PPE company told to pay back its profit

The Special Tribunal has ruled that a R103-million Gauteng health department personal protective equipment (PPE) tender awarded to Zakheni Strategic Supplies is unlawful and invalid.

The Special Investigating Unit (SIU) successfully applied to the tribunal to have the tender set aside, following an investigation into how it was awarded.

In her judgment, tribunal president Judge Lebogang Modiba ordered the company to pay back profits derived from the tender.

“The irregular manner in which the contract was awarded constitutes a material infraction to the constitutional values of fairness, transparency, equity, effectiveness and cost effectiveness. Therefore, it is just and equitable to set aside the contract.

“On the authority in Allpay, Zakheni is not entitled to profit from an irregular contract,” she said.

“I find no basis to exercise my discretion to permit Zakheni to benefit from the contract under the present circumstances.

“It is therefore just and equitable that Zakheni is ordered to account to the department for the profits earned or stands to earn from the impugned contract and to be divested of such profits.”

SIU spokesperson Kaizer Kganyago said the judgment was a culmination of extensive investigative work.

“The SIU investigation in the department of health revealed that Zakheni was awarded a R103-million tender without following regulations governing public procurement.

“The SIU probe uncovered that on 19 April 2020, the department, through its [now former] chief financial officer Kabelo Lehloenya, received a quotation from Zakheni for the supply to the department of specified PPE items, like gloves and mask.

“Twenty-four hours later, the department issued a commitment letter to Zakheni, signed by the CFO. In terms of the commitment letter, Zakheni would supply PPE to the department to the value of R103 770 000,” he said.

The company has been ordered to hand over any financial statements to the unit.

“In terms of the Special Tribunal order, Zakheni is ordered to render to the registrar of the tribunal and to the SIU, within 30 days, audited financial statements for the financial year covering the period during which the parties performed under the impugned contract, to the extent that the audited financial statements reflect all financial information pertaining to the impugned contract.

“The order by the Special Tribunal is a continuation of the implementation of the SIU investigation outcomes and consequence management to recover assets and financial losses suffered by state institutions and/or to prevent further losses,” Kganyago said. –