PPE scandal: SIU accused of targeting ‘innocent people’
The director of a company implicated in the personal protective equipment (PPE) scandal that rocked the Gauteng health department has accused the Special Investigating Unit (SIU) of “screaming corruption” and “dragging the names of innocent people through the mud”.
The SIU has accused the company, Ledla Structural Development, of being the “proxy” for Royal Bhaca Projects, which is owned by Thandisizwe Diko, the husband of President Cyril Ramaphosa’s spokesperson Khusela Diko and a family friend of the nowfired Gauteng health MEC Bandile Masuku.
In August the SIU obtained an interim order to freeze money in Ledla’s bank accounts, saying it was the proceeds of a corrupt, unlawful and irregular contract for Covid-19 PPE and medical supplies awarded to the company by the Gauteng health department at prices “grossly inflated way in excess of market-related prices”.
The Special Tribunal will sit in November to decide whether the interim order should be made final.
Monday was the deadline for answering affidavits. It was extended on October 6 by an already displeased judge Billy Mothle when he postponed the hearing because the parties were not ready.
No relief was sought against Royal Bhaca or Masuku and their bank accounts were not frozen.
But Ledla filed ahead of the October 6 postponement, saying there were no prospects of success that the court would make the interim order a final one.
Instead, the SIU has “elected to rely on unsubstantiated and impermissible inferences, under the guise of an ongoing investigation”, Ledla director Molatelo Lehong said in his answering affidavit.
He added that the SIU then “invites the media to a briefing session, where the names of innocent people are dragged through the mud of public opinion, and a Twitter storm erupts”.
Lehong said Ledla had received an offer to supply the Gauteng health department with PPE and accepted the offer. Lehong sets out in detail the number of masks, sanitisers, medical bags and boxes that were contracted for, the price, how many were delivered, to whom and how much was paid.
“I have set out the above detail to illustrate to the honourable court that the first respondent has engaged in an honest and bona fide commercial transaction with the Gauteng Department of Health,” said Lehong.
However, he did not mention the SIU’s allegations that Ledla was in fact a proxy for Royal Bhaca — Diko’s company whose contract was cancelled because of “perceived conflict of interest”, and which the SIU contends had been unlawfully awarded the contract in the first place.
“Ledla was in fact a proxy for Mr Diko and/or Royal Bhaca and … the payments that were made to Ledla were in fact made for the benefit of Mr Diko and Royal Bhaca,” the SIU said in its founding affidavit.
Lehong’s affidavit does not address the allegation in the SIU’s affidavit that Ledla made an 800% profit on the price it paid to the company Mediwaste for medical bags.
But it said: “The department placed an order for goods with [Ledla], thereafter [Ledla] sourced the goods from various suppliers and ultimately paid the suppliers from payment received from the department.”
The SIU had said that the relevant Treasury guideline, Treasury Note 8, stipulated that the bags should cost R1.80 each and that Royal Bhaca (and later Ledla) contracted to supply them at R7.
“Royal Bhaca’s quotation and the value of the contract subsequently awarded was seven times more than it would have been had the Treasury Note 8 been applied and adhered to. Apart from the other obstacles it faced to which I have already referred, Royal Bhaca ought to have been disqualified on its pricing alone,” said the SIU affidavit.
Lehong said he and Ledla were never aware of the Treasury instructions but in any event the items supplied by Ledla fell within the pricing range determined, with the range for disposable bags set at 42c to R125.
Lehong does not address the allegation that he suggested, in Diko’s absence, to Mediwaste director Norman Maake that they apply for a loan from the Industrial Development Corporation (IDC) to fund a partnership with Royal Bhaca but in fact split it between themselves and run down Mediwaste — what the SIU called a scheme to defraud the IDC.
Maake, in his answering affidavit, said he took this proposal as a joke: “What came to my mind was that this was a joke ... and there is no way I could have possibly seriously entertained the idea of destroying a business that I built over time for criminal motives.”
He said that even if the money paid by the Gauteng health department was the proceeds of unlawful activities, the money paid to Mediwaste and then paid on by Mediwaste to other service providers was not.
“I say so because there was no way in which Mediwaste and those other respondents could have known or could have been expected to know that such funds were the proceeds of unlawful activities,” he said.
He added that he saw nothing wrong with Lehong and his partner Rhulani Mboweni Lehong representing both Royal Bhaca and Ledla.
“For me, there was nothing strange with the whole set-up as it was not uncommon in the world of business for certain individuals to act as facilitators or business finders for other people or companies.”