ANC heavyweight in R1.4bn corruption scandal

2014-07-27 09:13

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Cape Town - ANC chief whip in the Gauteng Legislature Brian Hlongwa could face multiple charges of corruption and money laundering relating to two tenders worth over R1.4bn that were awarded during his tenure as the province’s MEC for Health.

According to the Sunday Independent, Hlongwa is suspected of being the central figure in a tender scandal that also involves other senior officials.

Allegations have also been made that the ANC in Gauteng benefited through kickbacks relating to the two tenders.

The tenders were issued in 2007 to 3P Consulting and Baoki Consortium. 3P was initially paid R120m to set up a project management unit for the department but ended up earning R392m by the time their contract was cancelled in 2009 when Health MEC Qedani Mahlangu took over from Hlongwa.

Baoki meanwhile was awarded a R1.2bn tender to set up a health information system and electronic health record. It was paid over R400m and by the time its contract was cancelled a year later, no system had been installed.

The department has since been embroiled in legal battles with both companies over the cancelled contracts as both firms are demanding the balance of payment be made to them.

However, last week the National Prosecuting Authority asked the South Gauteng High Court to place preservation orders on any claims filed by the two companies.

The NPA’s court action is the culmination of four years of investigations by the Special Investigating Unit and the Hawks.

A source close to the investigation said that criminal charges could be brought against individuals. It is believed that Hlongwa is top of the list.

Rigged

On Friday, the NPA announced that over R1bn in contract claims upon the Gauteng health department had been seized.

"The freezing order of R1.4bn is the biggest ever obtained by the NPA asset forfeiture unit (AFU)," spokesperson Nathi Mncube said in a statement.

The seizures were related to two tenders awarded by the department in 2007. The first tender was for the setting up of a project management unit (PMU).

"The tender was fraudulently rigged in favour of 3P Consulting and 3P was a party to the rigging," Mncube said.

He said 3P's CEO Richard Payne was a friend of Hlongwa and that 3P allegedly awarded contracts to friends and family, defrauding the department of R35m in the process, and allegedly provided Hlongwa R3m in cash, Mncube said.

One of the contracts awarded by the PMU was to Regiments Healthcare, with the company's CEO being Niven Pillay, Mncube said.

In January 2008, Payne, Hlongwa, plus 3P employees and department officials went on a holiday in Cuba paid for by 3P.

The second tender was for a health information system and electronic health records (HIS-eHR). It was awarded to Baoki Consortium, who were party to the tender being rigged.

The CEO of one of the Baoki companies was Heinz Smidek.

During 2007 to 2008, Payne paid a R3.3m deposit for a house for Hlongwa at 163 Eccleston Crescent, Bryanston, with the purchase price being R7.2m.

"The balance was to be made up by the sale of Mr Hlongwa's house at 26A College Drive, Bryanston," Mncube said.

Smidek allegedly arranged the purchase of the College Drive house for R4.6m by a Cypriot company registered in South Africa, Kemsing Services.
Both houses were refurbished by a company controlled by Payne, with the refurbishment paid for by 3P, Payne and Pillay.
Read more on:    anc  |  brian hlongwa  |  pretoria  |  johannesburg  |  local government
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