Northern Cape ANC chairperson John Block pressured provincial health officials into manipulating tenders for his own enrichment, according to explosive allegations in a statement given to the Hawks.
The statement was made by former Kimberley Hospital chief executive Hamid Shabbir, who skipped the country to the United Arab Emirates in 2009 after investigators seized documents from various Northern Cape premises in a R112.2-million corruption case.
According to Hawks investigators, the Northern Cape department of health bought water purifiers and oxygen plants from Uruguayan businessman Gaston Savoi's company Intaka at "grossly inflated" prices in deals greased by dubious "commission payments" of about R13.8-million.
In his affidavit, Shabbir also implicates former KwaZulu-Natal health MEC Peggy Nkonyeni, who he said flew in Savoi's jet to Kimberley where they attended a health department presentation together. Nkonyeni also faces corruption charges in a parallel KwaZulu-Natal case related to her former department's purchase of equipment from Intaka.
The Northern Cape deals landed Block, Savoi and nine co-accused in the dock in the Northern Cape High Court to face charges of corruption, fraud, money-laundering and racketeering.
Shabbir is central to the allegations and in his affidavit implicates himself, claiming that Savoi bribed him. He recalls receiving "at least" R3.2-million in kickbacks through a front company, although investigators have suggested the figure may be closer to R8-million.
But because Shabbir is living in Pakistan, he has not been arrested and charged. He made his statement to Hawks investigators who visited him in Abu Dhabi in February 2011 with the idea of using him as a section 204 witness under the Criminal Procedures Act. This would have granted him full indemnity in return for a detailed, full testimony. However, the National Prosecuting Authority has rejected his statement as "vague, evasive and [needing] more clarity", according to court papers.
Shabbir's account starts in 2001 when he was a senior doctor at Kimberley Hospital and Block was brought to him by the hospital's chief executive at the time, Deon Madyo. Then the MEC for transport, roads and public works, Block had been in a car crash and needed treatment.
Madyo – who went on to become head of the provincial health department in later years and also faces corruption and money-laundering charges in the Intaka case reportedly told Shabbir to make sure that Block "receives the best possible care".
Shabbir's relationship with Block developed over the years. In later months, Shabbir said, he visited the United Kingdom on official business and the heavyweight ANC politician joined the delegation: "Madyo instructed me to arrange an appointment for Block with the hand surgeon at Oxford. I accompanied Block to this consultation at the specialist. Block and I became acquainted with each other."
Company records show that Block and Savoi established Intaka Northern Cape, a subsidiary of Savoi's group, in March 2005. At about the same time, it is alleged, Block barged into Shabbir's office. "Block showed up at my office unannounced [and] told me to check if Madyo was available, which I did, and Madyo came to my office."
Block allegedly told the pair he had met people in Cape Town who could provide hospitals with on-site oxygen generation plants. "[He] instructed that we should avail ourselves to attend a presentation that was to be conducted by the Cape Town businesspeople."
Other evidence before the high court indicates that Savoi, Block, Shabbir and Madyo attended an "introductory meeting" on March 7 that year.
The meeting was held in Madyo's office, where Savoi presented his medical oxygen generators, which he called Oxyntakas.
Shabbir said: "The following day Madyo and I discussed the matter and he mentioned to me that Block has placed him under a lot of pressure to authorise this contract in favour of Intaka. He also told me that if he authorises this contract then Block will gain financially because Intaka intended rewarding Block upfront."
Intaka supplied five or six Oxyntakas to Northern Cape hospitals on a pilot project basis. Savoi started calling Shabbir, the official said, to inquire after the project: "[He] became interested in my personal circumstances. This drew us to become acquaintances."
From there, Shabbir's relationship with Intaka appeared to take on a life of its own, without any mention of Block. Shabbir said he helped another official to prepare the department's submissions to the tender board. While this was happening, "Savoi and I spoke to one another via telephone and he enquired from time to time as to the developments surrounding the approval of the tender for additional Oxyntakas".
At this point, Shabbir claims, he had been promised no reward for Intaka, but when he came across a water project being considered in his parents' home country, Pakistan, he and Savoi agreed to set up a business together.
He said Savoi attempted to transfer money to his uncle's Pakistani business, Rehman Enterprises, to fund a joint venture. "Had this business opportunity been successful, I stood to gain financially from Rehman's side of the [joint venture]." But because of "some banking difficulty" the money never went through.
Hawks investigators have suggested in court papers that payments to Rehman may have been "commission payments" – bribes – from Intaka to Shabbir. Shabbir has previously denied this.
Shabbir claimed that he and Savoi met at least three times to discuss the Pakistan venture: "In one of these meetings, held at Savoi's offices in Cape Town, he asked me what the possibility was of him being able to supply more Watakas [water purifiers] to the department of health in the Northern Cape. [I] advised him to speak to Madyo. Some time thereafter Savoi informed me that he had discussed this matter with Madyo, who gave him a possible positive response.
"In an ensuing telephone conversation, Savoi told me that he would remunerate me if I could ensure that he gets the contract to supply additional Watakas to the department."
Shabbir said he travelled regularly to Cape Town to meet Savoi to discuss the Watakas over lunches.
"He said that in order for me to get this money I had to establish a company and issue him with invoices, provided that I was instrumental in securing the purchase of these eight Watakas. I agreed to push the deal forward for financial reward."
Shabbir, Madyo and another official involved in procurement procedures began to prepare submissions to the tender board. Shabbir said he "fabricated" memorandums that doctors signed to help motivate for the procurement of the water purifiers. Ultimately, the tender was approved and Shabbir called Savoi. "He was very excited and told me that I must go and register my company so that he could remunerate me with R1-million per Wataka."
Shabbir set up a company trading as Watertech, which invoiced Intaka for "commission payments". He said he recalled invoicing Intaka for R3.2-million, but a forensic investigation report before the court recorded that Intaka paid Watertech about R4.6-million.
Shabbir said he also provided Savoi with "business intelligence" in a separate department procurement. Ultimately, this contract also went to Intaka. "I received about R612000 from Savoi, if I remember correctly," Shabbir said.
In late 2010 Block was arrested and charged with corruption and money laundering to the tune of R772000 related to the contracts. The case is due back in court early next year and Block has maintained his innocence.
Officials in his office acknowledged receipt, but did not respond to the M&G's questions.
Representatives for Savoi, Nkonyeni and Madyo said that because the case was before the courts the matter was sub judice and they could not comment.
Savoi's lawyer, George van Niekerk, said: "Our clients have always said that they would welcome the opportunity to tell their side of the story in court. It is not appropriate to ventilate the issues raised by you, which are central to the prosecution, in the press in advance of the hearing."
Nkonyeni's spokesperson, Wonder Hlongwa, added: "We do not wish to subject ourselves to a parallel prosecution by the media."
Shabbir's spokesperson, Ross Henderson, did not provide comment, and phone calls and emails to Shabbir went unanswered.
Long list of influential people caught in the web
Beleaguered Uruguayan businessperson Gaston Savoi is at the centre of a nationwide scandal that has seen the arrest of 16 senior politicians, top officials, businesspeople and lawyers in three provinces. They are accused of corruption, fraud and money laundering, among other charges.
At its simplest, the allegation is that Savoi's medical equipment – mainly water purifiers and oxygen generators – were sold to municipalities and provincial departments at inflated prices in return for bribes.
In KwaZulu-Natal and the Northern Cape, the prosecutors have claimed that fraudulent quotations were used to justify awarding the contract to Savoi's company, Intaka.
In many cases, front companies were established by officials and politicians, who then received "commission payments", alleged to be bribes, from Intaka.
The accused include Northern Cape ANC chairperson John Block, who is also the provincial finance minister, and Sipho Shabala, former head of KwaZulu-Natal's treasury and the state-owned bank Ithala.
Savoi has been arrested several times over the case and faces charges in KwaZulu-Natal and the Northern Cape. More recently arrested were former KwaZulu-Natal health MEC Peggy Nkonyeni, now the speaker in the provincial legislature, and Mike Mabuyakhulu, KwaZulu-Natal's economic development MEC. Their arrests were in connection with a R1-million "donation" Savoi made to the ANC after getting a contract.
Sources in the National Prosecuting Authority have said that the charges against Nkonyeni and Mabuyakhulu could be withdrawn. Some claim the case against them was due to political interference, although others insist there is strong evidence against them.
The accused in the KwaZulu-Natal and Northern Cape trials are expected back in court in October and January respectively.
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