OUTA – 19 August 2020
While OUTA welcomes the release of the Covid-19 Expenditure Disclosure Report by the Gauteng Provincial Treasury, it falls far short of providing sufficient information and detail needed to scrutinise and unpack the extent of corruption or maladministration that may have occurred with regard to the procurement.
Aside from receiving the names of the suppliers and the total amounts spent with them, it is necessary that we are able to ascertain value for money. In other words, what the Gauteng Province procured on a variable cost per item basis is what is important.
More important is the scrutiny around who received this business, the people connected to these businesses and whether we received the best value for money from these suppliers.
OUTA’s initial assessment of this report reveals that of the 358 companies listed who received Gauteng contracts from April to July 2020, for a total of R2.101bn, 13% of the suppliers (48 companies) received contracts worth at least R10m, and together collected R1.825bn or 87% of the total spend. The top 10 suppliers (ie 3% of them) collected R829.307m or 40% of the total spend.
More concerning however, is that 55 of the suppliers listed (i.e.15%), were only registered as government suppliers after 1 March 2020 and some of these received large payments.
The company which was paid the most was Dinaane Consulting Services, which was paid R116.950m in a single contract. Dinaane was registered as a government supplier only on 29 April 2020. According to the CIPC database, Dinaane was deregistered and its registration was restored only on 16 June 2020. It has one director and is based in a house in Naturena.
Other big contracts included Olee Telecom Solutions – R79.483m (registered as a government supplier on 25 June 2020 and contracted to provide cleaning supplies not telecoms) and Maponya Medical Solutions – R74.543m (registered as a supplier on 24 March 2020). This gives the appearance that many of these companies were registered as government suppliers deliberately to benefit from procurement related to the pandemic relief fund process.
Royal Bhaca Projects (linked to President Ramaphosa’s spokesperson Khusela Diko) was reported in the media to have obtained a contract for R125m for PPE from the Gauteng Department of Health, but it is not listed in this report. The biggest contract listed in the Gauteng Provincial report was for R116.950m and OUTA would like to know why the Royal Bhaca Projects contract was not listed.
All contracts with the companies with last-minute supplier registrations, more so those with large values, are a strong motivation for an investigation into all the Gauteng Covid-19 procurement.
This concern is further highlighted by the fact that although this report covers the period April to July 2020, the Gauteng government managed to contract eight suppliers who registered only in July for a total of R58.452m. This included R10.063m for Shwabada Holdings which registered on 29 July (and has an office address as what appears to be the backyard of a small house in Meadowlands), R4.012m for HSB Mercantile Investments (registered on 25 July 2020 and already under investigation by the SIU in connection with Covid-19 procurement) and R36.500m for Ikusasa Telecoms (registered on 17 July 2020).
OUTA also notes that some suppliers had duplicate payments for the same amount during this period. This may be construed as a double payment for the same service and OUTA obviously requests the reason for these duplicate payment. Herewith three incidents of “double payments” to the same service providers:
• 3G Locations and Transport was paid the same amount for two separate contracts with the Department of Health: R2 581 830 on a contract for “Operating lease: buildings” and the same amount again for “Rental & Hiring”. The list of total payments to each contractor shows a total of R5 163 660 (the equivalent of both payments) was paid.
• Viro Med Pharmaceuticals was paid the same amount for two separate contracts with the Department of Health: R494 960 for “Inv med: gloves, dis sundries” and the same amount again for “Inv med: surgical/medical supplies”. The total for both payments (R989 920) is listed for the total paid to Viro Med.
• Tuwo Rhodesia was paid R2.79m twice by the Department of Health for washing/cleaning detergents, but is listed in the contractors table as receiving a total of only R2.79m.
Another matter of interest is the expenditure of R4.938m on “Catering: departmental activities” by the Gauteng province, although South Africa was in lockdown. We believe the entire expenditure of catering across all Government departments is an issue worth investigating as this is a questionable expense in times when we should be cutting costs and not providing lunches to staff.
The costs of setting up the Nasrec field hospital are starting to emerge. The report lists R432.063 million under “Health infrastructure” for the Nasrec facility, part of a total of R2.978 billion on health infrastructure. Elsewhere the report lists two contracts to the Johannesburg Expo Centre, which owns Nasrec, for R30.430m to lease the centre and another R61.617m for upgrading and buildings. We would like clarity on these costs, particularly if Gauteng was involved in upgrading a privately owned facility.
OUTA will be requesting more detail from the Gauteng Treasury department to conduct a more thorough investigation into this content of this report.
A copy of the “Gauteng Covid-19 Expenditure Disclosure Report – April to July 2020” is available here.