A R515m Personal Protection Equipment (PPE) deal at the height of the pandemic, uncovered by SIU investigations, has revealed that hand sanitiser sold to the SAPS for R5 400.05 per 25 litres, including “airfreight, customs, clearance and VAT” costs, was not sourced from China… but instead from around the corner at Dis-Chem at a mark-up of 400%.
In early December, Maverick Citizen reported that a July 2022 report from the SIU to President Cyril Ramaphosa had included a section on a continuing investigation into a company called Mainstreet 699, which changed its name to Red Roses Africa Pty Ltd, that largely confirmed the findings of an investigation conducted into the company in 2021.
Maverick wrote at the time: “A small, unknown company operating under two names, with a Barberton, Mpumalanga, business address, no traceable history of supplying PPE products and a sole director (with an underwhelming online presence) scored contracts worth hundreds of millions of rands from the police at the height of the pandemic last year. Not only did it score the questionable contracts, it also managed to get R515m paid for supplying masks and hand sanitiser and disinfectant at …. criminally inflated prices.”
In a section on “Ongoing Matters”, the latest SIU report says that in the early days of the pandemic, a company called Mainstreet 699 made an “unsolicited bid” to SAPS to supply it with PPE, including hand sanitiser and masks. The company claimed that despite the worldwide shortage, it had sourced the sanitiser from China and an Airbus was ready to bring it to South Africa “once an order was issued”.
The deal was signed and in April/May 2020, 90 000 containers of hand sanitiser were supplied and Mainstreet 699 scored R423m. In total, for all the PPE it supplied to SAPS, Mainstreet received R596m.
This was one of the largest and costliest purchases registered by the National Treasury, which seemed to have thought nothing was suspicious.
However, it seemed odd to Maverick Citizen. Raising further suspicions, at the same time the Treasury’s Covid-19 Reporting Dashboard revealed two payments of exactly the same amount to two different companies (which turned out to be the same company.)
This “administrative error” was corrected without explanation after we pointed it out.
However, after a whistle-blower came forward, investigations have now uncovered that the sanitiser, sold to SAPS at R5 400.05 per 25 litres, including costs of “airfreight, customs, clearance and VAT”, was in fact not sourced from China … but instead from Dis-Chem.
The cost at which Mainstreet 699 bought the sanitiser from Dis-Chem was R1 150 per 25l container, meaning they made R4 250.05 on every container — a mark-up of 400%.
Yet, what is still not clear from the SIU report is where (and possibly even if) Mainstreet Africa obtained the other 57 000 containers it said it sold to the SAPS. We do know it billed for R423m – so about R250m remains unexplained.
In response to our questions, Dis-Chem confirmed that CJ Distribution, “an independent wholesaler owned by Dis-Chem”, did indeed supply 32 055 containers to Mainstreet 699 in April and May 2020. It says it had had no previous or subsequent business with the company: “Large orders like this were not out of character and CJ Distribution saw a significant increase in new customers, many of whom had never engaged CJ Distribution or Dis-Chem before as they had never had to order bulk PPE equipment and supplies.
“CJ Distribution receives orders from and services hundreds of third-party customers, retailers, and intermediaries for whom on-selling is common practice.”
Dis-Chem said it was not aware of the ultimate destination of the hand sanitiser and “not privy to the price its customers on-sell at, or whether they on-sell at all.”
Dis-Chem said the order, comprising 25-litre containers, was supplied “only to one delivery address in Silverton, Pretoria”. Significantly, this means it was supplied directly to a SAPS warehouse, not to the offices of Main Street 699.
The SIU report claims a Mario Pillay, the director of Mainstreet 699, had first made the unsolicited bid to provide PPE to SAPS. A Google search reveals that Mario Pillay is a former spokesperson of businessperson Robert Gumede and the Guma Group.
However, the report also names Blessing Qwabe, its CEO, as a person the SIU subpoenaed to interview. That interview has now taken place.
In response to our questions about who it had done business with, Dis-Chem responded that “we can’t provide detail on this, due to POPI regulations”.
The company said “there was nothing outside the normal scope of business that would have been flagged as reason for any misgivings or anything out of the ordinary. As with hundreds of other new customers at the time … it was viewed purely as a business transaction. There was no misconduct from Dis-Chem’s side at all.”
However, Dis-Chem is co-operating with the SIU, having provided it, under threat of a section 5(2)(a) notice, with all invoices for medical products bought by Main Street 699 between 1 April 2020 and 30 May 2020.
The evidence gathered by the SIU points to massive price gouging and possible corruption in the sale of PPE to the SAPS. The SIU was due to provide a final report on this and other matters to the President on 15 December 2022. Kaizer Kanyago, spokesperson for the SIU, said its investigation, and all interviews, had been completed.
Overall, this confirms earlier reports in Daily Maverick highlighting irregularities in the massive R1.6bn PPE “splurge” by the SAPS. But, strangely, despite the seriousness and scale, those implicated or involved seem reluctant to say anything.
The SAPS failed to respond to our questions.
Sindisiwe Seboka, spokesperson for the Investigating Directorate (ID) in the NPA, said that while the ID has investigated three small matters concerning PPE corruption in the SAPS resulting in officers being dismissed, the Mainstreet 699 matter “is not in our space”.
Blessing Qwabe, the CEO of Red Roses Africa Pty Ltd, failed to respond to a request for comment.
After more than two years, the Competition Commission is still deciding whether to hand its investigation of Mainstreet 699/Red Roses Africa to the Competition Tribunal and says it is waiting for a ruling by the tribunal in a similar matter. That judgment has taken more than two years.
Finally, despite a senior Treasury official being identified in the SIU report, the Treasury says no investigation is being conducted by the Office of the Chief Procurement Officer.
Strangely, for reasons unknown, all reference to Mainstreet 699 has been scrubbed from its Covid-19 Reporting Dashboard.
See more from MedicalBrief archives:
SAPS officers in court over PPE corruption
Hawks investigating allegedly inflated SAPS PPE tenders
Top SA cop investigating PPE fraud killed by poison, not COVID