SIU report lifts lid on PPE tender scandal: Millions stolen by government officials

An investigation into allegations of the Covid-19 Personal Protective Equipment procurement by State institutions has revealed that 25 officials have been implicated in PPE tender irregularities worth millions of rand.

According to Head of the Special Investigating Unit (SIU), Advocate Andy Mothibi, the investigation has revealed that political pressure played a role in the awarding of tenders to particular companies. A total of 189 PPE procurement corruption allegations were reported to the SIU.

“The report also found that de-registered companies were awarded tenders worth millions of rand, while in other instances, specifications were ignored and sub-standard quality products delivered. Furthermore, companies that did not qualify for BBBEE points, were awarded tenders,” Mothibi said during a media briefing on Friday.

He said in many of the cases, officials merely rubber-stamped decisions made by senior officials while others did not ensure that normal Supply Chain Management (SCM) controls were followed.

Mothibi said their investigation found that companies that were awarded contracts were not registered on the Central Supplier Database, and some were only registered days before the country was placed in a State of National Disaster, meaning that they had no proven track record.

"Our report found that there was no attempt to negotiate with suppliers in bringing prices within the thresholds provided by Treasury. This resulted in overpayment for goods. The Departments lack basic control measures that will establish correct product delivery. In several instances, we found under-delivery of items.

“There appears to be no verification protocols on supplier registration details. This has resulted in several suppliers claiming VAT when they were not registered with Sars as VAT vendors," he said. The investigation has also revealed how suppliers used front companies to obtain multiple contracts and how PPE was packed under false or forged labels.

Mothibi said based on the evidence, the SIU has recommended that disciplinary action to be taken against certain officials involved in the irregularities.

“Twenty-five referrals have been made to various State institutions for the institution of disciplinary action for misconduct and contravening of the supply chain management policies and sections of the Public Finance Management Act (PFMA) and the Municipal Financial Act (MFMA),” he said.

He said there were instances where officials were aware of the SIU investigations and opted to resign. However, a special request was then made to freeze that official’s pensions pending the investigation. Mothibi said the SIU made 38 referrals to the National Prosecuting Authority (NPA) in respect of evidence of criminality for prosecution. The referrals include allegations of fraud, corruption and the financial misconduct relating to the PFMA and the MFMA.

A secondary investigation found that 6 140 government officials had been claiming from the Unemployment Insurance Fund (UIF). "A total of 6 140 government officials were identified and were claiming from UIF to the value of R41 009 737, making use of 3 959 bank accounts. Of the 3 959 bank accounts identified, a total of 581 bank accounts were associated with multiple beneficiaries. Seventy-nine exceptions were identified relating to members of the South African National Defence Force (SANDF). A total of 59 SANDF members received payments to the value of R327 630,“ he said.

Mathibi said it was disheartening to see state officials in all spheres of government who have been called to serve the people of South Africa being implicated in unlawful and illegal activities in procurement processes that are meant to benefit the public with corrupt intent to unduly benefit themselves and their friends and or relatives to the prejudice of the state and of the public.

“If corruption is not tackled by all in society, it has the potential to weaken the State’s capacity to deliver basic services like water, electricity, roads, housing, healthcare and education. I appeal to public servants and those in a position of power and responsibility to serve the people of South Africa with integrity and pride,” he said.