PwC tasked to investigate R880m hospital oxygen plant tender

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23-01-2025
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Moneyweb
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To determine ‘once and for all’ whether irregularities occurred and if further action should be taken against ‘complicit individuals’ – minister.

Accountancy firm PwC has been appointed by the Department of Public Works and Infrastructure to investigate the allegedly irregular and corrupt R880 million hospital oxygen plant tender managed by the Independent Development Trust (IDT).

Minister of Public Works & Infrastructure Dean Macpherson on Wednesday welcomed his department’s appointment of PwC to conduct a forensic investigation into the circumstances surrounding the deal and provide recommendations for corrective measures to be taken.

Read: Minister takes action on allegedly corrupt R800m hospital oxygen plant tender

PwC’s appointment follows a public tender process, and its investigation must be completed within eight weeks.

PwC’s tasks include:

• Determining the full history surrounding the appointment of external services and whether due process was followed.
• Establishing whether the head of department or any officials caused the IDT to incur irregular, fruitless, or wasteful expenditure during the administration of the tender, the appointment of service providers, and the management of service providers’ contracts.
• Ascertaining whether any IDT officials and/or other individuals contravened laws or duties related to the administration of the tender, the appointment of contractors, or subsequent events.
• Determining the cause, nature, extent, and value of financial losses, including potential losses incurred by the IDT in relation to the tender.
• Identifying the extent of any irregular or illegal activity and the involvement of IDT officials and/or external service providers in relation to the scope of work.
• Recommending appropriate courses of action against IDT officials and external service providers where irregularities are confirmed.

The move follows Macpherson in December launching an investigation into governance issues at the IDT after failing to receive requested documentation from the trust’s board about the tender.

Governance issues

At the time he slammed a statement by IDT board chair Advocate Kwazi Mshengu that the IDT board had decided to commission a full-scale independent review of the trust’s internal processes to ensure that any gaps that may exist within the procurement processes are adequately addressed.

Macpherson said it is patently clear that an organisation cannot and should not be allowed to investigate itself and that he would be appointing an independent firm to investigate the alleged corporate governance failures.

The IDT last year admitted that two of the three companies were appointed following the tender process despite lacking South African Health Products Regulatory Authority (Sahpra) registration, which was apparently a mandatory requirement of the tender.

One of the tenderers also potentially submitted fraudulent documentation.

Macpherson said on Wednesday the independent investigation will “once and for all, determine whether irregularities occurred during the oxygen plant tendering process and whether any further action should be taken against complicit individuals”.

He said this move forms part of the critical steps being taken to improve transparency and governance within the department to ensure no wastage of public funds has occurred.

“As the Minister, I cannot turn a blind eye when serious allegations are raised regarding close to R1 billion of public money.

“This is why the Department of Public Works & Infrastructure will not be distracted by the ‘noise’ surrounding the oxygen plant tendering process but will take all necessary actions to uncover the truth and hold officials accountable where required.

“The independent investigation should therefore be welcomed, as it will also clear any innocent individuals,” he said.

Comment was requested from the IDT on the appointment of PwC to conduct a forensic investigation into the tender but a response has not yet been received.

A whole lot of ‘noise’

The “noise” Macpherson referred to is believed to also relate to allegations that have been made against him since he took his tough stance in December about the IDT tender process.

Media reports earlier this month quoted parliament’s portfolio committee on public works and infrastructure spokesperson Jabulani Majozi as stating that the committee was concerned the minister had, since his appointment in July 2024, not yet met the IDT and this absence of communication seems to be a crucial factor contributing to the perception of irregularities surrounding the IDT’s operations in the tendering process.

A media report on Wednesday further claimed the EFF had filed a criminal complaint against Macpherson at the Pretoria Central Police Station for allegedly avoiding the IDT’s board and executive leadership and contacting a junior employee at the trust via email to obtain a report on the payment delays to Lonerock Construction.

The EFF reportedly stated that this direct intervention by Macpherson blurred the lines of authority and undermined the IDT’s established governance structures.

DA deputy spokesperson on public works and infrastructure Edwin Bath said it is deeply concerning that certain political parties, and some members of business and the media, have sought to shield corrupt practices by levelling baseless accusations against Macpherson.

Bath said these claims are not only misleading but also indicative of a broader effort to derail the fight against corruption and are not dissimilar to what was seen under “State Capture”.

Repeated non-payment

James de Villiers, Macpherson’s spokesperson, said the issue of repeated non-payment by the IDT for services rendered by Lonerock Construction was raised to him in October 2024 by Rudi Dicks, the head of the project management office in the Presidency.

De Villiers said this followed the IDT missing every deadline it set itself since July 2024 to settle the nearly R19 million plus interest owed to Lonerock Construction over a period of 20 months.

He said Dicks had indicated that Linet Barnes was the contact person at the IDT.

De Villiers said the minister, as the executive authority of the IDT, responded to the thread of emails he was copied in on 9 December 2024, bemoaning that he was being dragged into this matter because the IDT could not do its job and pay an invoice that was outstanding for 20 months.

He said Macpherson requested an urgent report on why the IDT had not kept to its own deadlines and commitments from 20 months ago, with several senior IDT officials, including the CFO, included in the email.

De Villiers said the minister has a duty to ensure that the government policy of paying businesses within 30 days is adhered to, and which the IDT has clearly violated.

“It is this type of behaviour by entities of the state that affect business’s cash flow and ultimately cause them to close down and retrench workers. The Minister will not allow the IDT to do this,” he said.

“The current public campaign against the Minister is clearly linked to an orchestrated campaign to shield the IDT from its complete inability to manage its finances, to run a functioning board, and to deliver projects on time, as well as the scandals surrounding the oxygen plant tender.

“The Minister has nothing to hide and has in fact provided the email in question to any journalist that asked [for it].

“That is hardly the behaviour of someone involved in corrupt activities,” he said.