Special Tribunal declares R600m AngloGold Ashanti Hospital contracts unlawful

The R600 million lease and refurbishment contracts awarded by two Gauteng government departments for the AngloGold Ashanti Hospital have been declared unlawful, unconstitutional, and invalid.

The Special Tribunal made the order on 18 February after the Special Investigating Unit (SIU) applied to set aside the contracts and recover the state’s losses.

The order reviewed and set aside multiple decisions made by the Gauteng Department of Health (GDoH) and the Gauteng Department of Infrastructure Development (GDID).

Hospital orders inconsistent with the Constitution, unlawful, and invalid

This includes the lease agreements with AngloGold Ashanti Limited and Golden Core Trade and Invest (Pty) Ltd for the hospital and residential premises. The order states that these agreements were inconsistent with the Constitution, unlawful, and invalid.

“All lease agreement extensions or amendments were found to be unconstitutional and illegal. The appointment of eleven Professional Service Providers (PSPs) for the hospital renovation was deemed unlawful due to non-compliance with procurement requirements,” SIU spokesperson Kaizer Kganyago said in a statement.

“Consequently, all contracts for this work have been set aside between the GDOH, GDID, and the service providers.”

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The Special Tribunal found that contracts worth over R600 million that were irregularly awarded must be set aside.

The contracts include R 494 541 374, 29 comprising the following:

• Diphatse Trading & Projects CC: R132 227 265.03
• Makhado Project Management (Pty) Ltd: R118 452 735.52
• Yikusasa Building Contractors (Pty) Ltd: R89 406 591.58
• NJR Projects (Pty) Ltd: R56 808 184.33
• Thenga Holdings (Pty) Ltd: R49 540 108.20
• Mvusuludzo Projects (Pty) Ltd: R48 106 489.63

There are also additional invalid contracts worth R12 056 225.24 and PSP contracts worth R94 million.

Increasing hospital capacity

To increase hospital capacity during the peak of the Covid-19 outbreak, the GDoH and GDID signed a lease for Western Levels Deep Mine Hospital, which AngloGold Ashanti previously held.

The hospital was intended to provide additional beds for Covid-19 patients, but the procurement processes were riddled with irregularities.

“The SIU investigation revealed that the procurement process was unlawful, as it failed to adhere to the required transparent and competitive bidding procedures,” Kganyago said.

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“This is a contravention of the Public Finance Management Act and National Treasury’s regulations, causing the GDoH to incur fruitless and wasteful for goods and services supplied.”

The SIU investigation also found no feasibility study was conducted to evaluate the hospital’s capacity to treat Covid-19 patients.

The GDoH was also misled into believing that only minor renovations were needed at the hospital. Initially estimated at R50 million, the cost surged to over R600 million without justifiable explanation. Service providers were appointed without proper contracts and began work before finalising agreements.

Wasteful expenditure

Plus, the hospital was not operational during the critical first three waves of the pandemic, making the expenditure wasteful.

“The order continues implementing the SIU investigation outcomes and consequence management to recover assets and financial losses suffered by state institutions and/or prevent further losses,” Kganyago said.