SELBY MAKGOTHO: Taxpayers fleeced during pandemic
Intense corruption was a feature of the hard lockdown period
In a month’s time it will be exactly two years since the outbreak of the Covid-19 pandemic and subsequent declaration of a state of national disaster by the SA government.
While the period has brought pain and agony to many families affected by the numerous deaths that have been experienced over the past two years, the procurement of items intended to help fight back against the pandemic has experienced large-scale abuse through pointed disregard of the Public Finance Management Act, constitutional, legislative and other statutory provisions.
It is now emerging that the two months of hard lockdown exposed and gave rise to intense Covid-19 corruption. In those two months taxpayers lost almost R6bn due to corruption and maladministration in the hasty procurement of personal protective equipment (PPE).
Details of the alleged corrupt practices are being laid bare in the various legal submissions before the Special Tribunal, which is tasked with the statutory mandate of recovering funds siphoned from state departments, including organs of state. The Special Tribunal is sitting with 45 civil litigation cases with a total financial value of R2.1bn. In the latest report publicly released a fortnight ago Special Investigating Unit (SIU) head Andy Mothibi predicted that this figure will increase given ongoing investigations in various provinces and national institutions.
Over the past 18 months the Special Tribunal has been inundated with urgent preservation orders and review applications to declare invalid the several PPE contracts flagged by the SIU investigations, most of which we are told are ongoing. In the majority of applications the argument is that the conclusions of the contracts are unlawful, irregular and inconsistent with the Public Finance Management Act.
The Special Tribunal delved deeper into the role of public servants in the latest judgment in the matter of the SIU v Free State Treasury MEC and Others. In the landmark judgment reviewing and setting aside the R39.1m contract affecting 38 respondents in one application, the Special Tribunal ruled that: “To the extent that the departments stand to suffer any loss from the tender, the heads of the department should invoke Section 38 (1) (h) of the Public Finance Management Act against the implicated officials to recover any fruitless or wasteful expenditure incurred or to be incurred.”
This posture is that no-one should benefit from an irregular contract. The approach follows the Constitutional Court ruling in All Pay Consolidated Investment Holdings and Others v CEO: SA Social Security Agency: “It goes without saying that every improper performance of an administrative function would implicate the constitution and entitle the aggrieved party to an appropriate relief. In each case the remedy must fit the injury. The purpose of the relief thereof is to correct or reverse the improper administrative function. Ultimately, the purpose of the remedy is to afford the prejudiced party administrative justice, to advance efficient and effective public administration compelled by constitutional precepts and a broader level to entrench the rule of law.”
In the matter of the SIU and Another v Caledon River Properties t/a Magwa Construction and Another, a similar approach was taken. The Special Tribunal was approached to review and set aside the R40m construction of the border fence at Beitbridge. It was noted with disappointment, though, that when the matter was enrolled for trial, the witnesses pulled back, citing fears for their lives. However, it is explicitly made clear in court papers that officials of the department of public works had concluded the contracts in a manner that violates the constitutional provisions and those of the Public Finance Management Act. Judgment in this matter will be handed down in due course.
The former CFO of the Gauteng health department, Kabelo Mantsu Lehloenya, is due to stand trial for her alleged role in the awarding of contracts on her watch totalling R38.7m. The trial could have started in August 2021 but had to be halted after she brought in an application seeking to join Gauteng premier David Makhura to the proceedings. She lost the bid and is appealing against the decision. Summonses have also been issued against the former head of the department, Mkhululi Lukhele.
In SIU v Digital Vibes and Others the role of public servants features prominently in the pleadings. The matter involves the R150m contract the SIU alleges was awarded unlawfully and in haste, thereby contravening the legislative processes. In this matter an amount of R22.4m has been preserved pending the finalisation of civil recovery proceedings against all those who are implicated. The SIU has supplemented its papers and brought a joinder application.
The unit argues that it discovered that an estimated amount of R5m had been left out in the initial investigations and came up subsequent to the preservation order. In the joinder application the SIU seeks to join former health minister Zweli Mkhize's wife, Dr May Mkhize, and other respondents to the litigation process. The joinder application, which becomes part of the interlocutory process, will be argued on March 8.
While the Special Tribunal has not been created for the purpose of the Covid-19 pandemic, it came as some relief to the SIU and taxpayers. Without it the SIU would still be in the queues at the country’s high courts trying to bring urgent applications incurred in the irregularities of the pandemic.
There has been progress in the work of the Special Tribunal in the past 18 months. These include reviewing and setting aside the R10,1m Eastern Cape scooter project; the R39,1m Free State PPE contracts; and the R139m Gauteng PPE contracts. The R431m schools decontamination tender is also before the Special Tribunal, and judgment is awaited.
In the AngloGold Ashanti hospital tender, where the costs escalated 10 times from R50m to R500m, the affected contractors, ProServe Construction and Thenga Holdings, lost an application last week where they sought the Special Tribunal to reconsider its earlier preservation order. The review application will soon be enrolled for hearing.
• Makgotho, an advocate who is a PhD candidate in public international law at Unisa, is spokesperson for the Special Tribunal.
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