Rigged processes, political pressure led to awarding of dodgy PPE tenders, SIU finds

The Special Investigating Unit (SIU) has found evidence of political pressure in the awarding of personal protective equipment (PPE) contracts by some state institutions.

This was revealed by SIU head, advocate Andy Mothibi, during a media briefing on Friday on the unit’s finalised investigations into the procurement of PPE and other goods by state institutions last year.

“In some instances, we found that the evidence indicated that there was political pressure that played a role in the procurement of PPE. It also appears that the names of service providers were determined before the supply-chain management process commenced,” Mothibi said.

The SIU head said Treasury procurement guidelines were largely ignored by officials, resulting in overpayments and a complete breakdown of the checks and balances put in place.

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Mothibi said when the national State of Disaster was declared on 15 March 2020, Treasury permitted the emergency procurement of goods. However, some state officials had the impression that all procurement process should be done on an emergency basis, which was not the case.

“But they didn’t realise that even an emergency procurement must still be conducted in accordance with certain minimum prescripts to ensure in as far as possible that such process remain fair, equitable, transparent, competitive, and cost effective,” Mothibi said.

According to data received from the Treasury, state institutions spent a total of R30.7 billion between April and November 2020, of which more than R13 billion was subjected to investigations by the SIU.

These contracts were awarded to 1774 service providers. The SIU has finalised investigations into 164 PPE contracts to the value of over R3.5 billion, 1541 contracts to the value of R6.8 billion were still being investigated and investigations into 851 contracts were yet to begin.

Mothibi said government officials failed to exercise their oversight over the procurement process.

He said certain officials appeared not to trust government’s processes because of a perception that the processes created monopolies to the exclusion of small and black-owned businesses. But Mothibi said this was not true.

“The evidence also pointed to us that various officials merely rubber stamped decisions taken by the authorities, accepted and gave effect to unlawful instructions from officials more senior than them, which resulted in a complete breakdown of the checks and balances protections normally afforded by, among others, the principle of segregation of duties,” he said.

Some service providers were already under deregistration from the government’s supply-chain management system when they were awarded tenders, the SIU found.

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There was also no attempt to negotiate with suppliers.

“This resulted in overpayments that we have found for the goods that were supplied,” Mothibi said.

The SIU found that some products were not suitable for procurement and substandard PPE was also delivered.

Several departments lacked basic control measures to verify the numbers of goods brought, while some companies were not registered with the South African Revenue Service (Sars) as VAT vendors.

“Certain service providers were found to have been only registered on the CIPC [Companies and Intellectual Property Commission] during February 2020 and March 2020, and thus could not have demonstrable track records. Companies awarded contracts were not registered on the Central Supplier Database,” Mothibi said.

The reports were submitted to President Cyril Ramaphosa on 25 November last year. The SIU said it was also pursuing civil litigation at the Special Tribunal to set aside the contracts and recover the funds.

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