How ‘Covidpreneurs’ are looting billions from South Africa’s emergency funds

The Special Investigations Unit (SIU) has been empowered by president Cyril Ramaphosa to investigate any, and all allegations of corruption in contracts involving South Africa’s emergency funds – and it says that the R2.2 billion reported to be under investigation is just the tip of the iceberg.

In an interview with 702, SIU spokesperson Kaizer Kganyago said that the president’s proclamation on 23 July, gave the investigative unit the necessary mandate to confront allegations of wrongdoing by so-called ‘Covidpreneurs’ during the country’s state of disaster.

Deals believed to be worth more than R2.2 billion involving emergency purchases of personal protective equipment (PPE) are at the centre of the current investigation, with 90 companies that received contracts from the Gauteng health department under the spotlight.

Kganyago said that under the state of disaster, with lockdown regulations in place, emergency spending was allowed by departments which could deviate from legal procurement processes.

However, these were not a free-for-all, and still had to be done within the guidelines issued by National Treasury.

“Some people are using the deviation and emergency clauses in law to create emergencies where there aren’t emergencies,” he said.

One example of this, is where companies and officials know there are contracts coming to an end. For a long time, they knew these contracts were ending on a specific date, and then used emergency deviations in the act to ensure these contracts were then given to the people they wanted.

Kganyago said this this ‘favouritism’ is a big problem that is now being investigated. Other leads the SIU is following includes:

• Hearsay – not investigating rumours themselves, but following those leads to find evidence of wrongdoing;
• Contract deviations – checking to see if the correct processes were followed;
• Piggy-backing – cases where similar contract bids were presented, where later entries from preferred candidates ‘piggy back’ on bids, and the desired one is selected.

The SIU said that the R2.2 billion identified in weekend reports is just the tip of the iceberg, being the amount tied to contracts from the Gauteng Department of Health alone.

Kganyago said that the scope of the investigation covers the entire R500 billion stimulus package that makes up the country’s emergency funding.

He said the SIU is empowered by legislation to recover any funds stolen – and if the money itself is unrecoverable, it can work with the asset forfeiture unit to get the value back.

The benefit of the president’s proclamation is that the SIU will now be able to investigate in real time and hopefully to catch corruption in contracts that are not yet active or executed, stopping looting in its tracks.

Ramaphosa pledged to fight corruption in the country and opportunists who use the coronavirus pandemic for their own gain. The president said there had been allegations of:

• Fraudulent UIF claims;
• Overpricing of goods and services;
• Violation of emergency procurement regulations;
• Collusion between officials and service providers;
• Abuse of food parcel distribution;
• The creation of fake non-profit organisations to access relief funding.

“We are determined that every instance of alleged corruption must be thoroughly investigated, that those responsible for wrongdoing should be prosecuted and that all monies stolen or overpriced are recovered.”

To ensure that action is taken speedily, Ramaphosa said he will receive interim reports on investigations every six weeks.

Read: Mboweni slams ‘Covidpreneurs’ and corrupt officials looting government tenders