In a scathing judgment aimed at enforcing accountability within the public sector, the Special Tribunal has ordered the KwaZulu-Natal Member of the Executive Council (MEC) for Education to immediately initiate disciplinary proceedings against 16 department officials implicated in a corrupt Personal Protective Equipment (PPE) tender.
The order follows a successful review application brought by the Special Investigating Unit (SIU) to set aside an irregular contract worth over R2.5 million awarded to Hawulethu (Pty) Ltd in June 2020 for the supply of chemical toilets to schools.
In a judgment delivered electronically on 6 November and highlighted in a media statement by the SIU on 8 December 8, Judge Chantel Fortuin declared the contract unlawful, unconstitutional, and invalid.
The court painted a disturbing picture of a “fraudulent scheme” where basic procurement principles were treated as “optional” by senior civil servants.
The case centres on the procurement of 72 mobile chemical toilets intended for 11 district schools as a Covid-19 emergency measure to facilitate the return of learners after the national lockdown. The contract, valued at R2,5 million was ostensibly awarded to Hawulethu (Pty) Ltd to address urgent sanitation needs.
However, the SIU’s investigation revealed a litany of irregularities that Judge Fortuin described as intentional actions pointing to a fraudulent scheme.
The Tribunal found that Hawulethu (Pty) Ltd had delivered the toilets to schools before submitting bid documents and before even being appointed as a service provider. The company admitted receiving telephone calls from department officials prior to the official invitation to bid on 10 June 2020. The Tribunal noted that the “only plausible inference” to be drawn from these calls was collusion, price-fixing, and unfair competitive practice.
Furthermore, the company charged a markup of more than 100% on the goods provided. The “brazenness” of the scheme extended to invoicing: the department was billed for services during school holidays when no services were rendered, and charged for goods for a three-week period when they were not provided.
The judgment places the responsibility for these irregularities squarely on the shoulders of the department’s staff. The Tribunal found that 16 officials failed to follow mandatory supply chain management processes.
The list of officials facing disciplinary action includes high-ranking decision-makers. Among them are Deputy Director Generals Ms. Dlamini and Mr. Mthembu, who approved the project’s extension, and Ms. Gumede, a Chief Director of Operations Management. Other implicated officials include acting directors in finance and acquisition, as well as chairpersons of the Quotation Evaluation and Adjudication Committees.
The SIU investigation confirmed that these officials utilized emergency deviation regulations without obtaining the necessary approval from the Head of Department (HoD) until after the procurement process was already concluded. Additionally, they utilised a Treasury note meant for PPE procurement to buy toilets, which were not listed as PPE, thereby bypassing normal procurement procedures.
“From the Respondents’ submissions, it seems as if these basic principles which are the cornerstones of our democratic state are optional,” Judge Fortuin wrote in the judgment. “It seems as if finding loopholes in the system… is how private individuals and/or companies should be contracting with the state”.
In addition to the disciplinary orders, the Tribunal granted consequential relief stripping Hawulethu (Pty) Ltd of any financial gain from the unlawful deal.
The company has been ordered to forfeit all profits derived from the contract. To facilitate this, Hawulethu must submit a “true and proper statement of account,” audited by a qualified chartered accountant, within 30 days of the order.
This statement must detail the exact prices paid for the rental and servicing of the toilets versus the amounts invoiced to the department.
ALSO READ: Councillor and ‘mastermind’ targeted as SIU raids R161m UIF fraud syndicate
Once the statement is received, the Department of Education is required to appoint expert auditors to verify the figures and determine the value for money received.
If the parties cannot agree on the profit amount, they must approach the Tribunal for further orders.
Hawulethu was also ordered to pay the legal costs of the application.
The SIU has welcomed the judgment as a victory for consequence management. In a statement released on 8 December the unit commended the Tribunal for placing the responsibility of discipline “squarely with the most senior official in the education department”.
“The SIU will continue to investigate and litigate against maladministration and corruption in state institutions, in line with its mandate to protect public resources and hold accountable those responsible for irregularities,” the unit stated.
The KZN Department of Education must now initiate the disciplinary procedures against the listed officials who have not yet been disciplined.
