The breathtaking scale of the fraud involved in a mega-million-rand project to install oxygen generation plant at dozens of government hospitals has been revealed by Public Works Minister Dean Macpherson, reports Daily Maverick.
The forensic investigation, conducted by PwC, came after Daily Maverick’s revelations in October 2024 that an apparent “ghost company” had clinched the largest portion of the R836m project – for 55 hospitals – for which the Independent Development Trust (IDT) had issued a tender.
Follow-up reports by Daily Maverick and amaBhungane revealed more red flags regarding the contracts awarded to Bulkeng and a joint venture made up of Maziya General Trading and On Site Gas Systems International, when it was found Bulkeng did not possess the necessary certification to deal in medical equipment, among other issues.
“The first time I was made aware of this matter was through the media,” said Macpherson, referring to Daily Maverick’s first exposé.
What comes next?
The final forensic report by PwC has been handed over to the Special Investigating Unit (SIU), the Hawks, the SA Police Service (SAPS) and the National Prosecuting Authority (NPA) for further investigation.
The PwC report recommended disciplinary steps against Tebogo Malaka, the IDT’s CEO.
At least 400 IDT employees have been flagged for lifestyle audits, while Macpherson has appointed a new IDT board after the dismissal of trustees who failed to act on early warnings.
The tender that choked
The IDT, a state entity that falls under the Department of Public Works & Infrastructure (DPWI), had been appointed by the National Department of Health (NDoH) to act as an implementing agent for the oxygen plants project.
The funding came from the Global Fund, and the project intended to install pressure swing adsorption (PSA) oxygen plants at 55 hospitals – a technology allowing facilities to generate oxygen without relying on cylinder delivery. Initially budgeted at R260m, the cost eventually ballooned to R836m.
Bulkeng was awarded 45 sites worth R428m, while the Maziya-On Site Gas Systems joint venture was awarded 10 sites worth R152m. The Global Fund issued a formal “No Objection” to the appointment, based on assurances received from the IDT.
Procurement bypass
Despite the project’s critical nature and scale, key procurement safeguards were ignored. Macpherson confirmed that SA Health Products Regulatory Authority (SAHPRA) licensing was retrospectively deemed unnecessary, despite earlier requirements for it in the project plan.
No formal minutes were kept of certain bid committee meetings. Officials from the NDoH, who were supposed to serve as neutral observers, were instead appointed as voting members of the bid evaluation committee, violating separation-of-duty protocols.
PwC found that Bulkeng had no physical premises, no staff and no previous infrastructure experience, confirming Daily Maverick’s initial reportage.
The firm used another company’s SAHPRA licence without authorisation and submitted forged witness signatures in its bid documents. It also falsely claimed to be in a joint venture with “Brutas Atlas Copco Industrial South Africa”, a fictitious name combining Brutes Air Solutions and Atlas Copco.
While the initial project implementation plan required SAHPRA certification and Construction Industry Development Board grading, these were omitted from the final request for quotation. The internal steering committee flagged this and recommended that the procurement be restarted. Instead, IDT CEO Malaka secured a concurrence letter from NDoH Director-General Sandile Buthelezi to bypass the issue.
PwC further found that Bulkeng was permitted to submit bid documents after the official deadline. The unit cost per site escalated from an estimated R3.6m to more than R10.5m, with PwC concluding there was “no credible explanation” for the increase.
The director of Bulkeng, Nkosinathi Ndlovu, was reported to have died shortly after giving media interviews, but this has not been confirmed by the SAPS.
Between October and November 2024, Daily Maverick and amaBhungane published a joint investigation exposing Bulkeng’s fake credentials, forged documents, and licensing shortfalls, prompting the commissioning of the PwC forensic report.
Oxygen deferred
By December 2024, not a single PSA oxygen plant had been commissioned. Many targeted hospitals remain reliant on costly cylinder-delivered oxygen.
The Department of Health is expected to re-tender the project. The Global Fund has launched its own compliance review.
“I asked for documentation – I was told everything was in order. A month later, the same board admitted there was a problem,” said Macpherson.
He has indicated that the PwC report will inform broader procurement reform efforts across the Department of Public Works and its entities.
See more from MedicalBrief archives:
Oxygen plant tender probe delayed
Dodgy R836m oxygen plants deal cancelled
Global Fund to probe fishy oxygen tender