A Special Investigating Unit (SIU) investigation has found that the Newcastle Local Municipality in KwaZulu-Natal procured personal protective equipment (PPE) at inflated prices that were not in line with National Treasury rates during the Covid-19 national state of disaster. 

Of the five PPE service providers implicated in the investigation, three have signed acknowledgements of debt with the SIU, with a cumulative value of R451,100.

This is according to the SIU’s “second final report” on its investigation into possible corruption in the procurement of goods, works and services during the national state of disaster. The report, recently released by the Presidency, was submitted to President Cyril Ramaphosa on 15 July.

The investigations behind the report are primarily focused on the period between 1 January 2020 and 23 July 2020, and follow on from Ramaphosa’s Proclamation R23 of 2020. This proclamation mandated the SIU to investigate unlawful expenditure by state institutions during this period.

A final report on the matter was originally submitted to the Presidency in late 2021, according to a Daily Maverick report. However, a number of the SIU’s investigations were incomplete or ongoing, necessitating a follow-up.

Read in Daily Maverick: “Final SIU Covid-19 corruption report released – now comes Ramaphosa’s time for tough action”

Newcastle Local Municipality

The SIU’s investigation into the Newcastle Local Municipality was triggered by an allegation from a whistle-blower that the municipality had procured PPE at inflated prices. The allegation was related to the 2019/20 final Auditor-General of South Africa management report.

The resultant investigation encompassed eight service providers holding a total of 14 contracts valued at R2,387,230. Five of the service providers were found to have charged rates for the supply of PPE in excess of the regulated rates issued by Treasury.

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“The SIU has engaged with these service providers and has signed [acknowledgements of debt] for three of the service providers with a view to recover the losses incurred by Newcastle,” according to the SIU report. “Attempts to recover from two of these service providers are ongoing, wherein the state attorney has been engaged to issue letters of demand.”

The SIU made five disciplinary referrals to Newcastle on 31 May 2022. These were against three officials involved in the procurement process and awarding of contracts to:

• Ingcebo Yam Trading;
• Zokwenza Development and Training CC;
• MSO Trading (Pty) Ltd;
• Zamanzunza Trading; and
• Zizi Afrika Inspired (Pty) Ltd.

The three service providers that have signed acknowledgements of debt with the SIU for overpricing of PPE are MSO Trading (Pty) Ltd, Zamanzunza Trading and Zokwenza Development and Training CC.

Zamanzunza Trading signed an acknowledgement of debt on 26 November 2020, amounting to R70,000 on a contract valued at R250,000. The service provider has since repaid R31,500.

On 25 November 2021, MSO Trading (Pty) Ltd signed an acknowledgement of debt to the value of R246,500 for a contract of R1,234,500. Zokwenza Trading acknowledged a debt of R134,600 for a contract valued at R335,000 on 9 February 2022. 

All three service providers are repaying the debt in monthly instalments.

Read in Daily Maverick: “Latest SIU report reveals billions more rands of unlawful and dodgy Covid-19 spending exposed”

Another finding of the SIU investigation was that seven of the service providers were not registered with the South African Health Products Regulatory Authority (Sahpra) to distribute medical devices. This contravenes section 22(C)(6) of the Medicines and Related Substances Act of 1995.

“Evidence was referred in respect of four contracts to the value of R375,105 to Sahpra on 17 February 2022, and three referrals were submitted for a contract value of R795,000 on 2 June 2022, against… suppliers who were not registered with Sahpra,” stated the SIU report. DM