Latest SIU report exposes orgy of pandemic-related corruption
Investigating unit uncovers new evidence of dodgy deals involving billions of rands. By
The Presidency has released the 7th progress report from the Special Investigative Unit (SIU) on corruption in relation to Covid-19 and the National State of Disaster proclaimed in 2020.
It is a supplement and update to the SIU’s “final” report that was made public in January. However, such was the scale of corruption during the pandemic that the SIU’s investigations are continuing.
A very final report is promised this month. The explosive new report records how, by the report’s cut-off date of 30 June 2022, the SIU had investigated 5,482 contracts. Only 9% of these investigations were incomplete.
The completed investigations are into contracts worth R15.2-billion, and R2.5-billion is still under investigation. A significant number of contracts have been cleared, but the SIU says it has uncovered irregularities in 2,951 contracts covering R8.2-billion.
The SIU reports on actions arising from its findings. Since last December the number of matters enrolled at the Special Tribunal, which can invalidate contracts and recover funds, has gone up from 45 to 55. The SIU is seeking to recover more than R2.2-billion.
The number of matters the SIU has referred to the “relevant prosecuting authority” has also increased, from 386 to 408.
Continuing investigations include allegations that were first brought to light by Maverick Citizen, particularly concerning the Gauteng department of health’s hospital infrastructure programme and the R1-billion splurge on hand sanitiser and other Personel protective equipment (PPE) by the South African Police Service (SAPS).
The latest SIU report is 349 pages. Further reports on its findings will follow. In this article, we focus on two big investigations.
Mainstreet 699 charged SAPS R5,400 per 25l hand sanitiser … while they bought their 25l sanitisers locally at Dis-Chem for R1,150
including VAT
Gauteng’s R1bn ICU ‘field hospitals
The first is an investigation the SIU has now completed, concerning a R1-billion spending programme, using alternative building technologies (ABT), that was supposed to rapidly expand the number of ICU beds by 1,400 in four Gauteng hospitals.
In 2020, Maverick Citizen first uncovered and questioned this expenditure, mainly by analysing Gauteng’s Covid-19 monthly Expenditure Disclosure reports but also by revealing how leading doctors, such as Dr Nathi Mdladla (at the time the chief of ICU at George Mukhari), had questioned whether the expansion was needed.
The Gauteng department of infrastructure development – several of whose senior officials are under investigation – issued a statement attacking Mark Heywood and Daily Maverick, claiming that our stories were “devoid of basic fact” and a violation of the Press Code.
But now the SIU largely confirms our suspicions. The report lists all the ABT contracts Maverick Citizen identified and says the “Professional Service Provider”, whose identity and role is not explained, was appointed with “no proper selection process”.
The report records that “the SIU is still to determine whether the State received any value for money for the contract. The SIU is in the process of appointing a quantity surveyor (QS) to assist in the quantification and evaluation of … refurbishment and construction costs related to the projects.”
In “Steps Taken”, the SIU states it is investigating disciplinary action against an official and “will consider instituting civil proceedings when the QS report has been received and reviewed”.
Red Roses Africa (Pty) Ltd
The entry point for Maverick Citizen’s investigation into a company called Red Roses Africa (Pty) Ltd was a database and website maintained by the National Treasury on all Covid-19 expenditure incurred by all government departments in all provinces. It appears that the website no longer exists.
We noticed that Red Roses Africa had scored contracts worth more than R515-million and that exactly the same amount appeared to be recorded twice on the Treasury database under two different companies’ names, the second being Mainstreet 699.
This matter was drawn to the SIU’s attention by Maverick Citizen. In addition, a whistleblower contacted the SIU. The latest SIU report records the Red Roses Africa matter under the more than R2-billion of investigations that are still “matters ongoing”.
Details given by the SIU point to a possible web of collusion that extends beyond the SAPS and Mainstreet 699 and into the Treasury and possibly even Dis-Chem. At its heart, says the SIU, is “a contract to the value of R596,720,800 … awarded without following SCM [supply chain management] processes and approved by Brigadier Mahlangu.”
The report goes on: “The SCM department is alleged to be involved in collusion, price inflation, [and] flouting procurement processes and policies.”
The tale the SIU unravelled would be laughable were it not so tragic and costly.
In essence, it involved an “unsolicited bid” from Mainstreet 699, which made a fraudulent claim to SAPS that it had a non-existent Chinese company with an Airbus ready to fly PPE to South Africa.
In fact, says the SIU, the purchases were made from the retail pharmacy chain DisChem. There was a festival of price-gouging: “Mainstreet 699 charged SAPS R5,400 per 25l hand sanitiser … while they bought their 25l sanitisers locally at Dis-Chem for R1,150 including VAT.”
The SIU also found that the PPE that was purchased was “over and above the PPE that had already been purchased by SAPS to the value of R161,114,875 … and that it was presumed that SAPS [already] had sufficient PPE items for their members”.
The SIU records its intention “to refer the matter to the Special Tribunal to set aside the contract” and to the National Prosecuting Authority “for possible corruption”.
Speaking on behalf of the Presidency, Vincent Magwenya told Maverick Citizen: “We are encouraged by the actions that have been taken against various individuals and entities involved in the corruption outlined in the report.”