An insider has come clean on tender-rigging in the multibillion-rand medical waste industry, which is tasked with the disposal of potentially lethal needles, swabs, bandages and human body parts from hospitals and clinics.
“My personal experience through the years is that you can’t get a contract with any provincial department of health without paying their officials,” the insider, who asked not to be named, said in an affidavit he gave to the Mail & Guardian.
One such tender is a R218-million contract that the Limpopo health department awarded to a consortium with links to ANC Youth League president Julius Malema in 2005 (See “The Malema Link” below).
Losing bidders challenged this contract as well as a successive contract awarded last year, saying they believe the tenders were rigged in favour of politically connected tenderpreneurs. The person who made the affidavit was a member of the winning consortium in 2005.
The court challenge to the 2005 award was successful but the department reinstated the consortium to conclude the five-year contract.
It then awarded a R156-million, three-year successive contract to a restructured consortium that included two lynchpins of the controversial 2005 tender.
The insider has 15 years’ experience in the industry and extensive involvement with companies that bid for provincial health department medical waste contracts.
In his affidavit and in interviews with the M&G he recounted his role as a partner in the consortium that won the tender six years ago.
As the consortium’s medical waste expert at the time, he drafted its bid documents using a rival bidder’s proposal, which had been provided by the department.
” [They] provided us with a copy of [leading competitor] Evertrade’s proposal that they submitted to the department and we drafted our proposal for the tender based on the proposal of Evertrade,” states the affidavit.
The insider’s allegations have been vigorously denied by his former business partner, key players in the tender award and the Limpopo health department.
But Ian Du Randt, managing director of Compass Waste Services, the company that challenged the 2010 tender award, said he had spent “a considerable sum” on legal fees to challenge as many as five other government medical waste tender awards.
” We’re determined to clean up the industry. Our track record speaks for itself, as illustrated by our challenging of these illegal awards through the courts,” Du Randt said.
Tshumisano consortium, 2005
In 2005 the insider was a partner in Buhle Waste, which bid for the Limpopo waste tender. His partner, and Buhle’s majority shareholder, was waste management baron David Sekete.
The insider and Buhle Waste formed a consortium, Tshumisano, with a company called Afrimedicals. The latter, the insider claimed, was owned by David Mogale and Tsakane Kambule.
Mogale was chairperson of the Limpopo tender board from 1994 to 1998 and appears to have ties with influential political figures in Limpopo, including Malema.
Mogale did not answer the M&G‘s questions this week.
Kambule is the niece of former Limpopo health department boss Nelly Manzini, who approved the tender.
Kambule told the M&G that Manzini is her maternal aunt, but denied being a director of Afrimedicals and said she “never acted as a go-between for anyone”.
Manzini admitted approving the tender and being related to Kambule, but said: “In the tender which the bid committee awarded to Tshumisano … Kambule does not feature anywhere as a director or otherwise in any of the companies, including Afrimedicals.”
Fronting allegations
The insider claimed that Kambule’s absence from Afrimedicals’ company documents was concealed by an arrangement in which another person fronted as principal.
“The owners of the company were Tsakane [Kambule] and David Mohale [sic]. They amended their company documents to show that a lady by the name of Onica was the owner. [Mogale] and [Kambule] did not want their names to be connected to the company because they were involved with government departments,” he wrote.
Fronting is difficult to prove. Neither Kambule nor Mogale features as a member of Afrimedicals in company registration documents — but Onica Molewa does.
Afrimedicals was registered as a proprietary company in 2005, when it bid for the tender. In such companies members and shareholders are not necessarily one and the same and it is therefore possible for Mogale and Kambule to own the company without being listed as directors.
The insider claimed Molewa’s presence later caused problems. “The Limpopo department of health … wanted to meet with us and the owners of the companies. During this meeting Onica [Molewa] could not attend because she knew nothing about what was going on, so Tsakane [Kambule] introduced herself at the meeting as being Onica.
“At that stage the media also wanted to interview Onica [Molewa] and she was taken out of the province to Buhle Waste in Gauteng, where she was hidden.”
The insider said he hosted Molewa in Johannesburg.
Kambule responded: “I have no knowledge of such a meeting. The meeting never took place and I never at any stage pretended to be Onica Molema [sic].”
Sekete also denied that Kambule was involved with Afrimedicals “at the time of the tender bidding process in 2005”.
Becoming Buhle-Ingwe
The insider fell out with Sekete in December 2006 and left the consortium.
Last August a restructured consortium that included Sekete’s Buhle Waste and Mogale’s Ingwe Waste Management was awarded the lucrative Limpopo contract for three more years.
As in 2005 a losing bidder, Du Randt’s Compass Waste Services, is now suing the department and the winning Buhle-Ingwe consortium over alleged irregularities.
In court papers lodged at the North Gauteng High Court last October Du Randt accuses the department of not following the preference point system outlined in the Preferential Procurement Policy Framework Act.
“Because of the overwhelming influence of price in the 90/10 -preference point system, it is inconceivable that [the Buhle-Ingwe consortium] could have scored more points than [Compass Waste],” Du Randt says in his founding affidavit.
Compass Waste Services’s bid for the three-year tender was R26-million less than Buhle-Ingwe’s R156-million.
In its responding affidavit provincial health department head Aggrey Mabuti stated that the 90/10 scoring system “would not have made any difference to the result as [the Buhle-Ingwe] bid was the only bid which passed technical evaluation by achieving more than the threshold of 32 points”.
The department declined to comment further, saying the matter was sub judice.
Du Randt told the M&G: “We believe the principle of fair administrative justice is worth fighting for.Â
” If we don’t stand up against -corruption, illegal tender specifications and tender processes, we may as well close our business and move to Perth.”
The Malema link
In discussions in 2005 among the consortium’s directors, Tshumisano partner David Mogale insisted that a 3% stake in the company be given to a youth group, Blue Nightingale Trading 61, according to the insider.
He said: “A gent and a lady attended our meetings as representatives of the youth group. They kept quiet and never said a word. Much later, after I’d left the company, someone said to me: ‘Do you remember that skinny gent? That was Julius Malema!'”
Company records confirm that Malema, then ANC Youth League Limpopo secretary, became Blue Nightingale’s director in early 2006.
Blue Nightingale later sold its stake back to the consortium for less than R150 000 in 2006.
Mogale did not respond to questions this week.
In a puzzling response to M&G questions, Malema’s spokesperson, Floyd Shivambu, shouted: “There is no such thing as Blue Nightingale. Check [companies registration office] Cipro.” — Lionel Faull
The M&G Centre for Investigative Journalism, supported by M&G Media and the Open Society Foundation for South Africa, produced this story. All views are the centre’s. www.amabhungane.co.za.