Joint Statement by DA and Cope The opposition believes that criminal charges should be laid against the accounting officer (AO) of the Northern Cape Department of Health for financial misconduct and that the respective MEC should appear before the legislature disciplinary committee for misleading provincial parliament. This comes after our suspicions regarding irregularities in procurement processes, management of contracts and payment to service providers have been confirmed in the AG’s special investigations report. In terms of the Medical waste contract, the department’s attempt to distract from the real issue, namely the awarding of a shady contract, by putting their actions down to having to institute emergency procedures due to an existing crisis, holds no ground. The bottom line is that the department awarded an seemingly open–ended contract, with no dates or clear cost implications to Tshenolo Resources, a company who at the time had no track record of medical waste removal work and according to one of its previous employees, who also submitted an affidavit to all relevant authorities and of which the opposition has a copy, was by no means equipped to provide a service that complies to all legislation relating to medical waste removal. At the same time, the department dismissed another bid by Compass Waste on a frivolous point whilst they had expertise, capacity, a proven track record and were able to give detailed service cost implications. Furthermore the referred to “crisis” was created by the department itself because they hardly ever monitored the work of previous medical waste removal service providers and there was a trend at the department to continuously approve “extensions” with companies without inviting competitive bids. This is poor planning and according to National Treasury practice note 6 of 2007-08, a lack of proper planning does not constitute a reason for dispensing with prescribed bidding process. It is clear that the MEC for Health, Mr. Mxolisi Sokatsha, misled the House. The MEC responded to a question in the House by saying that he wanted to put it on record that the issue of medical waste management is a racial issue, that the people who were allocated the contract were competent and that an investigation team confirmed that they appointed the right person. At the same time, he denied there were any irregularities and continuously downplayed questions by members of the opposition (which we have been asking for almost two years) or stated that the information the opposition sought to obtain was confidential.
The responses of the department therefore ring hollow. Limited bidding processes were in fact followed with contracts being awarded while the exact service and the cost thereof was yet to be finalized, in turn also denying all companies the right to equal and fair participation. On top of this invoices to the value of R8.2 million reflected incorrect transportation costs, as well as charges for management fees, hiring of trucks and operating costs not stipulated. There were also overpayments to the value of R47 225. All of the above is in contravention of various applicable legislation, most importantly the Public Finance Management Act (PFMA). The PFMA compels the Accounting Officer (AO) to ensure compliance with all relevant legislation and regulations, yet action against non-compliance has been lacking for years and recommendations by oversight bodies are rarely implemented. An AO who neglects or fails to take appropriate corrective steps when problems arise may be held personally liable. The AO knew about the problem for a long time, which could have been avoided by instituting internal control procedures, appointment of qualified people in the right positions, monitoring systems and disciplinary steps. None of this happened during the time of dispute. All of this, taken together with the previously mentioned attempt to mislead the legislature, boils down to willfully failing to comply with the PFMA. This is financial misconduct and a criminal offence. There is also the matter of an affidavit by a previously employee of Tshenolo Resources. The affidavit, together with other documentation, was submitted to the Special Investigations Unit by the DA almost a year ago. The affidavit speaks to bribery, tender rigging and incompetence. In it the previous employee claims that he was approached by Mr Wandile Bozwana to help set up a company in the form of Tshenolo Resources and to write a proposal for the contract. He was shown original copies of competing companies’ contracts and was told that the tender was already closed. Despite this, Tshenolo Resources was awarded the contract and then subsequently had to get the company set up, as they did not have vehicles, employees were not trained, and they had no registered transfer or storage facilities. In spite of this, they were invoicing the department for items that did not actually exist. The previous employee also claims that officials in the department were paid for the contract. We believe that these allegations must be further investigated, as they are indicative that the extent of fraud and corruptions within the department is very likely much worse that the forensic AG response suggests. This sorry saga once again illustrates the importance of clean governance. The money spent on bloated contracts could have been spent on improving the quality of care at clinics in rural areas. The department’s behaviour denies people the basic right to quality care that they are entitled to. Indirectly, it also fuels unemployment, as businesses can’t compete equally. The department is too used to getting away with the awarding of questionable contracts, as is evident by the questionable Intaka/Wataka and fax and copier scandals, but to name a few. It is high time that we put a stop to this blatant abuse of taxpayers’ money. Hence, while we welcome the AG’s recommendations, the health department has received disclaimers for the past consecutive eight years, and has failed to heed any previous recommendations. We will thus push for the portfolio committee to implement more serious recommendations and action. In this regard, the opposition will now seek legal advice on instituting criminal charges against the AO and all involved officials, in their personal capacity, and in getting the MEC to appear before the legislature’s disciplinary committee. We will also seek legal consul on the immediate cancellation of the contract with Tshenolo Resources. Security Tender another example of contractual crime In light of the Northern Cape Department of Health’s security tender, the AG’s forensic report has exposed irregular payments to the value of R39 million made to the security company. The AG has found this expenditure as being irregular in terms of the PFMA. The AG’s report again paints a picture of blatant disregard for procurement legislation by officials of the department. It was found that there was again an open “cheque book” as the Service Level Agreement had no specific provision for cost, monitoring and contract management. This led to the department being charged for items not listed in the contract. The department was also double charged for VAT. In 2010 the Department correctly terminated the contract after advice from one honest official of the department. The service provider went to the Northern Cape High Court to seek an interdict against termination but lost the case after the department correctly opposed it. At the time the department stated under oath that the service provider actually owed it money as a result of overpayments and double charging for VAT. The strange thing is that almost a year later the department paid this same service provider R9 million for an “out of court settlement”. According to the department, the company obtained a court order, instructing the department to pay the money to the company. The department stated that they subsequently conducted an audit into the matter, after which they saw fit to transfer an amount of R9 million across to the security company. However, no one, including the AG or the portfolio committee, has seen either the court order or the report of the so called audit report. The only conclusion that we can therefore draw, is that neither the court order nor the audit, exists. In other words, we believe that this was nothing more than a fabricated story to cover serious irregularities within the department, not least of all the double charging of VAT, which is in direct contravention of the Revenue Services Act. They have also failed to report the irregularities to the Auditor General and the Provincial Treasury in terms of the PFMA. Given the big amount of money involved, and the department’s refusal to come clean, we are of the firm view that the security contract is simply another example of collusion, tender rigging and corruption. We will request SARS to institute an investigation into the matter. We will also seek legal opinion to hold the Accounting Officer and all other implicated officials accountable for their conduct. Issued by Karen de Kock (DA) and Pakes Dikgetsi (COPE)