The ANC, the Gauteng Department of Health (GDoH) and a number of businesses are in hot water over new charges of corruption and tender rigging relating to eHealth contracts.

Last week the Mail and Guardian reported that the police’s Hawks and the Special Investigating Unit (SIU) complied thousands of pages of evidence about hearsay corruption allegations against the ANC during the 2009 election campaign.

According to the SIU, from January 2009 Amethst, a joint venture between AME Africa and HST (Health Systems Technologies), allegedly paid multiple instalments of up to R200,000 into a fundraising bank account controlled by a senior official of the GDoH. Such payments are unlawful because at the time Amethst was part of Baoki Consortium, which was awarded a tender for a regional Health Information System (HIS) and hoped to do more than R1 billion in business with the GDoH.

The donations were never declared by either party, and the Gauteng division of the ANC has denied any knowledge of the money. “We did not receive money or any donation from the person who is mentioned,” said Gauteng ANC spokesman, Nkenke Kekana.

“From time to time in any election campaign, the ANC will be engaged in fundraising. We rely on our members and those who are supporters of the ANC and companies to donate money to the ANC. And many of them will request confidentiality because of the nature of the donations, therefore it is very difficult for us to talk about the subject matter,” continued Kekana.

Tender Rigging

Over the weekend new reports surfaced from ITWeb saying that the National Prosecuting Authority (NPA) had seized over R1 billion in contract claims from the GDoH, relating to two tenders awarded by the department in 2007. “The freezing order of R1.4 billion is the biggest ever obtained by the NPA Asset Forfeiture Unit (AFU),” said spokesperson Nathi Mncube.

The first tender was awarded to the Baoki Consortium – comprising of Equiton Investments and the Amethst joint venture between HST and AME Africa. Baoki Consortium signed an agreement with the GDoH to provide a province-wide HIS and Electronic Health Records (EHRs) for all patients in Gauteng. The software supplied by Siemens (Soarian Medsuite Hospital Information System) and Tiani Spirit (Tiani Spirit EHR) was meant to be rolled out across the province over three years, covering a total of 37 hospitals, 400+ clinics, 17,000+ beds and upwards of 20,000 GDoH staff.

The NPA also said that the former CEO of one of the consortium’s companies, Heinz Smidek, paid around R4.6 million for a house in Bryanston and allowed the then MEC for Health, Brian Hlongwa, to live in it rent-free. In return, Hlongwa allegedly influenced decisions in favour of Baoki Consortium who were awarded the final R1.2 billion contract in late 2008.

The NPA says the contract was awarded despite the GDoH not having the money, infrastructure or trained staff for the system. “The contract was approved even though the finance MEC at the time refused to sign it,” added Mncube.

The contract required the GDoH to pay Baoki Consortium every month regardless of progress, with the consortium receiving a total of around R460 million despite delivery not taking place. After the 2009 elections, Hlongwa’s replacement terminated contracts with Baoki Consortium, resulting in the GDoH being sued for damages by the members of the consortium. According to Mncube, allegations of fraud and corruption were then investigated by the SIU and Hawks.

The second tender was awarded to 3P Consulting (3P) to set up a Procurement Management Unit (PMU). “The tender was fraudulently rigged in favour of 3P and 3P was a party to the rigging,” said Mncube, “as 3P’s Chief Executive, Richard Payne, was a friend Hlongwa.”

As a result, the PMU procured goods and services for the department without competitive quotes or bidding, and beyond controls covered by the Public Finance Management Act. “3P allegedly awarded contracts to friends and family, defrauding the department of R35 million in the process, and allegedly provided Hlongwa R3 million in cash,” Mncube said.

Last week the NPA obtained three preservation orders under the Prevention of Organised Crime Act, freezing the contractual rights of Baoki Consortium and 3P. The NPA says the contractual claims of the two tenders were then seized – with Baoki Consortium’s being worth around R1.1 billion, and  the 3P contract totalling R300 million.

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