Address by the Minister of Public Works & Infrastructure, Dean Macpherson on the release of the final PwC forensic report into the PSA Oxygen Plant Tender
Members of the media,
Ladies and gentlemen,
Good afternoon.
Thank you for attending this media briefing.
I firstly want to pay tribute to the media who first blew the whistle on this matter.
Investigative journalism in South Africa is an asset to our country and holds us in public office, as well as those in our public entities accountable for the work we undertake.
But, today is also important for the Department of Public Works and Infrastructure and its key implementing agent, the Independent Development Trust as we hold ourselves accountable to the public whom we serve.
When I took office as Minister of Public Works and Infrastructure just over a year ago, I made it clear to the Department, its entities, and the country at large that we would draw a hard line in the sand when it came poor administration and corruption.
I said that we would restore public trust in this Department and every institution that reports to it; by ensuring they are run an organisation that is professional, transparent, and for the benefit of the public - not for the benefit of a few.
From the moment I stepped into this role, I was already aware of long-standing and serious allegations of maladministration, financial misconduct, and corruption at the Independent Development Trust.
Those concerns have haunted the IDT for a number of years.
Incomplete projects, tender irregularities, and consistent audit disclaimers had tarnished the entity’s credibility and shaken confidence across government and civil society.
So, when, in October last year, the Daily Maverick published alarming exposés into the R800 million PSA Oxygen Plant tender, we had to act and get to the bottom of this.
On 28 October 2024, they published an investigative piece claiming that one of the companies awarded a contract worth over R400 million lacked SAHPRA medical product registration, submitted questionable documents, and appeared to be a “ghost” entity - one without verifiable contact details, premises, or capacity.
Another joint venture, also awarded a sizeable portion of the tender, was said to have a chequered history with public contracts.
This tender was intended to deliver life-saving Pressure Swing Adsorption Oxygen Plants to 60 hospitals across the country.
It was a project worth R836 million, of which R528 million had been allocated directly to the IDT for implementation.
The delivery of these plants was not just a procurement exercise - it was a national health priority.
On learning of these claims, I immediately demanded answers from the IDT board at the time.
On 29 October 2024, I requested full documentation from the IDT, including the contracts, evaluation committee minutes, SAHPRA certificates, and due diligence reports.
What I received was inadequate and incomplete.
And a backwards and forwards exchange of letters ensued initially with the IDT denying there were problems with the tender.
On 1 November 2024, I called for the board to consider suspending the tender which the initially did not support.
And then finally, in December 2024 they admitted there may have been a problem with the tender.
By 5 December, the Department of Health officially announced its intention to withdraw the PSA project from the IDT and reassign it to the Development Bank of Southern Africa.
At this point, the IDT was also in a governance crisis.
Its board had not been quorate for months.
It was operating with seven trustees, short of the eight required to legally function.
There was no standing Audit and Risk Committee, and no internal audit capability worth noting.
I was also clear that an entity in this state could not credibly investigate itself despite insistences that IDT would investigate this matter.
Considering the above, I was therefore left with no choice but to act and institute an investigation into the matter.
On 15 January 2025, the Department of Public Works & Infrastructure appointed an independent advisory firm to conduct a full, independent forensic investigation into PSA Oxygen Plant tender.
Their terms of reference were broad: to investigate whether fraud, corruption, maladministration, or regulatory non-compliance had occurred, and whether internal controls had failed.
Over the next six months, the investigators conducted over 40 interviews with departmental officials, IDT executives, contractors, and oversight stakeholders.
They reviewed more than 90 procurement documents, analysed financial records, and conducted CIPC, CIDB and SAHPRA verifications.
But even as the investigation got underway, a disturbing counter-campaign was launched.
From early February onwards, I became the target of coordinated disinformation attacks.
Fabricated call logs were published.
AI-generated voice notes were circulated online.
Anonymous “whistleblowers” released baseless allegations against me and my office.
Fake news articles were published, which one major media house had to later withdraw because the claims could not be substantiated.
This campaign against me was amplified by political parties, including the EFF and ActionSA – who filed bogus complaints against me and claimed that I was interfering in the tender process.
Every time we act against wrongdoing in the department, there is a chorus of voices to defend that wrongdoing and maintain the status quo.
It is deeply concerning that we seem to have learnt very little from the modus operandi of State Capture,
What I did do, and what I will continue to do, is demand accountability.
I did not take an oath of office to protect wrongdoing.
I took an oath to protect the Constitution and the people of South Africa.
And I will not apologise for that.
Despite these attacks, the investigation was completed and a report issued to the Department.
It is my intention to brief you on the findings.
I would therefore now like to quote directly from a section of the forensic report, which lays bare the depth of the procedural failings and regulatory breaches uncovered during the investigation:
“The NDoH and IDT entered into a MoA which was signed by the NDoH and IDT on 20 June 2022 and 24 June 2022 respectively, for various projects to be undertaken by IDT as the IA.
This included the PSA Oxygen Plant project.
The Global Fund confirmed on 23 August 2022 that the IPIP was approved, subject to various conditions, including that the total cost of the PSA Oxygen Plant project does not exceed R216,006,750;
Risimati was appointed as the Professional Service Provider for the PSA Oxygen Plant project by the IDT;
Eight bidders were appointed on the panel for the roll-out of the PSA Oxygen Plants at 60 hospital facilities.
The service providers that were appointed on the panel were however not required to provide evidence that they meet the SAHPRA requirements as set out in the Infrastructure Programme Implementation Plan.
Therefore, it appears that the IDT appointed eight service providers on the panel for the roll-out of the PSA Oxygen Plants without confirming that any of the appointed service providers met the required criteria;
A SAHPRA license was again not included as a mandatory requirement in the RFQ document.
Dr Sisi of the IDT reported that there was an inherent requirement that the Original Equipment Manufacturer‘s are SAHPRA registered and the bidders were not specifically requested to supply evidence that they are SAHPRA registered as the equipment was going to be procured from the OEM’s who are SAHPRA registered;
Bulkeng as one of the preferred service providers did not have the required authorisation to use Atlas Copco’s SAHPRA license and the use thereof in their submission to the IDT appears to be irregular.
In light thereof and further to the information provided by Dr Sisi, it appears that the requirement in respect of the SAHPRA compliance was an important aspect to the entire procurement process of the roll-out of the PSA Oxygen Plants.
This criteria should therefore have been included from the establishment of the panel of service providers and the entire process therefore appears to be irregular;
The PSP pre-tender estimate at tender stage was R216,959,849.70 and at design stage was R253,317,911.83 as determined by the Professional Service Provider.
The NDoH was subsequently requested to approve the increased funding for the roll out and implementation of PSA Oxygen plants to R592,564,686.66.
The project therefore increased from R216,006,750.00 to R592,564,686.66 when the market was tested, which is a 174% increase of the initial estimated budget.
This budget was however, approved by the Global Fund upon submission by the NDoH and IDT;
Despite the fact that the issues were raised by the Head of Health Facilities and Infrastructure Management, NDoH, we determined that NDoH DG was of the opinion that the NDoH could no longer delay the project as it was putting the department at risk of losing the Global Fund money.
The issues that were raised by Head of Health Facilities and Infrastructure Management from NDoH should have however been considered and the reason for “putting the department at risk of losing the Global Fund money” is not sufficient to proceed with the procurement of an irregular SCM process;
It was determined that Bulkeng was awarded facilities with a total offer of R428,069,345,04 which exceeded their CIDB Grading threshold of R200 million;
The report did not identify any relationship and/ or links between the appointed contractors and IDT/ NDoH officials; and
The minutes of meetings, i.e. Bid Specification Committee, Bid Evaluation Committee, Management Bid Adjudication Committee, and Executive Bid Adjudication Committee, are very vague and contain limited information relating to the items that were discussed during these meetings.
The submission documents that were presented further often contains incorrect and incomplete information such as the correct dates of meetings.
Record keeping of these minute are further poor as none of the recordings for any of these meetings could be obtained.”
These findings represents a monumental failure in governance and adherence to IDT and IDT policies and National Treasury regulations – undermining the integrity of public procurement and threatening donor funds.
The report therefore confirms that multiple companies awarded work under the PSA project did not have valid SAHPRA licensing.
One company, Bulkeng (Pty) Ltd, submitted a SAHPRA licence belonging to Atlas Copco Industrial SA - without the knowledge or consent of Atlas Copco.
This was a clear misrepresentation.
It was fraud.
Moreover, Bulkeng intended to subcontract more than 25% of its responsibilities to Brutes Air Solutions, but failed to disclose this, in violation of Preferential Procurement Regulations.
Secondly, the investigators found that the bid evaluation process was deeply flawed.
The SAHPRA compliance requirement - originally stipulated in the Project Execution Plan and the Department of Health’s Memorandum of Agreement - was deliberately removed from the final Request for Proposals.
This opened the door for ineligible bidders to participate and win massive contracts.
Meeting minutes were missing or incomplete which is shocking but not surprising.
Committee appointments were not properly constituted.
Bid scores were not properly documented.
Price negotiations were not transparent.
In one example, the original Department of Health budget was R216 million - but when the IDT issued the RFQ, prices ballooned to over R590 million without a single documented approval or value-for-money assessment.
Thirdly, Bulkeng’s CIDB grading limited it to contracts of no more than R200 million.
Yet the IDT awarded it contracts worth R428 million - more than double its allowable threshold.
Fourthly, the CEO of the IDT, Ms Tebogo Malaka, failed to exercise oversight.
The report confirms that she relied entirely on internal SCM staff to assure her that the process had followed proper procurement protocol.
She did not verify any of the documentation.
She did not act on the red flags raised by the Department of Health.
She did not convene the necessary risk committees to assess the matter.
In this, she was not alone.
The report also singles out Dr Molebedi Sisi, the General Manager for Supply Chain Management at the IDT, for his role in misleading internal stakeholders and failing to act in accordance with his responsibilities.
Dr Sisi advised against cancelling the RFQ process despite clear warnings from the Department of Health.
He assured the CEO and evaluation committees that the procurement process was compliant, when in fact key regulatory requirements - such as valid SAHPRA licences - had not been enforced.
Instead, both the CEO and Dr Sisi approved contracts, accepted flawed internal assurances.
It is important to note that no Global Fund resources were distributed for this project.
That is why we were justified to act when we did, to safeguard donor funding which means that the entire allocation will be spend but through the DBSA to procure the oxygen systems.
The report does not only identify the failings - it also makes clear and actionable recommendations to the Department of Public Works and Infrastructure.
I would like to share these recommendations with you now:
“Taking appropriate action against the relevant officials who were involved in the PSA Oxygen Plant project as far as they have not addressed the issues that were raised by the NDoH adequately during the procurement process. This will include, but not limited to, the following:
- Ms Malaka as the CEO for confirming the procurement process followed in the RFQ process was correct whereas there were irregularities identified, and for the appointment of the NDoH officials as members and not as observers, as prescribed by the Memorandum of Agreement (MoA) as well as the Infrastructure Programme Implementation Plan (IPIP).
- Ms Malaka for not ensuring the proper establishment, composition and functioning of the Bid Specification Committee (BSC) and Bid Evaluation Committee (BEC) as stipulated in paragraph 8.1 of the NT PFMA SCM Instruction No. 03 of 2021/22 on Enhancing Compliance, Transparency and Accountability in SCM by appointing NDoH officials as members and not as observers to the respective committees as prescribed in the MoA;
- Ms Malaka, together with Dr Sisi did not handle the issues identified and raised relating to the procurement process followed in a fair, transparent and equitable manner as provided for in the IDT SCM Policy (paragraph 39.1.1) and Section 217(1) of the Constitution;
- Dr Sisi as the SCM GM for his role in the procurement process followed by the IDT for the RFQ process and not considering the cancellation of the RFQ as suggested by Head of Health Facilities from the NDoH, in line with the requirements of the IPIP (paragraph 3.4 and paragraph 3.5) or lack thereof;
- Mr Motsatse in his capacity as the BEC Secretariat for failing to maintain accurate records of the relevant minutes of meetings and the electronic recordings of the BEC proceedings in line with the IDT Code of Ethics and Business Conduct Policy (paragraph 8.4.2 – paragraph 8.4.4); and
- BEC members as prescribed by the NT SCM Instruction Note number 3 of 2016/2017 on Preventing and Combating Abuse in the SCM System, paragraph 10 which stipulated that “Every member of the Bid Committee is jointly and severally liable for the improper evaluation and adjudication of a bid”.
- Provide adequate training to the members that are involved in the SCM process, including the BSC, BEC and BAC, relating to the procedures that should be followed as part of the evaluation of bids. This will include the evaluation of the bids to ensure that they evaluate the tenders with the appropriate CIDB Grading threshold as part of the adjudication process; and
- Implementing procedures to ensure that proper minutes of meetings are kept by the IDT and that the recordings and records of these meetings are available should it be required.”
The forensic report recommends disciplinary action should be taken against Ms Tebogo Malaka and against Dr Sisi which will be in the purview of the board.
The investigation further recommends disciplinary referrals against several other IDT executives and SCM officials.
Ladies and gentlemen,
This morning, I have taken the following actions to ensure consequence management and accountability.
This will include writing to the Hawks and provide them with the report to supplement their current criminal investigation into this matter.
Like our handling of the George report, I want to ensure that where criminal allegations exist, I want to ensure the highest chances of success.
I have briefed the Minister of Health who has been incredibly supportive during this time and wish to extend my gratitude to him.
And I have formally briefed the newly constituted IDT Board on the contents of this report at a meeting held early today in Pretoria.
Accountability must follow and will follow.
South Africans deserve to know how their money was spent - and misused.
I am confident that the board will consider the report’s recommendations and other related matters in due course.
The Director General will be instructing the Department to incorporate each of these recommendations into the broader SCM reform process underway across the Department and its entities.
We are not just reacting to this scandal - we are using it as an opportunity to get things right in our entities and department.
Public Works and Infrastructure has immense potential to be a force for good in South Africa.
It can generate income for the State to be used in social infrastructure; it can save the country billions in Rands in leased accommodation for departments and its assets can be used for public good.
That’s why we must use every opportunity to better our systems and to build towards this goal to which I am deeply committed to.
Let me also speak briefly about the future of the IDT.
In July 2025, Cabinet appointed a full-term Board to the IDT.
I am grateful that Cabinet has endorsed the board and placed its faith in them to continue with turning around the entities.
That Board took office on 5 July, ending more than a year of instability.
The new Board includes the reappointment of Mrs Zimbini Hill as Chairperson and Professor Raymond Nkado as Deputy Chairperson.
I want to thank them both, and the other trustees, for accepting this responsibility at such a critical juncture.
Mrs. Hill has had to endure the most horrific, sexist and racist attacks against her, often supported by political parties, for doing a job our country has called on her to do.
She has not retreated once but has bravely stood up to these bullies head on.
I expect this from each member of the board, and I know they will rise to the challenge and systematically deal with each matter raised in the report including:
- Implementing every single recommendation of this report.
- Instituting consequence management.
- Restoring governance and compliance frameworks.
- Rebuilding the reputation of the IDT to be a trusted partner in social infrastructure delivery.
And they must urgently conclude the separate investigation into the IDT’s office lease agreement, which remains unresolved.
Let me say this to the public: the IDT can still be salvaged. I am fully committed to doing so which is why I have put so much effort into getting us to this point.
I was not prepared to accept the chaos and dysfunction so that people could steal as they pleased.
It has a critical role to play in delivering - clinics, schools, and police stations.
But only if it is trusted.
Only if it is clean.
And only if it is led with courage and competence.
As I conclude, I want to reaffirm something fundamental: this is not just about one tender.
It is not just about one company.
It is not even just about the IDT.
This is about the kind of state we are building.
Today gives expression to priority 3 of the Medium-Term Development Plan, which is to build a capable, ethical and developmental state.
Anyone who opposes what we are doing today, in fact opposes this very principle.
But let me be clear: if we tolerate corruption, we betray the very people we are entrusted to serve, you the public.
If we look the other way when procurement is manipulated, we erode public trust.
And if we fail to act when evidence of wrongdoing is placed before us, we are complicit.
That is why we acted.
That is why we investigated.
And that is why today, we will move to the next stage, consequence management.
I want to thank the Department of Health for its cooperation.
I want to thank those officials and whistleblowers who had the courage to speak out.
And I want to thank the people of South Africa for demanding better.
This is not the end of our cleanup, it is one part of a difficult but necessary process.
Thank you.
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