Tender processes were circumvented in the Amigos case, according to witness at state capture inquiry

The commission of inquiry into state capture heard on Wednesday of how procurement processes were circumvented at the KwaZulu-Natal department of health (DoH) in order to award a contract to a politically linked entity.

The chairperson of the commission, Deputy Chief Justice Raymond Zondo, heard that officials at the provincial DoH partly relied on a 22 September 2006 media report on “muddy water” running through the taps at a hospital in KwaZulu-Natal to justify procuring water purifiers.

The commission heard that the officials from the DoH and its then head of the department (HOD), Dr Ruth Nyembezi, used the media report as a reason to appoint a supplier for the purifiers, saying the plants were needed urgently.

The water purifiers were subsequently supplied by Intaka, the commission heard, an entity owned by Dr Gatson Savoi.

Officials from the DoH, however, tested the water and found that it was discoloured and was not contaminated but potable. A Mr Khanyile wrote to Nyembezi about the results of the tests.

The witness at the commission, PricewaterhouseCoopers (PwC) forensic auditor Trevor White, said Khanyile’s report on the water was ignored, leading to the appointment of Intaka.

A week later after the water was tested, the head of the DoH’s supply chain management (SCM) unit, a Mr Ntshangase, wrote to Nyembezi requesting for an exemption to go out to tender for the water purifiers and approval to appoint the lowest bidder for the contract.

The tender was valued at R9,960,000.

The commission heard that the memorandum Ntshanagase sent to Nyembezi contained false information, including that the water was not safe to drink as well as that the SCM unit had obtained three quotes from entities bidding to supply the water purifiers.

The quotations by the three bidders had in fact been sent by Savoi to Nyembezi and the two other entities that had bid with Intaka were closely linked with the latter.

“This is just a memorandum that contains a number of false statements,” White told Zondo, adding that this was done to create the impression that the proper procurement procedures had been followed.

An email sent by Savoi to Nyembezi on 25 September 2006 in which he sent her the three quotations, was part of the records police seized in their investigations.

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“So Dr Nyambezi and Dr Savoi [collaborated] to inflate the prices,” White told Zondo.

White said that initially, the representatives of the two entities that had provided quotations denied any wrongdoing but subsequently entered into a plea bargain.

He added that consider the price tag of the project, almost R10 million, it should have gone to tender and that effectively Nyambezi created a need for the water purifiers when it was not there.

White said it was clear that documents had been fabricated to circumvent the procurement process and subsequently appoint Intaka.

After Intaka was awarded the contract a number of concerns around it were raised, the commission heard.

The commission also heard that Savoi and Nyembezi allegedly colluded in manipulating the tender specifications in another contract to favour Intaka.

White told the commission that a number of the people in the DoH who were involved in the process leading to Intaka’s appointment as a supplier, who were interviewed during investigations, had been critical of the contract but had been pressurised or overruled.

The contract which Savoi and Nyembezi allegedly manipulated the tender specifications was approved on 30 November 2006. Losing bidders launched an appeal which was ultimately unsuccessful.

“That appeals process was run out of provincial Treasury,” White said, a department headed at the time by Sipho Shabalala, who is also implicated in the Amigos case.

At the conclusion of the hearing of the appeals, Shabalala sent an SMS to a representative at Intaka about the hearing.

The commission also heard that Savoi had told Intaka’s internal legal counsel that the MEC for the DoH at the time, Peggy Nkonyeni, had been disappointed in the delays in a contract for the supply of oxygen plants and that this delay may have been partly a result of questions sent by the Democratic Alliance to Ntshangase and that Nkonyeni had given an assurance that the contract would be finalised.

The commission heard that technical staff at Intaka also raised concerns about the supply of oxygen plants to the DoH, saying their products did not meet the requirements.

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