The Special Investigating Unit (SIU) is taking aim at a dozen companies that were involved in a R500 million project to renovate a Gauteng hospital, with the goal of securing additional beds to treat Covid-19 patients during the pandemic. The hospital, previously owned by AngloGold Ashanti and located in Carletonville, was leased by the Gauteng provincial government from Golden Core Trade and Invest. Initially earmarked for use as a mental health facility, the hospital’s renovation was intended to quickly increase the capacity to treat Covid-19 patients, but the project spiraled far beyond its initial estimates.
The refurbishment was originally estimated to cost R50 million, with an additional R10 million for residential accommodations on the premises. However, the final costs of the project reached a staggering R500 million, and the provincial departments of Health and Infrastructure Development have struggled to explain the massive discrepancy. The SIU’s investigation uncovered significant flaws in the process, revealing that the appointments of the dozen companies responsible for the refurbishment bypassed standard procurement procedures. No valid tender processes were followed, and the companies were appointed through informal communications, often without clear details about costs, budgets, or the scope of work.
The SIU also found that many of these service providers were not part of the approved panel for the departments of Health and Infrastructure Development, and no approvals were obtained from the Provincial Treasury for the expenditures. Further investigation revealed evidence of overcharging, inflated profits, and invoicing for amounts that far exceeded market rates. Despite the enormous sums spent, the renovations were not completed on time, and the hospital was not ready for use during the first three waves of the pandemic, making the urgent need for additional beds unnecessary.
Judge Soma Naidoo, a member of the Special Tribunal, recently ruled that the lease agreements for the hospital, as well as the appointments of the 12 service providers and contractors, were unconstitutional and unlawful. The judge declared the decisions made by the departments of Health and Infrastructure Development invalid, setting aside the lease agreements, as well as any extensions or amendments. The contracts and agreements related to the refurbishment project were also deemed invalid and set aside, highlighting the significant mismanagement of public funds.
The SIU has now referred its efforts to recover the overpayments to trial. A case management meeting is set to determine the logistics and terms for the trial. The SIU intends to require the companies involved to submit detailed accounts of their appointments, work, and payments to establish the profits they made. If the amounts in question are disputed, the parties will need to approach the tribunal for resolution. If the SIU is successful in the trial, it plans to demand that the companies return their profits, with interest, within 60 days. If the companies fail to agree on the disputed sums, the case will proceed to trial, with oral evidence or further proceedings determined by the Special Tribunal.
This case serves as a stark reminder of the potential for abuse of public funds and the importance of transparency and accountability in the management of state resources. The SIU’s actions represent an ongoing effort to tackle corruption and ensure that taxpayers’ money is not wasted through questionable contracts and inflated costs.
