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HomeNews UpdateUncovering the 200 suspicious Tembisa Hospital contracts flagged by Deokaran

Uncovering the 200 suspicious Tembisa Hospital contracts flagged by Deokaran

Three weeks before she was murdered, Babita Deokaran identified more than 200 “possibly fraudulent” companies doing business with Tembisa Hospital that she felt needed further scrutiny – including R500,000 for 100 leather wingback chairs.

However, the Gauteng Health Department ignored her concerns that some R850m destined to fund healthcare for some of the country's poorest citizens was being stolen.

News24 reports that a complex web of letterbox companies – 20 entities that exist only on paper – extracted R60m in contracts from the hospital in six weeks. The half a million rands spend on 100 leather wingback chairs was just one of a surge of dubious payments flagged by Deokaran before her assassination.

Key documents contained in thousands of her emails show that the East Rand hospital was turned into a contract factory. In four months, it processed more than 1,200 purchase orders worth more than R600m.

While struggling with overcrowding, staff shortages and no funding, the hospital channelled nearly R60m in payments to letterbox companies that exist only on paper. Twenty entities which simultaneously billed the hospital are controlled by four people. Each registered five companies on the same day and provided fake addresses when doing so.

Among them is Johannesburg sound technician Samendran Chin, whose companies raked in nearly R8m through 22 individual Tembisa Hospital purchase orders. He did this in just six weeks while holding down a full-time job.

Deokaran identified 217 companies doing business with the hospital that scored thousands of “possibly fraudulent” contracts and called for an immediate stop to payments and an urgent forensic probe.

Evidence appears to show that Tembisa Hospital bosses spent millions on goods and services by exploiting a loophole in public procurement legislation. This has never been fully investigated by the Gauteng Department of Health, despite Deokaran’s pleas before she was murdered.

Ground zero: Tembisa Hospital

Scrutinisng the hospital’s buying patterns between April and June in 2021, Deokaran found that 1,203 purchase orders, valued between R400,000 and R500,000, had been processed: nearly triple the amount of purchase orders for Gauteng’s nine largest hospitals combined.

For goods and services valued below R500,000, the hospital CEO has to sign off, outside the need for deviations and a more rigorous procurement process. Deokaran’s suspicion was rooted in both the sheer number of contracts and their value, the practice of “split invoicing”, regarded by forensic investigators and auditors as a strategy to avoid transparent procurement processes.

An internal Gauteng Health Department expenditure table reveals that, over five years, the number of purchase orders increased 1ten-fold, and their collective value rose exponentially. This surge in spending is what alerted Deokaran.

Letterbox barons

A News24 investigation spanning six months delved into the list of companies named by Deokaran. Publicly available data from several hundred company searches revealed a pattern: key individuals each controlled five entities which billed Tembisa Hospital simultaneously.

A closer look at 20 of these firms revealed that they were controlled by just four people: Samendran Chin, Sydney Thindelo, Kelvin Sills and Meshan Govender. In each case, Companies and Intellectual Property Commission data indicate they were appointed as directors of five firms each on the same day.

The businesses sport obscure names. None has official websites. None is registered with the South African Health Products Regulatory Authority (SAHPRA), a prerequisite for trading in medical goods.

Over weeks, News24 travelled across the province, visiting the registered business addresses submitted to the CIPC by those in control of these companies, and all turned out to be fake. Several do not exist on the map, one address is that of a Dutch Reformed Church, another is a guesthouse. One of the purported business premises is a family home, purchased more than a decade ago.

The only link to officialdom is that the companies are all registered with the central supplier database, enabling them to bid for state contracts. There was no shortage from Tembisa Hospital: between May and June in 2021, 129 contracts were awarded to companies controlled by the four, at a rate of nearly three per day, according to Gauteng Health Department data in possession of News24.

These contracts ranged from the provision of everything from masks to suture kits. Hidden among them is the purchase of 100 bonded leather wingback chairs at a price of R495 000, billed through one of Thindelo’s companies, Sogaki. The purchase price falls just within hospital CEO Ashley Mthunzi’s delegation of authority.

Mthunzi and Gauteng Health did not respond to questions regarding this purchase, or whether any of the contracts were examined in a randomised compliance audit conduct after Deokaran was killed. She had requested a targeted investigation. This has yet to be conducted.

The beneficiaries

Sydney Thindelo (35)
Sydney Thindelo accounts for the largest haul of the four, with 43 individual contracts amounting to a total take of R20.1m in less than two months. According to publicly available documents, he lives in Northwold, Johannesburg, and once worked for a city accountancy firm.

His five separate business addresses were visited, and no offices could be found. In response to questions, he said only: “I have seen the article. I just want to confirm that I have nothing to do with the unfortunate thing that happened to Mrs Babita.”

Kelvin Sills (24)
The youngest at 24, Sills’ companies saw R17.75m in processed payments, according to documents obtained by News24. The 36 contracts pushed his way were valued between R487 000 and R498 000.

One of his firms, Umathora, supplied 2 000 hand towels to Tembisa Hospital at a price of R230 each, excluding VAT.

Repeated efforts to contact Sills were unsuccessful, and questions and allegations were put to him via the email address he used in business dealings with the hospital. News24 hand-delivered a letter to a relative at an address in Brackenfell, Cape Town. He did not respond.

Meshan Govender (27)
Meshan Govender was appointed as a director of his five companies on 11 May 2020. A year later, he landed 28 Tembisa Hospital contracts worth R13.83m. All of the entities billed the hospital interchangeably and at the same time. Often, payments to several of his companies were processed on the same day.

There is little public information available about Govender. Questions and allegations were put to him via several email addresses, among them amosmosia068@gmail.com, which was used for official correspondence in his business called Zabate. He could not be reached.

Samendran Chin (32)
Samendran Chin is employed by a prominent Johannesburg music company as a sound engineer, News24 confirmed. It is understood he is viewed as a valued employee owing to his work ethic. He juggled work along with the business operation of his companies – all trading with Tembisa Hospital.

In a conversation at his Melrose Arch workplace, Chin said he had been told not to speak to journalists, but would not say by whom. Questions and allegations were put to him in writing, and he did not respond. The collective value of contracts awarded to his companies is R7.88m.

We visited 20 separate addresses where these businesses purportedly operated from. We could not locate a single office or warehouse.

Antoinette le Roux
Antoinette Le Roux is a 57-year-old employed at a bank on Johannesburg’s East Rand. Five of her companies – formed on the same day – were flagged by Deokaran after they scored Tembisa Hospital contracts worth R9.5m.

When visiting a Kibler Park address linked to her, a man who identified himself as her brother-in-law expressed disbelief. “Owns businesses, definitely not… not her. She works in a bank.” He said he would pass on a request for contact. She did not respond and could not be reached by phone.

Accountable

As CEO, Mthunzi is central in the “possibly fraudulent” payments and soaring hospital expenditure first identified by Deokaran. In response to earlier questions, the Department of Health said Mthunzi was appointed to act in the post on 28 April 2021 and then permanently installed on 1 June.

According to purchase order data and the dates on which they were processed, only one of the 129 contracts linked to the letterbox companies predated his appointment. Some contracts were processed within a week of his arrival.

He did not respond directly to questions.

News24 also reports that the Gauteng Health Department had kept a lid on the findings from a damning audit conducted at the hospital last year. The audit flagged porous procurement systems, competitive bidding having been bypassed and officials’ overspending.

According to a leaked copy of the audit report, the hospital’s supply chain officials allegedly handpicked companies from which to source quotations, instead of using the potential suppliers listed in the Treasury’s Central Supplier Database (CSD).

“The failure to use CSD is resulting in unfair and biased behaviour by supply chain management officials [and] certain companies are favoured if CSD is not used,” said Kobie Smidt, the director of the audit and compliance unit who conducted the assessment.

In the unpublished audit report compiled in September last year, the department’s audit and compliance unit conducted a random assessment of transactions covering four months between 1 April and 31 July 31.

It included a sample of at least 12 companies from Deokaran’s list. These companies supplied surgical pads, needle holders, swab holder forceps, cellulose eye sponge, antimicrobial dressing, patient registers and printing paper.

The audit investigation found that some of the winning bidders were non-compliant, there was no rotation of companies, some companies charged the same amount for different products and “all purchase orders tested were just below R500,000 and this was distinct in all orders from this institution”.

The audit identified these transactions as historical issues and recommended an urgent investigation of the matters.The assessment also revealed gross overspending.

Over expenditure on lexical supplies sold at R328m was 178% more than the allocated budget of R118m. Administrative fees were 4 225% over at R87,000. Overall, the total goods and services budget of R319m was exceeded by 12.6%.

Smidt attributed the irregularities to the hospital’s failure to ensure that it had an adequate demand and procurement plan to ensure that the demand for goods and services was aligned to the available budget.

“It will assist the institution to prioritise services and avoid over expenditure, irregular, fruitless and wasteful expenditure. The demand plan would snore that planned items were acquired and ensure value for money,” Smidt found.

The law also required that supply chain officials would not receive quotations from suppliers and instead, a delegated official should be appointed to receive the quotations via email. “A dedicated email must be created at each institution for the receipt of quotations and only the delegated official would have access to this email address.”

But not so in Tembisa, Smidt found, adding that “the quotations were received in the supply chain management by the same official requesting the quotation”.

“No segregation of duties is applied for the requesting and receiving of quotations, which could lead to improper quotations.”

The Department of Health said it wished “to assure the public that decisive action will be taken against employees found to have failed to discharge their responsibilities in line with the Public Finance Management Act and other applicable prescripts”.

This week, the DA in Gauteng called for the suspension of Gauteng Health CFO Lerato Madyo, after News24 revealed her inaction in investigating Deokaran’s concerns and her lies surrounding what she had done to probe the flagged payments. Gauteng Premier David Makhura, who was vocal in the wake of Deokaran’s murder, would not engage on censure.

“We will not be distracted from our efforts to crack down on corruption in the province by those who give orders to kill whistle-blowers so that they can continue to loot state resources,” he said at the time.

This week, he would not drawn to comment on whether there should be consequences for Health Department bosses who failed to implement Deokaran’s recommendations for an investigation.

“The premier will give space to law enforcement agencies to do their work… At the moment we cannot comment on what happened (in the) days leading to the passing of Ms Deokaran,” said his spokesperson, Vuyo Mhaga.

 

News24 article – Silenced: Tembisa Hospital contract factory: R500k on leather loungers and letterbox barons unmasked

 

News24 article – Leaked audit report highlights Tembisa Hospital’s gross overspending and procurement nepotism (Open access)

 

See more from MedicalBrief archives:

 

Gauteng health boss ignored Deokaran’s plea for probe, claims acting HoD

 

Threat to Presidency DG confirms murder plot – Deokaran family

 

Speculation of Gauteng ‘Mafia’ link to murder of Babita Deokaran

 

 

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