Corruption feeding frenzy involving R2.2bn of pandemic relief funds

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More than R2.2bn of emergency COVID-19 funds have been stolen in a corruption feeding frenzy, the news embarrassingly emerging just as the International Monetary Fund has agreed to a further R70bn in relief, writes MedicalBrief. More than 90 companies are being investigated in Gauteng alone and the allegations of fraud stretch to an official in the Presidency.

Anti-corruption investigators are probing a slew of allegations that unscrupulous officials and businesses benefited from billions meant to fight COVID-19. Sunday Times report that deals believed to be worth more than R2.2bn, involving emergency purchases of personal protective equipment (PPE), are at the centre of what one business leader described as a “heart-wrenching, unscrupulous and filthy” feeding frenzy.

Sandile Zungu, president of the Black Business Council, said he was saddened to see that his lobbying for black businesses to benefit from the process has been hijacked. “We now have to put it on record that these are not black businesses, but thieves,” said Zungu.

The Special Investigating Unit (SIU) is investigating 90 companies that received contracts from the Gauteng Health Department. It is also investigating R30m worth of allegedly irregular contracts in KwaZulu-Natal (KZN), as well as others in the Eastern Cape.

One industry insider said it was “disheartening” that legitimate companies were overlooked in favour of the start-ups that had benefited. “Most of these companies are connected with people in power or positions within health departments that are authorised to sign off orders,” said the unnamed source. “You see that companies with core business in IT, plumbing, construction, stationery etcetera are getting medical goods supply orders.”

 

The SIU will now be able to probe any allegations relating to the misuse of COVID-19 relief funds, President Cyril Ramaphosa says. Business Day reports that on 23 July, the president signed a proclamation authorising the SIU to “investigate any unlawful or improper conduct in the procurement of any goods, works and services during or related to the national state of disaster in any state institution.”

The proclamation comes more than two months after SIU head Andy Mothibi told MPs in May that because of the number of COVID-19-related cases they had received, which included large procurement cases, the SIU would seek a national proclamation to facilitate its investigations.

The unit only deals with cases proclaimed by the president. He said the proclamation empowered the SIU to probe any allegations relating to the misuse of COVID-19 funds
across all spheres of the state.

“If the SIU finds evidence that a criminal offence has been committed, it is obliged to refer such evidence to the prosecuting authority,” Ramaphosa said. He said the SIU was also empowered to institute civil proceedings for the recovery of damages or losses incurred by the state.

 

Gauteng Health MEC Dr Bandile Masuku denied claims in reports that he was involved in influencing irregular COVID-19-related procurement processes. According to News24, Sunday Independent reported that Masuku and his wife, Loyiso Lugayeni-Masuku, were linked to a R125m personal protective equipment (PPE) contract that was allegedly awarded to disputed AmaBhaca king, Madzikane II Thandisizwe Diko. This was one of the transactions reportedly flagged in an audit conducted by the provincial treasury into the spending of R2bn on PPE by the Gauteng Health Department.

The publication did not name any official source confirming the allegation and did not elicit a response from Masuku, who reportedly referred all enquiries to departmental spokesperson Kwara Kekana.

Diko is married to President Cyril Ramaphosa’s spokesperson, Khusela Diko. Diko and her husband maintain the money was never paid to his company and the contract was never finalised, Sunday Times reported.

The report says the SIU is quoted as saying its investigators had uncovered 90 companies involved in questionable PPE contracts in Gauteng. Almost all are owned by politically connected individuals.

Khusela Diko has since taken a leave of absence from her government roles, pending an investigation into the allegations.

 

Who got what was has been revealed by the Gauteng Health Department, reports News24. The company paid the most for COVID-19 related work received a tender for R159m to provide PPE, according to the department in a presentation to the Health Portfolio Committee in the provincial legislature. It said a total of 167 companies received tenders for work related to Covid-19 between April and July.

Those companies, Diaane Consulting Services was paid the highest amount – R159m – while African Delight Catering was the lowest-paid company – R50,000. Diaane Consulting Services provided surgical masks, FFP2 masks and sanitisers. The company was one of 84 companies that supplied PPEs to the department between March and June.

 

The EFF has demanded Masuku step down over the contract to Diko’s husband. According to a report on the IoL site, EFF acting provincial chair Itani Mukwevho said the party was ‘disgusted’ at how Masuku handled the awarding of the contract to Madzikane II Thandisizwe Diko’s Royal Bhaca Projects and said he should step down pending a probe by the SIU.

Mukwevho said it was not a coincidence that more than 90 companies involved in questionable PPE contracts in Gauteng had links to politically-connected individuals.

He said while the EFF welcomed the SIU investigations into tenders awarded by the Gauteng Health Department, it wanted a comprehensive internal investigation into the alleged influence of Masuku’s chief of staff David Maimela, who allegedly played a critical role in giving the contract to Diko’s husband.

 

DA MP Siviwe Gwarube has submitted questions to Health Minister Zweli Mkhize on all COVID-19 health contracts.
Gwarube says in a report on the Politicsweb site:

Today, I will request that the Minister of Health, Dr Zweli Mkhize, makes public all companies and their board of directors that have been awarded any contracts by the provincial departments of health across all nine provinces. This follows the dubious R2bn PPE contracts that have been awarded to various companies, many of which politically connected or without any demonstrable history of supplying the services that are being rendered, by the Gauteng Health Department.

The Minister is empowered to demand that these details are publicized by the provinces. It is important that any contract that has been awarded by the provincial departments is made public and the following information is easily accessible: company name; history of work done with the state or any other entity in the field; board of directors and the status of the contract.

The DA will write to Minister Mkhize and submitting Parliamentary questions requesting this information as a matter of urgency. Once this information is made public, we will do our due diligence to ensure that politically connected individuals have not been the chief beneficiaries of these contracts and that, in fact, these services are being provided in the provinces. In addition, this is the kind of information that the SIU should be considering in looking into corruption relating to all COVID-19 funds as per the President’s proclamation.

We cannot simply allow the systemic looting of public money in the middle of this pandemic to go unchallenged. We also cannot wait until crucial resources are squandered before action is taken. Retrospective investigations do little to provide the people of South Africa with the relief they require. Corruption is not a victimless crime. Money stolen takes away from services designed for the benefit of the public.

Minister Mkhize is on the record having committed to fighting corruption that will rear its head in the health response to this crisis. We expect him to move with speed in making this information public as soon as possible. The DA remains committed to ensuring that every cent is channelled towards fighting this virus and not to the pockets of the greedy and politically connected few.

 

Finance Minister Tito Mboweni has been asked to present to MPs Treasury’s guidelines on government procurement of PPE, says a Polity report. Standing Committee on Finance chair Joe Maswanganyi said the committees were alarmed by the various allegations and were expecting to be briefed on Treasury’s processes to ensure that a single procurement tender worth millions is divided into multiple small tenders to benefit many small, medium-sized and microenterprises (SMMEs).

“…while the committees cannot dictate terms on how government should conduct procurement for the COVID-19 pandemic, they are expressing a concern in light of complaints about being excluded by many SMMEs,” said Maswangayi.

After the presentation from the Finance Minister and the National Treasury, the committees will determine if there is a need for a joint meeting with the Portfolio Committee on Health, provincial health committees and their respective departments of health.

 

The government has, meanwhile, made a commitment to the International Monetary Fund (IMF) to be transparent in the spending of COVID-19 relief funds when applying for a $4.3bn (R70bn) loan, which was approved by the IMF executive board Monday, reports Business Day.

Standing committee on finance chair Joe Maswanganyi noted at a meeting of the two committees that people were losing jobs while others were amassing wealth at the expense of the country. This had caused public outrage and had to be investigated. Parliament could not wait, he added for the auditor-general and the SIU to finalise their investigations.

Auditor-general Kimi Makwetu has instituted real-time audits of government’s COVID-19 spending while the President has signed a proclamation authorising the SIU to investigate allegations of corruption surrounding the expenditure of COVID-19 related funds.

Select committee chair Yunus Carrim supported this proposal as did Cosatu parliamentary co-ordinator Matthew Parks who said the trade union federation Cosatu would submit a report to the committee on its findings in relation to alleged corrupt PPE procurement.

 

Full Sunday Times report

 

See also Full Sunday Times report

 

Full Business Day report

 

Full News24 report

 

Full News24 report

 

Full report on the IoL site

 

Statement on the Politicsweb site

 

Full Polity report

 

Full Business Day report

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