Hawks probe R111m hospital fraud

Ill-spent: The Eastern Cape Health Department has been accused of diverting money away from hospitals, such as the Cecilia Makiwane Hospital.

Ill-spent: The Eastern Cape Health Department has been accused of diverting money away from hospitals, such as the Cecilia Makiwane Hospital.

The Hawks are investigating an alleged fraudulent payout of more than R110-million by the Eastern Cape health department. The money, desperately needed by hospitals and clinics, apparently found its way into the pockets of senior ANC officials in the province.

Former infrastructure boss at the department, Mlamli Tuswa, says his attempts to raise the alarm about this irregular payment were ignored.

In an affidavit, submitted to the Hawks’ anticorruption task team in East London last month, Tuswa claims that the department paid the Coega Development Corporation (CDC) R111-million in management fees without any service-level agreement in place, invoices or other proof to support the payment.

He further claims that a number of senior ANC politicians and members of the legislature were lobbied to get the health department to pay the state-owned Coega.

Eastern Cape Hawks spokesperson Anelisa Feni confirmed that “there are allegations of fraud and corruption that we are investigating and the details thereof remain confidential at this stage”.

Tuswa claims the department diverted funds meant for 38 urgent projects at hospitals and clinics scheduled forthe 2018-2019 financial year, to pay the Coega bill.

Documents attached to the affidavit to the Hawks show that Tuswa had warned his bosses in September that the payment was irregular and that a review should be conducted.

Coega was appointed by the health department as its implementing agent in managing the construction and maintenance of clinics and hospitals in that province.

“The so-called debt to Coega was paid without provision of the supporting documentation in the form of invoices, confirming that services were delivered and that invoices submitted are valid and authentic. The payment was done on the 6th September 2018. It is worth noting that the chief financial officer (Mr Kaye), director legal services (Mr M Mlambo) and I cautioned Dr [Thobile] Mbengashe (health department superintendent-general) of paying this amount without the necessary corresponding documents,” claims the affidavit.

Tuswa wants the Hawks to investigate Coega’s bank accounts becausehe believes that some of the money might have found its way into the pockets of some influential people and politicians in the Eastern Cape.

The R111-million is said to be an irregular portion of a total R150-million that was paid to Coega as the result of an arbitration award in September last year, after a drawn-out battle between the Eastern Cape health department and the entity.

“Given the interest shown and role played by some provincial politicians in pushing at all costs the payment of the R150877815 to Coega, I have all the reasons to believe that some of this money has landed in their pockets. It is against this background that the outflows of this amount from Coega’s bank account need to be followed in order to establish its final destination,” said the affidavit.

According to Tuswa, who was fired earlier this year after an internal disciplinary hearing, his advice to review the arbitrator’s decision was ignored.

The parties went to arbitration after Coega’s chief executive, Mninawe Silinga, and Mbengashe agreed to participate in an out-of-court process. Subsequent to paying the R111-million and the letter from Tuswa, Mbengashe wrote to the tribunal asking it how it had arrived at the amount.

“The department has always disputed the values and method of calculation of the Project Stage 1 and 2 fee invoices submitted by CDC, and this was at the core of the dispute … For this reason, the department seeks clarity on why the amounts were deemed to have been admitted by the department and did not seek clarity from the department with respect to their acceptance or otherwise of the values and method calculation of these Project Stage 1 and 2 fee values?” wrote Mbengashe.

But Silinga’s office this week said they had provided all the evidence required by arbitrators for Coega to be paid, based on a 2009 service delivery agreement,which remained in place until the “discharge of all contractual obligations”.

“Yes, we can confirm affirmatively, the claim relates to invoices duly submitted to the department and approved by ECDoH [Eastern Cape department of health]but not paid … It is important to note work claimed, submitted to the department and signed related to completed stages during the planning stage of projects and progress on site during implementation …” said Silindile Manqina, communications officer in Silinga’s office.

But Tuswa said the arbitration process was flawed because the panel selection was controlled by Coega, a claim the agency denies.It said the process was agreed upon by both parties.

“A classic [example] is where an additional information (R111669060, VAT exc) that did not require to be arbitrated on was suddenly requested from CDC by arbitrators. On the strength of this information, the arbitrators made the award in favour of CDC … it arrived at this decision solely on the basis that it did not receive objection from ECDoH to either the value of or the method determining the value thereof and these amounts are deemed to be admitted as such,” said Tuswa in a letter to his bosses in September.

The arbitrator’s decision was clearly wrong, he said, claiming irregularities and fraudulent activities in the Coega payment claim.

“CDC had submitted its claim largely based on using a nonexisting service level agreement alleged by Coega Development Corporation to have been signed by both parties during the 2014-15 financial year. The value of the alleged time-based fee invoices is not possible to achieve based on the resources and time used.

“The value of the fees way exceeds what is possible as it translates in four years and six months for 10 people working full time (24 hours a day and seven days a week) on the affected projects … The CDC does not have invoices for the time-based invoices … There exists no such service level agreement and the only applicable one is that of 2009…”

But Coega dismissed these allegations, claiming the payments were done in line with the management fees that it charged for work done and as prescribed by the department of public service and administration.

When contacted this week Tuswa confirmed the affidavit, that he was challenging his dismissal and that his arbitration was set for May 5.

The Herald newspaper reported that Tuswa was fired for soliciting a bribe, arranging a R30 000 salary for a friend in exchange for Coega tenders and paying one company exorbitant rates to change light bulbs at health facilities in the province.

Thanduxolo Jika

Thanduxolo Jika

Thanduxolo Jika is an investigative Journalist and Co-Author of We are going to kill each other today:The Marikana Story. The Messiah of Abantu. Read more from Thanduxolo Jika

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