Hlongwa’s R1.4bn ‘corruption ring’
Ex-MEC allegedly received kickbacks from two companies
GAUTENG ANC heavyweight Brian Hlongwa faces imminent, and would face multiple charges of corruption and money laundering related to two tenders worth over R1.4 billion, sources have told The Sunday Independent.
Hlongwa, the former MEC for health in Gauteng, has emerged as a central figure in the tender scandal that threatens his career as well as that of other officials implicated. He allegedly received kickbacks from both firms.
Allegations have also been made that the ANC in Gauteng benefited from the kickbacks.
The R1.4bn has become a honeypot in a tug-of-war between the government’s Anti-Corruption Task Team (ACTT) and two companies, 3P Consulting and the Baoki Consortium. The two companies allege that they are owed the millions for services rendered in terms of two separate tenders granted by the Gauteng Department of Health.
However, the ACTT – made up of the Hawks, the Special Investigating Unit, the Asset Forfeiture Unit and the National Prosecuting Authority (NPA) – contend the millions that the two companies claim belong to them, are, in fact, proceeds of crime.
The NPA this week asked the South Gauteng High Court to place preservation orders on any claims 3P and Baoki have filed, ensuring that if it was unable to forfeit the claims altogether and the companies are successful, they would still forfeit the money.
In 2007, 3P won a tender to set up a Project Management Unit at R120m. But 3P contracted 144 entities to provide services to the department and extended their contract by three years, eventually paid R392m by the time Health MEC Qedani Mahlangu cancelled the contract in 2009.
In 2008 Baoki was given a R1.2bn tender to set up a health information system and electronic health record.
It was paid over R400m without installing any system by the time its contract was cancelled one year later.
Should the NPA’s preservation orders be finalised, it will come as a massive reprieve for the Gauteng Department of Health, which has been embroiled in legal battles with the two companies since 2009, when Mahlangu replaced Hlongwa and cancelled the two contracts.
Both are demanding the financial remainder of their contracts.
They will be allowed to oppose the application and – according to sources within the task team – the State’s toughest litigators are preparing themselves for a lengthy and gruelling battle to ensue as the companies attempt to recoup their gains.
Firm 3P Consulting, which is currently in liquidation, is claiming over R100m from the department.
This week liquidator Kevin Chow from the Harvard Corporate Rescue Services referred queries to attorney Alec Brooks of Brooks and Brand Incorporated, who is handling the insolvency inquiry into 3P on behalf of the liquidators.
Brooks, however, told The Sunday Independent that he could not comment on the matter as he was still awaiting the orders.
Attorney James Haydock, speaking on behalf of the Baoki Consortium, said the consortium was still considering its position.
The department has been unable to resolve an arbitration with the Baoki Consortium for over R650m it claims to be contractually owed.
Baoki and the provincial health department have been in arbitration since June last year when they hit a stalemate.
Haydock said that the arbitration by nature was confidential.
The companies will have eight days to lodge their appeals.
The NPA’s court action this week is the culmination of four years of investigating by the SIU and the Hawks.
Hawks spokesman Paul Ramaloko declined to disclose who the criminal proceedings would target first.
Task team sources have told The Sunday Independent that Hlongwa is top of the list.
The application for the restraining order has lifted the lid on an intricate web of corruption, allegedly indirectly co-ordinated by Hlongwa and his friend Richard Payne, who owns 3P Consulting.
AN ALLEGED corrupt relationship between Brian Hlongwa, the current ANC chief whip in the Gauteng Legislature, and two companies that won tenders worth hundreds of millions is at the centre of a probe by multiple government agencies.
The investigation dates back to when Hlongwa was MEC for health. Now he may be charged on several counts of corruption over alleged massive corruption in the awarding of contracts in the province’s health department.
In addition, several former Gauteng Department of Health officials are likely to face criminal charges for their involvement in a corruption ring, allegedly co-ordinated by Hlongwa when he was health MEC.
This is according to evidence submitted to the South Gauteng High Court this week as part of the National Prosecuting Authority’s application for preservation orders on claims by two sets of companies that benefited from irregularly awarded contracts.
The evidence has provided intricate details of an alleged “generally corrupt relationship” between Hlongwa and businessman Richard Payne and the web of government officials, businesspeople, employees and companies that managed the administration of the contracts and specific corrupt activities.
The charges are recommended in a report by forensic auditor Andre Prakke, who formed part of the Anti-Corruption Task Team’s investigation team and a separate report produced by the Special investigating Unit (SIU) last year, which describes a series of alleged frauds and corrupt acts through local and international trips, cash payouts, and alleged bribes.
SIU spokesman Boy Ndala did not wish to comment, saying the matter was sub judice as it was before the courts.
Hawks spokesman Captain Paul Ramaloko confirmed the corruption investigation was at a mature stage but said neither Hlongwa nor Payne, or any department of health officials, had been charged.
“We are guided by the investigation as to who should be brought to book,” said Ramaloko.
However, in his report Prakke alludes to massive kickbacks which would form the heart of the State’s case against Hlongwa and the officials: “Money, donations, gifts, loans, sponsored trips, spa treatments, renovations and alterations, furniture and or any other form of gratification from 3P Consulting, Ukwakha and or any other affiliate entity to any department employees or officials constitutes gratification as defined in section 1 of the Prevention and Combating of Corrupt Activities Act.”
Payne’s company 3P Consulting initially won a contract to do a budget compilation for the department, which led to it producing a turnaround strategy which called for a project management unit (PMU) to be set up.
Payne’s 3P crafted a proposal of the PMU and later bid for the establishment of the unit, which eventually managed 144 contracts for the department.
Initially the contract was signed off at R60 million per year but by 2008, it increased to R138m.
And in 2009, before Hlongwa was redeployed to the legislature as chief whip, he extended the contract for three years at an additional R273m.
Health department staff acted under the unwarranted dictates of Hlongwa in awarding the contract to 3P, increasing its value and extending its period, according to an affidavit by Hawks Colonel Thabo Motedi, which formed part of the application.
In exchange for the contracts, 3P, through Payne, made over R3.5m in cash payments to Hlongwa in addition to paying R1.6m towards a R7.2m house in Bryanston.
Regiments Capital chief executive Niven Pillay, who received the contract to review the Folateng Hospitals, contributed R1m to the purchase of the house.
According to the evidence, Hlongwa, his head of department Sybil Ngcobo, chief operations officer Abdul Rahman and deputy director-general Obakeng Mookeletsi were allocated offices in the executive wing of 3P’s offices and had special access rights.
And Ukwakha Dezign, a shelf company owned by Payne, furnished the residences of Hlongwa, Mookeletsi and supply chain director Valdis Ramaano, at no cost to them.
Neither Hlongwa nor Ngcobo, Ramaano or Rahman could be reached for comment this week.
But Mookeletsi, speaking to The Sunday Independent, denied any of the trips listed were for material benefit.
Commenting on possible charges being levelled against him, he said: “If there is evidence of wrongdoing, there should have been a charge.”
He said one of the trips listed to Cape Town was for a standing committee on public accounts meeting and was not paid for by 3P but rather by the Project Management Unit. It was possible that Pillay invited him to the Durban July in 2008 but it was not a secret in the office, said Mookeletsi.
IN HOT WATER: Brian Hlongwa is the former Gauteng health MEC.
LIVING LARGE: The Bryanston property which Gauteng ANC chief whip Brian Hlongwa bought allegedly with the help of companies which won tenders in the health department.