The Special Investigating Unit (SIU) may have identified about R8bn of irregular spending linked to the government’s response to the Covid-19 outbreak and recovered about R34m, but that barely scratched the surface, with most contracts not having been investigated.
Despite procurement scandals involving prominent political figures such as former health minister Zweli Mkhize and President Cyril Ramaphosa’s former spokesperson, Khusela Diko, less than 10% of the R152.5bn spent between April 2020 and September 2021 came under the microscope.
On Tuesday, the presidency released the SIU report on procurement fraud and corruption perpetrated during SA’s national state of disaster, the disclosure of which threatened the credibility of the government’s response and highlighted public disgust at the level of corruption in the public service.
Anger was especially pronounced as SA faced its worst economic and health crisis, and was probably a factor behind the ANC suffering unprecedented losses in the local elections held in November 2021.
Of the contracts that were looked at, most were found to have been irregular. However, a multitude of deals with only 91 suppliers at a significant value of R179bn remain unchecked, with the unit eager to get the green light to scrutinise them.
The SIU cleared 1,313 service providers linked to 1,655 contracts worth R5.3bn of any irregularity.
Of the R551m potentially recoverable cash or assets, R34m of cash or assets had been recovered.
The SIU team sent its report dated December 10 2021 to Ramaphosa and Andy Mothibi, the head of the unit detailing the illegality connected with Covid spending. Two further reports on contracts are due in late March and May.
Of the matters referred to the SIU, the majority are outside the scope of the report, because its focus is limited by proclamation.
“For the contracts that fell outside the scope of the proclamation, the SIU will consider applying for an extension of the proclamation or a new proclamation,” says the report.
All indications are that the report merely scratches the surface when it comes to dirty dealings between crooked government officials and profiteers under the auspices of emergency procurement.
SA’s economic powerhouse, Gauteng, features prominently, with the unit recommending disciplinary action against 15 provincial department officials.
The state has already clawed back some modest funds through a special tribunal, a niche court that fast-tracks graft cases. The SIU report lists 45 personal protective equipment (PPE) matters with a total value of R2.1bn before the tribunal, and eight orders to the tune of R174m either for the freezing of assets or repayment of profits.
In one high-profile case, the tribunal recovered over R24m from Ledla Structural Development and Royal Bhaca Projects, which the SIU found were embroiled in tender rigging with Gauteng’s health department. But this wasn’t even 10% of the total R264m they received in irregular contracts.
The watchdog found the two companies shortchanged the department by supplying substandard PPE. Despite this, the SIU found Ledla and its suppliers profited a staggering 637% on certain goods.
Royal Bhaca came under public scrutiny in 2020 after reports that its directors were closely linked to former Gauteng health MEC Bandile Masuku and Nkosi Thandisizwe Diko, the late husband of Khusela, who was then the president’s spokesperson.
The report on Covid-19 procurement fraud records a “complete breakdown” of payment processes as departments secured goods and services during the national state of disaster. It also found that “political pressure played a role in the procurement of PPE”.
A split was apparent between provincial and national government, with departments ignoring regulations that they work on contracts with the Treasury’s centralised team, which included health department staff and non-profit input from business. Provinces sidestepping the central office led to corruption and theft.
The SIU has made 368 referrals to the National Prosecuting Authority (NPA) and some were sent to the SA Revenue Service.
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