Key Takeaways
- The Special Investigating Unit (SIU) has secured an interim preservation order to freeze three high-value properties worth about R8.4m linked to the alleged looting of about R27m from the Northern Cape department of health.
- The order was granted against the assets of Kimberley businessman Somandla Sibisi and his companies Macronym 37 (Pty) Ltd and Aphiwokuhle Holdings.
- The SIU investigation found that the contract to supply PPE was awarded without any lawful procurement process and was part of a premeditated scheme to defraud the state.
- The contract was for a total value of R26.96m, but the department’s actual needs were significantly less, resulting in an over-expenditure of over R8m.
- The SIU’s forensic analysis proved that key invoices from the sub-contractor were created two years after the alleged deliveries, solely to mislead the SIU investigations.
Introduction to the Scandal
The Special Investigating Unit (SIU) announced on Friday that it has secured an interim preservation order to freeze three high-value properties worth about R8.4m linked to the alleged looting of about R27m from the Northern Cape department of health. The order was granted against the assets of Kimberley businessman Somandla Sibisi and his companies Macronym 37 (Pty) Ltd and Aphiwokuhle Holdings. This move is part of the SIU’s ongoing civil proceedings to recover public funds paid unlawfully for a personal protective equipment (PPE) contract during the Covid-19 pandemic.
The Contract and Procurement Process
The SIU investigation found that in June 2020, Macronym was awarded a contract to supply the department with 50,000 coveralls, 250,000 surgical masks, and 250,000 FFP2 (N95-equivalent) masks. The PPE was intended for distribution to healthcare facilities and workers across the province. However, the contract was awarded without any lawful procurement process. A "deviation" dated March 24, 2020, was used to illegally bypass National Treasury rules. This deviation was drafted on March 11, 2020, before the relevant Treasury instruction was published, proving a premeditated scheme.
Discrepancies in the Contract
The SIU said the final order bore no relation to the department’s actual needs. The department’s own approved submission of March 23, 2020, did not request any coveralls and specified a need for only 30,000 N95 masks. However, the contract with Macronym unlawfully included 50,000 coveralls and inflated the mask order from 30,000 to 250,000, creating an over-expenditure of over R8m in masks alone. This discrepancy suggests that the contract was tailored to benefit Macronym rather than meet the department’s needs.
Forensic Analysis and Evidence
The SIU’s forensic analysis proved that key invoices from the sub-contractor, Masedi Star, were created in 2022, two years after the alleged deliveries, solely to mislead the SIU investigations. Two contradictory versions of the invoice exist, and bank records show that Macronym paid Masedi Star only R2m, not the R13.248m claimed. Evidence also showed direct WhatsApp communication between Macronym’s director Sibisi and Gaborone during the procurement process. This suggests that the contract was the result of a corrupt relationship between Sibisi and Gaborone.
Financial Tracing and Personal Enrichment
Financial tracing revealed that within days of receiving the R26.96m from the state, Macronym, which was previously in overdraft, used the funds for extensive personal enrichment. This included R3.86m for property purchases, R4.2m transferred to a related party, Aphiwokuhle Holdings, over R8.2m to other Sibisi family members and entities, as well as R1.12m in cash withdrawals. Additionally, there were payments for a jacuzzi, a high-end sound system, motor vehicles, and school fees. This suggests that Sibisi and his companies used the state funds for personal gain rather than fulfilling the contract.
Lack of Compliance and Effective Stock Management
At the time of the award, Macronym was not tax-compliant and was not registered in the central supplier database as a medical supplier, the SIU said. The department’s storage facility at the Henrietta Stockdale Nursing College had no effective stock management system. Records were so poor that a shortfall of 44,438 coveralls could not be accounted for, and the auditor-general flagged the inability to verify the deliveries. This lack of compliance and effective stock management suggests that the department was vulnerable to fraud and corruption.
Conclusion and Next Steps
The SIU’s investigation and the interim preservation order are significant steps in recovering the public funds paid unlawfully for the PPE contract. President Cyril Ramaphosa had directed the SIU, under Proclamation R23 of 2020, to investigate allegations of corruption, maladministration, malpractice, and payments made by state institutions concerning PPE procurement and the conduct of state employees. The SIU’s efforts aim to hold those responsible for the alleged looting accountable and to prevent similar incidents in the future.