Document handed out: Defence, Looking at the Status of Corruption & Fraud Cases in the DoD [confidential]
The Committee met virtually for a presentation by the Department of Defence (DOD), the Auditor-General of South Africa (AGSA), and the South African Health Products Regulatory Authority (SAHPRA), on the procurement of Heberon medication from Cuba by the DOD last year.
Members were not pleased by the lack of preparation by the DOD team, which led to the presentation being rescheduled. The Department asked for an extension of three weeks so that they could complete their investigations and present a detailed report to the Committee. The AGSA also asked for an extension because they wanted to conclude their findings, and were still waiting for documentation from the DOD. SAHPRA said it was prepared to make its presentation, but suggested presenting on the same day as the DOD so that the discussions would be more constructive. It added that the lack of cooperation from DOD in not providing requested information had made the investigation difficult.
The Committee suggested that the DOD should return the heberon drug to Cuba, as Cuba was prepared to take it back. The Minister said she would make sure that the DOD worked with SAHPRA and provided all the required information, and that the matter of the heberon procurement would be concluded soon so that those who were responsible for making the procurement decision could be held accountable. She thanked the Committee for allowing the Department a three-week the extension to complete its work.
Members were concerned about the slow pace at which the DOD was resolving cases of irregular expenditure, considering that there were outstanding cases that dated back as far as 2008. Most cases that had been resolved involved amounts of under R25 000, while huge amounts were involved in many cases that had been reported but were not close to finalisation.
The Chairperson started by giving a brief background on the matter of the procurement process involved in obtaining the heberon medication from Cuba by the Department of Defence (DOD), and then asked the Minister to give opening remarks.
Ms Thandi Modise, Minister of Defence, said she was looking forward to working with the Committee, considering that she had recently been appointed in the position, and was still having meetings with the DOD team to get a better understanding of matters. She asked the Secretary of Defence to lead the presentation.
Ms Gladys Sonto Kudjoe, Secretary of Defence, said the DOD was busy working on the report and still gathering information so that it could present a detailed report to the Committee. The Department was doing its best to determine the procurement procedure that had been followed, and there had been an agreement between the DOD and the South African Health Products Regulatory Authority (SAHPRA) that the drug would be used for research.
At this stage, R35 million had been paid for the drug, and there was an outstanding balance of R180 million. There had been discussions on how the matter could be dealt with, considering the bilateral agreements between Cuba and South Africa. Cuba had offered to take the drug back if South Africa was not in a position to use it, because it would expire soon.
There were implications that needed to be looked into before making decisions. The DOD had engaged with the Chief of the South African National Defence Force (SANDF) in trying to establish where the process might not have been followed. The drug had never been budgeted for, and this had also contributed to some of the issues surrounding the procurement of the drug.
Lt-Gen Rudzani Maphwanya, Chief of Logistics, SANDF, informed the Committee that the logistics department had been responsible for bringing in the drug into the country.
The Chairperson asked Gen Maphwanya not to give a background to what had happened, because the Committee was well equipped with the facts, but to brief the Committee on the outcome of the investigations by the ministerial task team.
Mr S Marais (DA) raised concern about the approach taken by the DOD team. He said that they were going around in circles, and wanted to confuse the Committee. However, the Committee wanted to know the outcome of the investigations.
Ms Kudjoe acknowledged the ministerial task team, and said that they believed the team would conclude its work soon so that it could be presented to the Committee. The report would have to be taken to the Minister first, before being presented to the Committee.
The Chairperson asked Minister Modise to share her comments with the Committee on the ministerial task team issue, and if any work had been done.
The Minister asked the Committee to grant the Department three weeks so that they could finalise the report and make a detailed presentation. She also added that she had not yet been thoroughly briefed on the matter. They had agreed to separate the issues so that there was no confusion when the presentation was done. The most important thing was see if the procurement process had been followed, and who had given the go-ahead to procure the drug.
The Chairperson asked if Members had comments following the request that had been made by the Minister.
Mr Marais was thankful that the Minister had made a commitment to submit the report within three weeks, but said he was disappointed at how the DOD had been doing their work.
Mr T Mmutle (ANC) seconded the proposal by the Minister and said that the Committee would have to look at its programme and see where they could include the discussion about heberon and the report. It would be important to have the meeting within three weeks. He was concerned about the information that had been provided by the DOD, because it had not shed light on what the Committee expected. The DOD should make use of the three weeks to polish up their report so that when they appeared before the Committee, the matter was put to rest.
The Chairperson referred the Committee to previous meetings in which the heberon matter had been discussed, how it had been reported, the findings that were concluded and what was being expected at this current stage.
He asked if Prof Helen Rees, SAHPRA board chairperson, could shed more light on whether the clinical trial stage had taken place.
Prof Rees asked the Committee if it would be possible for them to present their findings on the same day as the Department. It would help with the discussion, since the reports focused on the same issue. SAHPRA was prepared to give its presentation, but then it would lead to a discussion and the DOD was not prepared for this. SAHPRA had tried in many ways to help with the matter, and they had asked to move the matter into an inter-departmental discussion because it involved three different departments. It was important to have a legitimate discussion to try to resolve the matter.
The Chairperson asked for comments from Members on the request by Prof Rees.
Mr Marais responded that the Committee was not interested in the issues between government departments, and it would make sense to arrange a meeting for the presentations to be on the same matter.
The Chairperson asked the Audito- General of South Africa (AGSA) if they would be prepared if the meeting had to be rescheduled.
Mr Lourens van Vuuren, Business Executive: Audit research and development, AGSA, told the Committee that they would be prepared by the end of September to make a presentation and they would suggest having the meeting early October.
The Chairperson was concerned about the fact that each party had their own mandate on the matter that they were dealing with, and asking for an extension was not the right thing to do because they had known about the deadlines before.
Mr Mmutle was worried about how the matter had been handled by the different entities, considering the last meeting had agreed that SAHPRA had to work with the DOD to get more information, and it was almost a year now since the procurement of heberon. He gave the benefit of the doubt to the DOD, and was of the view that maybe when they appeared before the Committee again, they would be well prepared so that the matter could be resolved.
Mr Marais shared the same frustrations that had been raised by Mr Mmutle. He said that SAHPRA had gone to do a second inspection of the vials because a certain percentage had been contaminated, and this had been an important step by SAHPRA. The issues were being confused at the moment, and there were many rules that had not been adhered to. The DOD was acting in a negative way, because the facts of what had happened were available to the Committee. The matter should have been resolved, because the Committee needed to focus on other issues. If the Cubans were willing to take back the drug, then there was no need to delay the process.
Mr W Mafanya (EFF) was of the view that the Committee had received the information from the different departments, and while they were waiting for the ministerial task team, the terms of reference should deal with the matter of SAHPRA. He suggested that the Committee should wait for the ministerial task team.
The Chairperson said SAHPRA had experienced difficulty in gaining access to the storage facility, and the Committee did not want new information since it had been furnished with the details last year.
Minister Modise said that only when strategic issues were involved would the DOD be allowed not to follow procurement procedures, but with this matter there was a problem that needed to be resolved. The National Treasury could not accept how the procurement had been conducted. It was important to determine what had really happened with the procurement of the heberon, and the relationship between Cuba and South Africa should not be tarnished. She emphasised that SAHPRA should have access to the facilities and conduct their tests, and no one was in a position to deny them. The core issue was to determine who had allowed for the procurement of the drug without following the proper procedures.
The Chairperson asked AGSA if they had received all the information from the DOD.
Mr Van Vuuren said that they had not received all the information that they had requested, but that would not have an effect on the report because they had done their own investigations.
The Chairperson was concerned about the outstanding documents that had not been presented to the AGSA; he asked Prof Rees if they had received all the documentation from the DOD.
Dr Tumi Semete, Chief Executive Officer (CEO), SAHPRA, replied that they had not received all the required and requested information, especially on what the Department intended to use the drug for. They had not received feedback to the questions that they had asked the Department. SAHPRA had intended to submit a clinical trial in March, but they could not do so because of the lack of cooperation. There were gaps in the application, and they had had to redo the application because some information was missing. Another meeting had been held in July between SAHPRA and the DOD, but nothing much had materialised because SAHPRA was not receiving the information that they required, even after sending vigorous demands to DOD.
The Chairperson was concerned at the lack of cooperation from the DOD, because they were not working well with SAHPRA and AGSA. He was of the view that the DOD was worsening the situation by contacting the ambassadors of Cuba, because they were supposed to prioritise the work of SAHPRA to resolve the matter. As it currently stood, the DOD had been dragging out the matter.
The Secretary of Defence responded that some of the documents were with the Public Protector, since she was dealing with the matter. The DOD did not have any information that they were withholding, but the problem was that the procurement did not fall under the uniformed offices. She promised to make amends and ensure that the matter was resolved as a matter of urgency.
The Chairperson raised the point that the Secretary of Defence was in a position to evaluate such matters and request documents, because she was the accounting officer.
Mr Marais suggested that when the Minister attended the rescheduled meeting, she would need to give the required answers to the Committee.
The Committee agreed to allow the Department to work on its report and provide feedback within three weeks with a detailed presentation.
Corruption and fraud cases in the DOD
The DOD team took the Committee through the status of corruption and fraud cases in the Department. The presentation was confidential, and contained 72 slides of tables.
The Chairperson asked Members to engage with the DOD on the presentation.
Ms A Beukes (ANC) said that the presentation was confusing, and she had found it difficult to follow the conversation. She asked why the investigations by the military police were taking so long, because there were cases dating back to 2008. She also asked about suppliers who had been receiving tenders from the DOD, yet they were not following the Treasury regulations, and wanted to know what the current status of the process was.
Mr Mmutle said that the presentation should have included more information so that the Committee could track the progress of what had been done. He was concerned about suppliers who were not blacklisted and continued working with the DOD, because certain companies were fraudulent. If it was possible, they should blacklist the directors so that they could not be involved with the DOD.
The Chairperson asked the Secretary of Defence to respond to the questions asked by Members.
Ms Kudjoe responded that the cases dating back to 2008 were because of the capacity issues of the investigation teams. There was insufficient capacity to handle all the issues as soon as possible. The DOD would provide more information to the Committee so that they could see the progress being made on the cases.
She said the matter of fraudulent directors was before the National Treasury, and the DOD was waiting for guidance on the way forward. It supported the idea of blacklisting fraudulent directors so that they did not do business with government departments.
The DOD had backlogs when it came to investigating cases, but they were doing their best to finalise all of them. It agreed to delivering better presentations to the Committee with more accurate information. Staff members that had been implicated in irregular expenditure cases were frustrating the process through delays, and this had an impact on how quickly cases could be concluded. Capacity was a challenge within the DOD, but there were also other factors that needed to be taken into consideration. It was in a difficult position when it came to determining fraudulent directors because in some cases, they used different companies that were not blacklisted.
The Chairperson thanked the DOD for its feedback, and asked the Committee Secretary if it would be possible to engage with the DOD again in October, considering that there were still ongoing cases and the AGSA would also be briefing the Committee. He asked the DOD to provide dates when the investigations had commenced. He suggested that the Department also include data on staff members who were on suspension, with a detailed report. It was important for it to show the progress on cases that they were dealing with, and to show that there was a will to conclude pending cases. It was not good enough that only cases that were below the value of R25 000 had been resolved, yet those that involved huge amounts of money were still under investigations dating back to 2008. It was not acceptable that investigations should take this long considering the sensitivity of these matters.
He asked the Minister to give her closing remarks.
The Minister said she would do all her best to make sure that future presentations were more organised, and that the cases would be concluded as matter of urgency. The Committee had every right to ask questions that involved the DOD, and to receive feedback in time. She stressed the importance of having a clean DOD that would tackle matters.
The meeting was adjourned.
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