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A forensic report has found that the IDT awarded a major oxygen plant contract to an unqualified company using a fraudulent Sahpra licence.
The Independent Development Trust (IDT) awarded a multi-million oxygen plant project tender to a company that did not have a valid South African Health Products Regulatory Authority (Sahpra) license.
This is according to a report by auditing firm PricewaterhouseCoopers (PwC), which looked into the R836-million oxygen plant tender to supply oxygen systems to 60 state hospital facilities across the country.
Fraudulent license submission exposed
The report was released by Public Works and Infrastructure Minister Dean MacPherson at a media briefing in Pretoria on Tuesday.
It revealed that Bulkeng Pty Ltd fraudulently submitted a Sahpra license that belonged to a different company.
IDT, the government’s built environment project management agency, awarded Bulkeng a R428 million tender on behalf of the Department of Health to install pressure swing adsorption (PSA) oxygen plants.
“Bulkeng Pty Ltd submitted a Sahpra license belonging to Atlas Copco Industrial SA without the knowledge or consent of Atlas Copco. This was a clear misrepresentation. In simple language, it’s called fraud,” MacPherson said.
Furthermore, Bulkeng has a Construction Industry Development Board grading threshold of R200 million, which means it did not qualify to be awarded a project of that value.
Additional contractors lacked Sahpra approval
MacPherson said the report also revealed that seven other companies were awarded contracts without valid Sahpra licences.
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“The service providers that were appointed on the panel were, however, not required to provide evidence that they meet the Sahpra requirements as set out in the Infrastructure Programme Implementation Plan,” the minister said.
Project costs soared without explanation
Another alarming finding was that a R216 million budget ballooned to R592 million without justification.
MacPherson said the Department of Health requested to approve increased funding for the rollout and implementation of the plant projects to R590 million—more than double what the original starting estimate was.
“This project was therefore increased by a staggering 174% from the initial estimated budget.”
He said the international financing organisation Global Fund and the health department approved the increased budget, despite one of the initial conditions in 2022 being that the total cost of the project would not exceed R216 million.
The report also singled out Dr Molebedi Sisi, IDT’s general manager of supply chain management, for his “role in misleading internal stakeholders and failing to act in accordance with his responsibilities”.
MacPherson said Sisi advised against cancelling the Request for Quotation Process of the tender bidding, despite clear warnings from the Department of Health.
“He assured the [IDT] CEO and evaluation committees that the procurement process was compliant, when in fact key regulatory requirements such as valid Sahpra licences had not been enforced.”
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Instead, both the CEO, Tebogo Malaka, and Sisi approved contracts, he said.
IDT executives named for misleading and inaction
The report revealed that Malaka failed to exercise oversight and relied entirely on internal supply chain management staff to assure her that the processes had followed proper procurement protocol.
“She did not verify any of the documentation. She did not act on any of the red flags raised by the Department of Health.”
PwC investigation followed media exposé
As a result of these findings, the minister said disciplinary action was recommended against the senior officials involved.
The Department of Public Works appointed PwC to conduct a full independent forensic investigation into the PSA oxygen plant on 15 January, following a related exposé by the Daily Maverick three months prior.
MacPherson said investigators conducted over 40 interviews with departmental officials, IDT executives, contractors and oversight stakeholders over six months.
They reviewed more than 90 procurement documents and analysed financial records.
The minister said he was already aware of the long-standing and serious allegations of financial misconduct and corruption at the IDT from the moment he stepped into his role.
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