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Charges loom over dodgy KZN R15m blanket deal

An investigation by the KwaZulu-Natal government into alleged looting of Covid-19 funds has revealed that its social development department squandered more than R15-million on 48 000 blankets it did not need, which it purchased irregularly at the beginning of the lockdown.

The department’s top officials now face disciplinary action and criminal charges over the blanket scandal and the irregular purchase of personal protective equipment (PPE), valued at R13-million, at inflated prices.

Premier Sihle Zikalala – who appointed the investigation in response to media reports about the departmental spending spree – announced the steps being taken against the officials at a media briefing on Tuesday afternoon. 

Those implicated by the probe and who face immediate suspension and sanction include the head of department, the acting director general, the acting deputy director general, the chief accounting officer, directors and assistant directors, and supply chain management officials.

Zikalala said, however, that there was no indication that the province’s social development MEC, Nonhlanhla Khoza, was involved in the irregular procurement, which he described as an act of “looting” of Covid-19 emergency funds.

Khoza’s department purchased the blankets, as well as sanitisers, soap and other hygiene equipment, for distribution to the province’s 12 districts, days before the lockdown kicked in on March 26.

A total of R40-million was spent in three days: R22-million on blankets and the balance on sanitisers, soap and other hygiene products, for distribution to the district municipalities and the eThekwini Metro.

None of the purchases were made directly from manufacturers, but instead from a number of middlemen, who added their mark-up after purchasing the blankets, sanitisers, soap, face cloths and hand pumps from manufacturers.

The report would be handed to the department of social development for action, after which further criminal charges would be laid with the South African Police Service and steps taken to recover the department’s losses from the officials and service providers they appointed.

Zikalala noted, however, that “we are not going to sit and leave the matter with the department”, whose internal controls were found to be “inadequate and inefficient” by the treasury investigation team that had probe the controversial deals.

Their investigation found that the awarding of a R13.6-million contract for masks and sanitisers to 11 service providers was irregular, because prices had been inflated by more than R2.2-million. The purchase orders were also irregularly issued: the service providers were paid in full on May 4, but delivered the materials only on May 11.

Zikalala said that four service providers were paid between R350 and R559 per blanket, which had been purchased without any needs assessment by the department, which had intended to distribute them to its 11 regions.

The blankets did not meet specifications, and there was no evidence that that department had attempted to secure any kind of discount for its bulk purchases, resulting in overspending of R15-million.

Only 4 982 blankets of 48 000 had been distributed, indicating that the procurement might not have been necessary at all. The remaining 43 000 had been left in a storage centre with uncontrolled access, resulting in further damage and loss of blankets.

The investigators found that two of the service providers were running business from their houses and that their names and those of others involved in the scandal had been given to junior officials by their seniors.

The suppliers were paid in full, he said, before they delivered the blankets to the department.

An investigation into the procurement of PPE by the provincial education department found that the department had, in fact, saved R75 million by negotiating with suppliers to ensure that it paid less per item than the minimum cost set by the national treasury.

At the time, the department said it paid the four distributors between R450 and R550 a unit for the 2.1m wide and 2.4m long, 4kg mink blankets without a tender, using emergency powers in terms of treasury regulations. Four companies – Zain Brothers, Gibela Investments, LNA Communications and Rosette Investments – supplied the blankets. A fifth, Ngcome Steam Pot, was appointed to supply sanitisers and other hygiene provisions.

A search by Mail & Guardian found blanket manufacturers selling single blankets online for R350 per unit. All of them offered discounts for larger orders. One manufacturer contacted by this newspaper offered a significantly lower price – about R250 per unit – for 48 000 blankets. -M&G

Khoza’s spokesperson, Mhlaba Memela, referred all media queries to the premier’s office, which declined to comment further.

Meanwhile, Zikalala said an investigation into the procurement of PPE by the provincial education department found that the department had, in fact, saved R75-million by negotiating with suppliers to ensure that it paid less per item than the minimum cost set by the national treasury. –M&G