South African probe finds evidence of political pressure, fraud in COVID-19 contracts

PUBLISHED: Fri, 05 Feb 2021 12:31:20 GMT
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JOHANNESBURG, Feb 5 (Reuters) – A probe into public spending on coronavirus in South Africa has found evidence of political pressure, price inflation, and fraud in many of the contracts, fuelled by an “insatiable pursuit of self-enrichment”, a report showed on Friday.

The Special Investigation Unit (SIU) launched the probe in July after a flood of whistleblower submissions alleging irregularities in the procurement of personal protective equipment (PPE) and hospital supplies like beds and wheel chairs.

The investigation found evidence of tax fraud, the use of shell companies to win multiple contracts, instances of price inflation of up to 500%, and political pressure put on managers to break procurement laws, SIU head Andy Mothibi told reporters.

The investigation looked into more than 13 billion rand ($870 million) of spending, just a slice of total COVID-19 expenditure of 30.7 billion rand.

“It appears that persons in positions of authority in some state institutions believed that the declaration of the state of emergency meant that all procurement is automatically conducted on an emergency basis,” Mothobi said.

“The SIU investigations have revealed a flagrant and wanton disregard of the applicable law, policies and procedures. My observation is that the flagrant and wanton disregard is underpinned by insatiable pursuit of self-enrichment.”

The investigation will be concluded in the next six months, Mothobi said.

The SIU said that to date, contracts with a value of 365 million rand had been sent to a special tribunal formed to hear the cases. It added that about 260.60 million rand in cash or assets were seen as recoverable.

South Africa has the highest number of coronavirus cases and deaths on the continent with about 1.4 million cases and more than 45,000 deaths to date.

Already in recession before the pandemic struck, the country has also struggled to fund vaccine purchases, partly due to years of government corruption. President Cyril Ramaphosa has vowed to deal harshly with graft.

($1 = 14.9537 rand) (Reporting by Mfuneko Toyana Editing by Frances Kerry)

(c) Copyright Thomson Reuters 2021. Click For Restrictions – https://agency.reuters.com/en/copyright.html

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