Rugby tickets for tenders

2009-11-17 22:29
Cape Town - A correctional services official received a house, cars, an overseas trip for his daughter and Blue Bulls season tickets in exchange for awarding tenders, Parliamentarians heard on Tuesday.

"Some of the statements you made or findings are horrific," committee chairperson Vincent Smith said after a briefing by Special Investigations Unit head Willie Hofmeyr on corruption in the department.

"That is one of the most shocking presentations I have listened to in 15 years in Parliament," DA MP James Selfe said.

Hofmeyr said the official, who is still to appear in court and cannot be named, was "instrumental" in awarding four tenders worth hundreds of millions of rands to a single service provider and its affiliates between 2004 and 2006.

R2.1m in payments

He had played an "integral role" in the procurement process and was "irregularly instrumental" in developing tender specifications to the exclusion of end user departments, Hofmeyr said.

He said the SIU had conducted a financial investigation of the benefits the official and his immediate family received from the service provider.

"We have not been able to establish any lawful cause for these payments which amount to at least R2.1m.

"It consisted of a car, another car or contribution to a car, a car for his son and daughter, a sponsorship of the daughter's trip overseas, another contribution to a car, six Blue Bulls season tickets - we haven't put a value on that.

"The company financed the development of a house... to the tune of more than R1m, as well as renovating a kitchen for about R180 000."

Credit card payments

Hofmeyr said the company had also contributed R80 000 to a retirement home for the official and deposited three amounts of R48 000 into his credit card.

"We are satisfied these amounts came from the company."

The SIU had found a payment of R5 500 and one of R58 000... for payments to architects for plans for construction of his house.

Hofmeyr said the specifications for the bidding process were drafted in such a manner that the company was given a clear advantage over others.

There had been poor financial planning in the specifications, no feasibility studies and no needs analysis had been done.

Budgets in some of the tenders were "significantly exceeded".
In some of the cases, the company involved had been involved in drawing up the specifications for the tender.

In a bid in 2006, an invoice for R106m payment was submitted just three days after the contract was signed. The invoice was paid ten days later.

In another bid, the submission period was reduced to 21 days from 30 days without any due cause, leaving other companies with very little time to submit.

In another, the company involved was registered only seven days before closing of bids. This was despite the fact bid requirements should have five years' experience.

Budget overspent

In a tender awarded in 2005, budget was overspent by R150m. The budget was increased by variation orders which upped value of contract by R100m.

Hofmeyr said the DCS was "significantly exposed" to civil claims by companies which lost out on civil claims in tender process.

The matter had been referred to the National Prosecuting Authority for a decision on prosecution and to the DCS for a decision on disciplinary action.

Hofmeyr said the SIU had also uncovered massive fraud in the prison medical aid scheme.

"What we found in the medical aid scheme was a massive fraud being committed by DCS and private doctors," he said.

The level of claims against the scheme had been reduced by half a billion rand, since the investigation was completed and about R22m in cash had been recovered.

"The level of claims against the medical scheme halved in three years from R1bn to R500m.

This was done by "closing loopholes" and prosecuting 26 doctors and ten DCS officials involved.

Hofmeyr said one private practitioner for DCS had claimed R12m in one year.

"You would have to work a 36-hour day to log the number of hours to do what he said he was doing.

"There was no central checking or verifying on those sorts of issues," he added.

Shocking findings

The SIU had also uncovered "significant problems" with petrol card fraud, resulting in 140 officials being disciplined and two charged criminally.

Another audit of 160 prison pharmacies had found "shocking" control over medicines.

"We found grey medicines, illegally imported medicines. All sorts of abuses."

The SIU had started a developed a red flag database to spot for illegitimate contracts.

When the SIU ran a pilot of the project at Pretoria Central Correctional Centre on the three quote system, it had found further "shocking" results.

"The project targeted transactions between R2 000 and R30 000 between 2004 and 20007.

"What we found there was fairly bad. Maybe I should say shocking.

"Of the 6 000 transactions, 1 000 were found to have irregularities.

Hofmeyr said the types of irregularities included cover quoting of R2.6m, splitting orders of R2.4m and irregular expenditure.

Read more on:    willie hofmeyr  |  corruption

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