Outa: Gauteng must explain how R5m was blown on catering during lockdown

While welcoming the release of the Covid-19 Expenditure Disclosure Report by the Gauteng Provincial Treasury, the Organisation Undoing Tax Abuse (Outa) says the report falls short of providing sufficient information needed to scrutinise the extent of corruption or maladministration that may have occurred with regard to procurement.

The organisation is keener to understand who received business as its initial assessment of the report reveals that of the 358 companies listed who received Gauteng contracts from April to July 2020, for a total of R2.101 billion, 13% of the suppliers (48 companies) received contracts worth at least R10 million, and together collected R1.825 billion or 87% of the total spend.

More concerning, it said, was that 55 of the suppliers listed were only registered as government suppliers after March 1, with some receiving large payments.

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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,” Outa says.

The sale of cooked food was banned under a significant period of the hard lockdown under Levels 5 and 4.

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Outa found that:

• The company which was paid the most was Dinaane Consulting Services, which was paid R116.950 million 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 – R79.483 million (registered as a government supplier on 25 June 2020 and contracted to provide cleaning supplies, not telecoms) and Maponya Medical Solutions – R74.543 million (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 R125 million 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 R116.95 million and Outa would like to know why the Royal Bhaca Projects contract was not listed.

Although the report covers the period April to July 2020, the government managed to contract eight suppliers who registered only in July for a total of R58.452 million, which included R10.063 million for Shwabada Holdings, which registered on July 29, but its offices appeared to have been a backyard of a small house in Meadowlands.

Outa also noted that some suppliers had duplicate payments for the same amount and requests reasons for the duplicate payments.

• 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 health department: 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 health department for washing/cleaning detergents, but is listed in the contractors table as receiving a total of only R2.79m.

“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 says.

The organisation will be requesting more detail from the Gauteng Treasury department to conduct a more thorough investigation into the content of this report.

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