The SANDF. Photo: Gallo Images/Sharon Seretlo
The Special Investigating Unit (SIU) has uncovered serious alleged procurement irregularities in the South African Department of Defence’s R33.4 million Cuban medicine deal.
This was revealed as part of a broader investigation revealing widespread corruption and irregular contracts across the defence sector.
The findings were presented during a briefing to Parliament’s Standing Committee on Public Accounts (Scopa) on Tuesday.
SIU Chief National Investigations Officer Leonard Lekgetho revealed that the Department of Defence (DoD) procured 930 units of Interferon Alpha 2B Hebron antiviral drugs from Cuba during the Covid-19 pandemic.
Lekgetho said the department paid for the medicine to use it as an immune booster for soldiers during lockdown enforcement duties.
The investigation found that the procurement agreement was signed after the medicine had already been delivered, and the drugs were not approved by the South African Health Products Regulatory Authority (Saphra).
“The military command Council of the South African National Defence Force (SANDF), which is the highest decision-making body in the Department of Defence, approved the acquisition… the price unit per each viral was $15.50, which amounts to R257 per viral,” Lekgetho explained.
According to Lekgetho, the procurement process was fundamentally flawed.
“The department did not procure the Interferon from Cuba by means of a competitive bidding process,” he stated.
“Regarding legislation, the secretary of defence is the accounting officer. All procurement needs to be signed by the accounting officer. Still, in this instance, the accounting officer did not sign the procurement.”
He further noted that “the interferons were not approved or registered by the South African Health and Product Regulatory Authority to be imported and used in the country” and “the department did not have funds in its budget allocated for the acquisition of the interferons”.
ALSO READ: Minister Angie Motshekga ‘safe’ but SA troops ‘surrounded’ with no ammo or place to store dead
Lekgetho said the procurement’s outcome proved “fruitless and wasteful”, with most of the medicine being returned to Cuba following a court order.
“Only 15 of the total interferons imported from Cuba were used, and of the ones that were used, 10 were used on a patient at the one military hospital, and five of them were used by Saphra in order to do the testing,” Lekgetho confirmed.
He added that “the department did not recover the payments made to Cuba in respect of the interferons” and “the interferon was found not to be fit for purpose by Saphra and as such payments that DOD made to Cuba were fruitless and wasteful expenditure”.
ALSO READ: SANDF troops poorly equipped and ‘should not have been deployed’, says defence union
Beyond the Cuban medicine controversy, the SIU’s investigation exposed significant issues at state arms manufacturer Denel, including a troubled R8.3 billion armoured vehicle contract from 2007 to design and manufacture 264 armoured vehicles.
It was revealed that despite Denel receiving more than R8.1 billion in payments, only 21 vehicles have been built to date, and even these haven’t been delivered to Armscor.
Lekgetho reported that project funds were misappropriated.
“Some of the funds that were paid and allocated to the project were utilised by Denel for non-project related matters,” including salaries and operational expenses unrelated to the contract.
ALSO READ: Four more SANDF soldiers killed in the DRC
SIU head, Advocate Andy Mothibi, expressed grave concern about losing intellectual property to foreign entities, specifically in the United Arab Emirates (UAE).
“This presents a very serious scenario,” Mothibi told the committee.
“Although we’ve referred criminal actions… some of those who were involved here have also joined the companies. The extent of the plan – this was planned… they took the IP with all these companies from the UAE, and then they left Denel and went to join the company.”
Committee members described the situation as a “national disaster,” emphasising how the compromise of defence intellectual property could give other nations military advantages.
Advocate Ntuthuzelo Vanara, the SIU’s chief legal counsel, highlighted the complex legal challenges in recovering stolen intellectual property.
“This is really a sad state of affairs that presents complex legal challenges because the scheme was executed through agreements that indicate the disputes will be resolved through laws of a foreign jurisdiction,” Vanara explained.
ALSO READ: Nsfas to settle R44m debt: Outa calls for immediate action
The investigation revealed significant irregularities in Microsoft software licensing, with three controversial contracts between 2016 and 2018 totalling more than R500 million.
The SIU has instituted civil proceedings at the Special Tribunal regarding contracts worth R467 million with technology companies EOH and SoftwareONE.
EOH has already signed an acknowledgement of debt and paid R41.6 million back to the state.
However, the investigation revealed that many licences were never used, as the department already had valid licences at the time of procurement.
Questions were raised about the necessity of middlemen in Microsoft licensing deals.
“There is really no tangible business case to have a middle company to procure Microsoft because you can go direct,” Mothibi explained, suggesting that such arrangements often facilitate corrupt practices.
The Department of Defence has been defending EOH rather than supporting the SIU’s efforts to blacklist the company, prompting questions about the department’s motivation and oversight.
ALSO READ: Police portfolio committee to summon Minster Mchunu over inspectorate closure
The investigation also examined irregular pilot training bursaries, with the SIU recovering R559 000 through an acknowledgement of debt letter.
The unit has also filed for default judgment at the Special Tribunal for an additional R234 000 related to failed student obligations.
The investigation revealed serious governance failures at both Denel and the SANDF, including officials using personal Gmail accounts for official business.
“The board failed in their fiduciary duties in handling the affairs of Denel,” Vanara stated, noting that delinquency proceedings are being considered against board members.
MP Andrew Whitfield expressed concern about continued bailouts to Denel despite evidence of corruption.
“It’s quite clear that it’s a sieve of corruption… Parliament should be held criminally liable for giving money in such dire circumstances,” he stated.
ALSO READ: Portfolio committee warns that budget cuts and fewer teachers will weaken education in SA
The SIU has made several recommendations to address these issues, including improving record management, enforcing consequence management, and developing frameworks to prohibit the use of private email accounts for official business.
The committee discussed strengthening the SIU’s powers through constitutional or legal amendments and making its recommendations binding, similar to the Public Protector’s powers following recent Constitutional Court rulings.
The investigation continues as the SIU pursues civil litigation to recover funds and makes recommendations for criminal prosecution.
The unit has made 41 criminal referrals to the National Prosecuting Authority and 23 disciplinary referrals related to the Department of Defence investigation alone.
The SIU confirmed it had prepared amendments to the SIU Act to make its recommendations binding, similar to the Public Protector’s powers.
The committee agreed to engage further with the Minister of Defence and the National Treasury on systemic issues, with plans to invite the Finance Minister to address transversal issues affecting procurement across government departments.
The unit continues to pursue civil proceedings and disciplinary actions against implicated officials while working to recover misappropriated funds.
NOW READ: Private hospitals also taking NHI fight to court as Motsoaledi talks ‘war’
Download our app and read this and other great stories on the move. Available for Android and iOS.
