/ 14 February 2022

Forensic report details R156-million overspending on 1 Military Hospital upgrade

One Military Hospital Pretoria Photo Delwyn Verasamy
After an inquiry in February 2021 about the report, the M&G finally gained access this week to a 42-page executive summary of the forensic investigation “into the 1 Military Hospital repair and maintenance programme”. Photo: Delwyn Verasamy

Senior executive officials from both the department of public works and infrastructure and the defence department are to be held liable for irregular expenditure valued at more than R156-million on repair and maintenance work at the 1 Military Hospital at Thaba Tshwane, Pretoria, incurred between 2009 and 2011, according to a forensic investigation report that is to be brought before parliament this week. 

More than R411-million was spent on the department of public works’ repair and maintenance programme (Ramp) at 1 Military Hospital between 2006 and March 2011. The combined amount shows a 95% overspend on the initial estimation for repair work at the hospital. 

The Mail & Guardian reported in September last year that unauthorised and wasteful expenditure and the failure to follow procurement processes are only part of a lengthy list of misdemeanours covered in a forensic investigation into repair and maintenance work at the country’s should-be flagship military hospital. 

After an inquiry in February 2021 about the report, the M&G finally gained access this week to a 42-page executive summary of the forensic investigation into the 1 Military Hospital repair and maintenance programme”. 

The investigation was conducted independently by Abacus Financial Crime Advisory. The main report contains more than 4 000 documents into the dubious dealings that occurred between 2006 and 2020, when the report was finalised.

What follows is an overview of the r corrupt activities, including cash payments, theft, irregular expenditure and the mismanagement of state funds. Important to note is that repair and maintenance work planned for the hospital since 2001 has not commenced, and that the heartbeat of the hospital, its first and second floors, are still not operational to date. 

21 years of mismanagement

The Ramp served as an overarching project that public works launched in 1999 to address a backlog of repair work at state institutions since the mid-1990s. 

The forensic report suggests that in December 2001 public works launched the “1 Military Hospital Ramp” with the aim to “restore” the hospital. It is understood that the Ramp yielded successful results at departments such as justice and correctional services. 

“However, the Ramp that was intended to improve operational efficiency and effectiveness [at 1 Military Hospital], was fraught with significant delays, challenges, scope creep, incomplete works, variations and cost overruns,” reads the report. 

An assessment on cost estimates and repair work to be undertaken at the hospital was completed in 2001. It was only in 2005, and then again in 2006, that another assessment, managed by public works, was conducted. Then, in 2006, contractors and project managers — referred to as contractors 1 and 2, and project managers 1 and 2 in the report — were appointed for three years. These contracts were extended until 2011. 

If public works had not agreed to this extension, then a new procurement process would have had to be initiated. The contract extension, therefore, was a “manufactured and manipulated process that constitutes a deliberate and irregular circumvention of the required procurement processes”, according to the report. 

In August 2021 the M&G reported on how the department of public works and the defence department were passing the buck as to who was to blame for unfinished repair work at the hospital. 

The report found that “both senior executive officials from DOD [defence department] and public works actively participated in this irregular conduct”, referring to the extension of the contracts. 

Furthermore, the failure from public works to appoint one principal engineer (agent or consultant) to oversee, manage and control all contractors — about 16 — conducting work at 1 Military Hospital led to constant delays, in some cases theft, and erroneous construction work.  

Ultimately, the report recommends, senior executive officials should be held

accountable for irregular conduct in regards to the extension of contracts in 2009, and the consequences. In addition to this, the extended contracts, valued at R156 668 974, are deemed irregular expenditure. 

It was also found that further contract extensions were granted under the guise of the existing Ramp, which was “legally flawed”. The initial contractors’ already extended contracts expired in 2011. 

Public works abandoned the Ramp after March 2011. 

“We were informed that they did not have the appetite to see the project through and that they would be prevented by the AGSA [auditor general of South Africa] from proceeding,” the report says, referring to more additional funding for the project. 

Gross overspending of 95% was recorded between 2006 and 2011. A combined amount of R411 776 047 was spent over a five-year period, with very little to show for it. 

Ramp’s refurbishment project

From 2001 until 2011, the scope of repair work at the hospital increased significantly as the once-flagship 1 Military Hospital deteriorated further. 

A refurbishment project to “refurbish and redesign” floor one and the pharmacy on floor two, as well as other related aspects, was introduced in 2012. Both public works and defence were responsible for the new project, using the Ramp as the basis. 

Almost a decade after the refurbishment project was introduced in 2012, little to no repair work has been done on site, except for the demolishing of walls on floor one. This was done by a South African National Defence Force (SANDF) department, despite a principal consultant being appointed in 2014 to lead the project. 

The report, however, found a corrupt relationship existed between the consultant and an official. 

According to the report, there was evidential material that “suggest a corrupt relationship between an appointed consultant and a senior officer in SAMHS [South African Military Health Service] during the execution of the refurbishment project”. 

It was found that a senior defence official played a key role in the starting phase of the refurbishment project and was paid at least R140 000 in cash by the principal consultant. 

“Corrupt payments in the amount of at least R140 000, were made … This amount was paid in cash over a period of time. The representative’s  [of the consultant] version is that these payments were made to the senior official at the times when the principal consultant submitted their invoices for payment.”

A ‘fiasco from the onset’

As the scope of work increased since 2001, when the Ramp was first implemented at 1 Military Hospital, the lack of oversight, management and leadership rendered the first floor non-operational. It is still in this state to this day.  

In a letter dated 28 June 2015, a senior official in the defence department described the Ramp as “a fiasco from the onset, owing to the fact that the Ramp did not provide the mandate to address statutory and functional requirements”.

Over the period of two decades the hospital — which should treat the president,

deputy president, their predecessors, foreign dignitaries, members of the SANDF and their

families — recorded more than R1.5-billion expenditure spent on outsourcing because of its inability to conduct certain procedures. 

This is partially because of the absence of medical equipment that should have been installed at the hospital. The equipment was procured almost 10 years ago, but it does not fit, or cannot be set up, at the incomplete building site. 

Further to this, the report concluded that certain officials at the defence department should be held accountable for the fruitless and wasteful expenditure of more than R19.5-million on medical equipment that was never used, and has now been declared obsolete. 

Adding to the fiasco, is the fact that neither the defence department nor public works have taken decisive action since the investigative report was handed over to them, in 2020 and 2021, respectively. 

In September 2021, the defence department was told to return to parliament and present a detailed report on the matter, with reference to the investigative report. This is expected to take place on Thursday. 

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