Order granted to freeze R22.4 million held in bank accounts of companies involved in the sanitation of Gauteng Schools.
The Special Investigating Unit (SIU) has been granted a preservation order by the Special Tribunal to freeze bank accounts of additional seven companies with the sum of R22.4 million. This is in addition to the R40.7 million preservation order granted last month in the Gauteng schools decontamination matter.
Special Tribunal order prohibits Chachulani Group Investment Holdings, Muta Investment Holdings, Netvision Energy Savers, Psychin Consulting, Home Ground Trading 1105 Pty Ltd, Mpale Investments Holdings Pty Ltd, and Naledzi Investment Trust from dealing with the funds held in the bank accounts.
The companies began dissipating the funds received from the Gauteng Department of Education (the Department), upon receipt. Traces of the funds show that, the companies made large payments to unidentified recipients who have, in turn, disposed of them. Some of the funds went towards travel and accommodation, and towards loan repayments. It appears that the companies have been disposing of the funds with the intention of frustrating any claim that the SIU may have to those funds.
Based on the information presented by the investigating team, the Financial Intelligence Centre (FIC) issued intervention directions under Section 34 of the FIC Act to place a hold on R22.4 million of the funds received from the Department for a period of 10 days. The SIU approached the Special Tribunal for preservation order to freeze the accounts following an investigation into allegations of unlawful procurement of services by the Department to decontaminate, disinfect, and sanitize schools.
The corruption busting Unit will launch review proceedings in the Special Tribunal by 19 June 2021, and also seek an order against the service providers to pay back all profits as consequence of their appointment.
The SIU investigation has revealed that the procurement process conducted by the Department was manifestly unlawful. The Department paid over R431 million to service providers pursuant to a process that was hap-hazard, unfair and littered with procurement irregularities.
Gauteng education department obtained a deviation under Treasury regulations to conduct the procurement process without inviting competitive bids. The department did so on the basis that emergency procurement was warranted, given the urgent and pressing need to appoint service providers to decontaminate schools exposed to COVID-19. The request for the deviation expressly stated that the Department would “appoint accredited service providers from the Central Supplier Database (CSD)”.
The SIU investigation revealed that the department failed to comply with the express requirement of the deviation. The vast majority of service providers that were appointed (173 out of 280) were not accredited and were not on the CSD. On this basis alone, the SIU will argue before the Special Tribunal that the procurement process was unlawful and falls to be reviewed and set aside.
Furthermore, the SIU investigation revealed that the procurement process was not cost-effective. The service providers were not paid per square meter of the area cleaned. Rather, a senior official in the department appears to have arbitrarily decided to offer a fee of R250 000 to R270 000 for the decontamination of primary schools; R250 000 to R290 000 for secondary schools; and R250 000 to R300 000 for district offices. The fees bear no relation to the work done by service providers or the cost of material used.
Selection and appointment of suppliers was done in a hap-hazard, unfair and inequitable manner. Ordinarily, the Supply Chain Management (“SCM”) division of the Department would select and appoint suppliers. In this case, the SIU investigation has revealed that the SCM division was not involved in the selection and appointment of service providers. Some of the names of service providers appointed were received via WhatsApp from officials in the Department. The service providers were appointed without first checking whether they were accredited or appeared on the CSD, the SIU investigation has revealed.
Though there are legal outcomes, the SIU investigation into the affairs of the education department are continuing. Evidence pointing to criminal conduct will be referred to the National Prosecuting Authority (NPA), as well as the Hawks in the South African Police Service (SAPS) for further action.
Fraud and corruption allegations may be reported via the following platforms: siu@whistleblowing.co.za / Hotline: 0800 037 774
Enquiries:
Mr Kaizer Kganyago - Special Investigating Unit
Tel: 012 843 0048
Cell: 082 306 8888
Email: kkganyago@siu.org.za
