The corruption probe by the Hawks and the asset forfeiture unit centring on Uruguyan businessman Gaston Savoi and his Intaka health group is likely to have significant political fallout in KwaZulu-Natal and the Northern Cape.
Savoi was arrested on Wednesday and charged with fraud over contracts worth more than R180-million.
Allegations that kickbacks were paid by Intaka come uncomfortably close to some traditional ANC power-brokers in both provinces and may have a bearing on ANC succession battles.
In KwaZulu-Natal the key figure affected by asset seizures and pending criminal charges is the former director of provincial finance, Sipho Shabalala. In the Northern Cape, ANC strongman John Block appears to be in the cross hairs.
Shabalala and provincial health officials allegedly colluded to allow Intaka to secure contracts to supply water purification and oxygen plants to local hospitals.
The prices charged were allegedly wildly inflated — two water purification systems that could have been sourced at about R725Â 000 per unit were bought from Intaka for nearly R5-million each.
Shabalala was allegedly paid more than R1-million, which was laundered through an attorney’s trust account.
Savoi claimed that the payment, in March 2007, was a “donation” to the ANC. But the investigating officer, Johann du Plooy, in an affidavit applying to restrain the assets of Savoi, Shabalala and others, said he could find no record of a payment to the ANC.
Instead, payments were made for the benefit of Shabalala or his wife.
However, the KwaZulu-Natal ANC confirmed receiving a donation from Savoi when Shabalala’s involvement with Intaka was raised in media reports last year.
Shabalala’s long-standing hold over provincial finances is seen as the source of his influence. His wife, Beatrice, has conducted business with May Mkhize, the wife of the KwaZulu-Natal premier, Zweli Mkhize, and both families benefited from loans from Ithala, the provincial development bank.
Upheavals in Ithala, including alleged soft loans to politically connected individuals, led Mkhize in early 2009 to deploy Shabalala to turn the bank around.
But Shabalala was soon mired in scandal himself. A forensic audit leaked earlier this year recommended 23 disciplinary charges against him for flouting tender procedures in awarding a R169-million construction contract. But the provincial economic development minister, Mike Mabuyakhulu, merely gave Shabalala a written warning.
A statement by Shabalala said he would not comment on any matter relating to the fraud. It said that “at this stage his sole link to the ongoing probe appears to be the payment of a R1-million donation to the ANC.”
Also among those named as facing charges is businessman Lindelihle Mkhwanazi, who allegedly received R1-million from Intaka as “commission”.
Forensic auditor Trevor White said in court papers: “It has been reported to me that Mkhwanazi was the ‘boyfriend’ of Ms [Peggy] Nkonyeni, the MEC at the KZN department of health at the time”.
Elsewhere White disclosed that Nkonyeni introduced Savoi to Mkhwanazi and that she was in SMS contact with Savoi.
Addressing him as “Doc!”, she apparently informed Savoi about setbacks in contract negotiations between Intaka and provincial officials and said: “Next time we’ll have to be more careful and perhaps u need to cancel the donation since u r losing on maintenance. What do you suggest? Peggy.”
Nkonyeni, said to have been Zuma’s preferred candidate as KwaZulu-Natal premier, is not facing charges. But she was charged in an earlier case involving the purchase of a mobile ultrasound scanner through Savoi’s company. Charges were provisionally withdrawn against her and two others in August 2009 when a key witness suffered a breakdown and could not testify.
Neither Nkonyeni nor Mkhwanazi could be contacted.
Documents filed in the case against Intaka also show that Block, said to have backed Zuma before the ANC’s Polokwane conference, has been drawn into the corruption scandal. He could not be reached for comment.
According to the court papers Block became a director of Intaka Northern Cape in March 2005 and later hosted an introductory meeting between Savoi and two Northern Cape health officials. Both officials allegedly received kickbacks from Intaka in connection with contracts for the supply of water purification plants and oxygen machines.
Documents seized by the police also show that Block or his companies received more than R600Â 000 in commission payments from Intaka.
Sam Sole is a member of amaBhungane, the M&G Centre for Investigative Journalism
This article was produced by amaBhungane, investigators of the M&G Centre for Investigative Journalism, a non-profit initiative to enhance capacity for investigative journalism in the public interest. www.amabhungane.co.za.