NPA seizes Gauteng health contract claims worth R1.4bn

2014-07-26 09:32

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

Over R1bn in contract claims upon the Gauteng health department has been seized, the National Prosecuting Authority (NPA) has said.

“The freezing order of R1.4bn is the biggest-ever obtained by the NPA Asset Forfeiture Unit (AFU),” spokesperson Nathi Mncube said yesterday.

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 chief executive Richard Payne was a friend of Brian Hlongwa, the health MEC at the time.

The PMU procured goods and services for the department without competitive quotes or bidding, and beyond controls covered by the Public Finance Management Act.

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.

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

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

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 chief executive of one of the Baoki companies was Austrian citizen Heinz Smidek.

In late 2008, the value of the 3P tender was increased to around R221m, from the original two-year, R60m agreement.

In 2009, the department then extended the contract for another three years, with Mncube stating Hlongwa influenced the decision in 3P’s favour.

Regarding the HIS-eHR contract, in late 2008, Baoki were awarded the final contract worth R1.2bn for its rollout over three years.

This was even though the department did not have the money, infrastructure or appropriately trained staff for the HIS-eHR.

Mncube said the contract was approved even though the finance MEC at the time refused to sign it.

The contract also required the department to pay Baoki every month, regardless of delivery, which did not take place, with Boaki receiving a total of around R460m.

Following the appointment of a new health MEC after the 2009 elections, Hlongwa’s replacement terminated both contracts, with 3P and Baoki suing for damages.

Allegations of fraud and corruption were then investigated by the Special Investigating Unit and the Hawks, Mncube said.

Based on the investigation, on Monday the NPA AFU obtained three preservation orders under the Prevention of Organised Crime Act, freezing the contractual rights of 3P and Baoki.

The contractual claims of the two tenders, 3P’s being worth around R300m and Boaki’s being worth around R1.1bn, were seized.

Should the NPA be successful with its final forfeiture application, the government would not have to pay out.

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions. publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24


WATCH: Man films himself going down water slide upside down as things go very wrong…

What is at first an exciting tummy-turning adventure stunt, quickly turns into a scarily bad idea caught on camera. Take a look:


You won't want to miss...

WATCH: Conor McGregor: Notorious the trailer
Best date night restaurants in South Africa
WATCH: Ryan Reynolds offers fans a free tattoo in new Deadpool 2 teaser
Should you date your co-worker?
Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.