- The SIU’s head of strategy has written to the justice minister about an alleged irregularity in the procurement of cloth face masks.
- He also claimed SIU CFO Andre Gernandt influenced the awarding of the contract.
- The head of strategy accused SIU head Andy Mothibi of irregular appointments and maladministration.
The Special Investigating Unit (SIU), which has been mandated to investigate irregularities and corruption in the procurement of Covid-19 supplies, has been accused of irregularly procuring personal protective equipment (PPE) for its staff, according to a report by the Sunday Times.
The report references a letter from the SIU’s head of strategy, Ziphozenkosi Mguli, to Justice Minister Ronald Lamola.
In the letter, Mguli accuses the chief financial officer (CFO), Andre Gernandt, of instructing officials to handpick a specific company for the production of face masks, without following tender processes.
In April, the Treasury instructed public officials to buy cloth masks only from a list of pre-approved companies, which are also registered with the Department of Small Business Development.
In June, the SIU appointed a company, which does not appear on the list of approved suppliers, to provide it with 1 600 cloth masks for R58 000.
Mguli claims Gernandt instructed supply chain management members to include the company in the award process, though it is not on Treasury’s list, and that he has issued similar instructions in the past.
The letter also made several allegations against SIU head Andy Mothibi, accusing him of the irregular appointment of executives, maladministration, abuse of power and the irregular awarding of contracts.
Mguli alleges that Mothibi “conspired” to retrench an executive, ignores protocols, excludes or sidelines key executives, among others.
Mguli also alleges the SIU head relies “excessively” on expensive external legal opinions, despite the unit having internal legal capacity.
Lamola’s spokesperson Chrispin Phiri confirmed to News24 on Sunday the justice department had received Mguli’s letter.
Phiri said the letter stated that a second document would be provided and would include further details.
“We confirm that the ministry was copied in correspondence to what appears to be sent to the executive committee of the SIU on 30 July 2020. On 6 August, correspondence was addressed to the ministry. The letter, by and large, records interaction between Mr Mguli and Mr Mothibi. The letter further goes on to state that further allegations will be brought against Mr Mothibi, these allegations have not been furnished yet.”
The ministry will await the full disclosure before initiating a processes in line with the Audi al patrem rule (let the other side be heard).
“That way, the minister will be equipped with full facts and information to ascertain what immediate action is required. In the meantime, we continue to ensure that the SIU is well-equipped to fight the corruption,” he says.
Speaking to News24 on Sunday, SIU spokesperson Kaizer Kganyago said all procurement and human resource processes were followed.
He said Gernandt did not issue instructions to appoint any service provider.
“The SIU’s supply chain management [SCM] department is headed up by a senior manager, who ensures that, at all times, the SCM processes are followed according to the SIU’s SCM policy,” Kganyago said.
He added that, while the drafting of annual reports is done by Mguli, “at no stage did he report issues of mismanagement”.
“On the contrary, SIU has achieved a clean audit by the Auditor-General of SA, and the SIU Audit Committee has issued a report every year in the SIU Annual reports,” Kganyago said.
“Mr Mguli indicated that exco members have interest in his concerns, however when he was afforded an opportunity to engage with the exco members, he refused to engage.”
Kganyago added that a “request for quotation” process had been followed by the SIU’s supply chain management department, “under the leadership of the SCM senior manager”.
Kganyago said the request was sent to 11 service providers and four responded with the following quotes:
SA Doctors APP: R58 500
Company B: R80 340
Company C: R96 579.30
Company D: R105 000
“After evaluation, the lowest bidder, SA Doctors APP (Pty) Ltd, who was registered on the National Treasury Central Supplier Database, was appointed at a price of R32.50 per mask and signed off by the SIU SCM senior manager,” Kganyago said.
He also sent News24 National Treasury’s Instruction Note 5, which noted that the instruction to only buy cloth masks from companies registered with the Department of Small Business Development had been removed.
National Treasury’s instruction note 5. (Supplied, SIU)
National Treasury’s instruction note 5. (Supplied, SIU)
Kganyago explained that when National Treasury issued their instruction note, the SIU’s SCM department conducted market research and found that “the price given by National Treasury at the time was not realistic” and prices were 80-100% higher.
“It was not practically possible to comply with Instruction Note 5 and be able to procure the necessary masks.
“SCM contacted service providers and noted the discrepancies on the prices, which resulted to SIU broadening the pool of suppliers than a narrowed list of suppliers, which is against the Constitution’s principle of having a competitive process.
“The list of suppliers from Small Business Development was not disregarded as other suppliers on the process included those from the list,” he said.
Had the SCM procured the masks from the second supplier registered with the Department of Small Business Development, it would have cost more, Kganyago said.
He also denied allegations that excessive legal costs are being incurred by Mothibi, with the chief legal counsel confirming that these costs were not excessive and are justifiable.
He said legal opinions were sought in most matters instituted and defended by the SIU.
In the past three years, it has been involved in 200 cases in various forms.
“In relation to matters and or disputes between the SIU and its employees, the SIU will request external opinions based on the complexity of the issues, the parties involved and whether the legal representation has been retained.
“As of date hereof, the SIU has not obtained more than approximately 10 opinions concerning about 142 disputes between employees and the SIU. The costs for the opinions is negligible in respect of the claims from employees, which exceeds millions of rands,” Kganyago said.
Mothibi has also denied that he made irregular appointments, with all processes subject to recruitment processes.
“Mr Mothibi further denies that he awarded irregular contracts. All procurement at SIU is conducted in accordance with the SIU Procurement Process, which is based on the Public Finance Management Act, and ultimately the Constitution.
“The SIU will present evidence to whatever forum that demonstrates that the allegations made by Mr Mguli are malicious, spurious and intended to tarnish the name of SIU and that of adv Mothibi,” Kganyago concluded.