The Presidency has released the ‘second final report’ of the Special Investigating Unit’s investigation into procurement corruption within the Newcastle Municipality during the Covid-19 national state of disaster.
According to the Daily Maverick, five PPE service providers to Newcastle Municipality were found to have overcharged for the supply of goods.
During the Covid-19 national state of disaster, the Municipality procured personal protective equipment (PPE) at inflated prices that were not in line with National Treasury rates, according to the SIU investigation.
Three of the five PPE service providers named in the investigation have signed debt acknowledgements with the SIU totalling R451 100.
The SIU’s ‘second final report’ on their investigation confirmed cases of corruption in the procurement of goods, works, and services during the national state of disaster. The report, which was recently released by the Presidency, was delivered to President Cyril Ramaphosa on July 15.
The report’s investigations are primarily focused on the period between January 1, 2020 and July 23,2020, and follow Ramaphosa’s Proclamation R23 of 2020 which directed the SIU to look into any illegal expenditure by state institutions during this period.
According to the Daily Maverick, a final report on the matter was originally submitted to the Presidency in late 2021. However, several of the SIU’s investigations were incomplete or on-going, necessitating further investigation.
The SIU’s investigation in Newcastle was prompted by a whistle-blower’s claim that the municipality had purchased PPE at inflated prices. The allegation concerned the final Auditor-General of South Africa management report for 2019/20.
The investigation resulted in eight service providers holding a total of 14 contracts worth R2,387,230. Five of the service providers were found to have charged rates for the supply of PPE that were higher than the treasury-mandated regulated rates.
“The SIU has engaged with these service providers and has signed acknowledgements of debt with three of the service providers in order to recover Newcastle’s losses. Attempts to recover (money) from two of these service providers are ongoing, and the state attorney has been retained to issue demand letters,” the SIU said in a statement.
On May 31, 2022, the SIU referred five disciplinary cases to Newcastle. These were filed against three officials involved in the procurement process and contract awarding to the following companies: Ingcebo Yam Trading, Zokwenza Development and Training CC, MSO Trading (Pty) Ltd, Zamanzunza Trading, and Zizi Afrika Inspired (Pty) Ltd.
MSO Trading (Pty) Ltd, Zamanzunza Trading, and Zokwenza Development and Training CC are the three service providers who have signed debt acknowledgements with the SIU for overpricing of PPE.
On November 26, Zamanzunza Trading signed an acknowledgement of debt for R70,000 on a contract worth R250,000. Since then, the service provider has repaid R31,500.
MSO Trading (Pty) Ltd signed an acknowledgement of debt for R246,500 on November 25, for a contract worth R1,234,500. On February 9, Zokwenza Trading acknowledged a debt of R134,600 for a contract worth R335,000.
The debt is being repaid in monthly installments by all three service providers.
Another finding of the SIU investigation was that seven of the service providers were not registered to distribute medical devices with the South African Health Products Regulatory Authority (Sahpra). This is a violation of the Medicines and Related Substances Act of 1995, Section 22(C)(6).
“Evidence was referred to Sahpra on February 17 in respect of four contracts worth R375,105, and three referrals were submitted for a contract worth R795,000 on June 2, against suppliers who were not registered with Sahpra,” concluded the SIU report.
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