https://www.moneyweb.co.za/news/south-africa/makwetu-flags-uif-ters-sassa-benefits-paid-to-government-officials/"]Full Moneyweb report[/link]
[link url="https://www.gov.za/speeches/minister-thulas-nxesi-response-auditor-general%E2%80%99s-report-payment-uif-coronavirus-covid19"]Nxesi statement[/link]
[link url="https://www.timeslive.co.za/politics/2020-09-02-some-items-more-than-double-even-five-times-the-price-a-g-on-ppe-scandal/"]Full TimesLIVE report[/link]
[link url="https://www.timeslive.co.za/politics/2020-09-02-a-g-reveals-how-few-field-hospitals-and-quarantine-sites-are-in-use-covid-19/"]Full TimesLIVE report[/link]
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