Findings on procurement of Heberon medication from Cuba: DoD, SAHPRA & AGSA input; with Deputy Minister

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Defence and Military Veterans

01 December 2021
Chairperson: Mr V Xaba (ANC)
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Meeting Summary

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The Committee met on a virtual platform to briefed on the procurement by the Department of Defence of  Heberon medication from Cuba during the early stages of the Covid-19 pandemic last year.

It was told that the Department had ordered 970 895 vials of Heberon between 27 April and 17 August last year at a cost of nearly R35 million without prior approval from the South African Health Products Regulator (SAHPRA), and the procurement was not accounted for in the financial records. SAHPRA had advised that the product must be returned to Cuba by 30 November 2021, or it would confiscate and destroy the product, but communication on the return of the product to Cuba was still awaited.

The Auditor-General of South Africa (AGSA) had concluded that all expenditure incurred under this project was irregular. The Department currently had approximately 970 885 vials that were not approved for patients. The outstanding approval, together with the approaching expiry dates of March and April 2022, would most likely result in the Department not administering some, or all, of the remaining drugs. Therefore, the non-compliance had resulted in a likely material financial loss of R260 342 813 to the Department.

A Member stressed there was a need to conclude the matter because a crime had been committed and it was important to refer the matter to legal entities that could assist. The Minister had previously acknowledged that she was not aware of some of the decisions that had been taken. The Chairperson reminded the Members that the Minister had committed to providing the Committee with her findings. The report would be in writing, and the Committee would have an opportunity to discuss it.

The Department of Military Veterans presented the progress report of the Presidential Task Team (PTT) on Military Veterans, after which the Deputy Minister pointed out that the PTT had not yet dealt with some of the matters that the Department had covered. The report had raised the establishment of a separate Ministry, and this matter had been set aside by the President, and would be discussed later. The PTT had not yet given its recommendations, so the Committee should not be confused on the progress of this matter. The PTT was also still waiting for information on how the Department was going to assist military veterans in terms of economic sustainability.

Meeting report

The Chairperson said had received a letter from the Ministry, highlighting that they were seeking more time from the Committee to present their findings. The Minister and the Secretary for Defence were not in the country, as they had accompanied the President on a state visit to Ghana. He asked Members to give their views.

Mr S Marais (DA) asked if the letter could be sent to the Members of the Committee, and expressed his displeasure at the reasons for their absence. He was of the view that the Minister and the Secretary for Defence should be able to participate in the meetings because they were virtual. It was not pleasant for an advisor to the Minister to communicate with the Committee and request a postponement of the meeting, because the Committee communicated directly with the Minister.

Mr M Shelembe (DA) was also not pleased with the reasons for the Ministry to seek a postponement of the meeting, and said there was no reason for the Committee to accept the request. The Ministry had also not provided an alternative date to have the meeting.

Mr W Mafanya (EFF) registered the same sentiments as Mr Marais and Mr Shelembe.

Ms T Legwase (ANC) also expressed the same views on the letter, and suggested that the Committee leave the planning of the meeting to the Committee Secretary.

The Committee resolved that they look at alternative ways of having the Minister present for the meeting, because it was an important discussion considering the sensitivity of the matters.

The Chairperson tasked the Committee Secretary with scheduling the meeting, and said he was to communicate with the office of the Minister.

He asked the South African Health Products Regulatory Authority (SAHPRA) to make their presentation.

SAHPRA presentation

Dr Boitumelo Semete-Makokotlela, Chief Executive Officer (CEO): SAHPRA, made the presentation on behalf of the entity.

She said that the product had batches that expired in March 2022 and July 2022 respectively. A clinical trial application was received on 9 May 2021. Both SAHPRA and the SA Military Health Service (SAMHS) were organs of state as defined in section 1 of the Intergovernmental Relations Framework Act (IGRF Act). SAHPRA's discussion with the then Acting Minister of Health indicated that there was a process that the Ministers of Health, Finance and Defence had initiated. The various Directors-General (DGs) were to convene meeting between SAHPRA and the SAMHS to facilitate a resolution to this matter, but the meeting had still not taken place.

The current status was that a letter was issued by SAHPRA that indicated that the product must be returned to Cuba by 30 November 2021, or SAHPRA would confiscate and destroy the product. Communication on the return of the product to Cuba was still awaited. A letter from SAHPRA asking for evidence of this process had been issued.

AGSA presentation

Ms Mbali Tsotetsi, Deputy Business Unit Leader, AGSA, told the Committee that not all requested information had been provided. This included the manufacturer’s stability data, some documentation supporting the international import for all three shipments, transportation and manual recording for the second shipment, and an internal report on the procurement of the drug. The Department had confirmed that no procurement process was followed, as the drugs were procured under Project Thusano.

AGSA had concluded that all expenditure incurred under this project was irregular. None of the 970 895 vials of Heberon were accounted for on the Department’s inventory system, and the payment of R34.86 million was not accounted for in the financial records. There was no evidence of SAHPRA approval prior to the importation of Heberon. Subsequent SAHPRA approval was for ten vials, as opposed to the 970 895 vials imported. The Department did not obtain approval from the SAHPRA as required by the Medical Council of South Africa (MCSA) regulation 6.2, before importing the unregistered drug Heberon Alfa R (Heberon) into the country.

The Department had procured 970 895 vials of Heberon from a Cuban supplier between 27 April and 17 August 2020. SAHPRA had re-authorised the use of only ten vials of Heberon on a single patient on 5 October 2020, and had granted no further approvals. The Department currently had approximately 970 885 vials that were not approved for patients. The outstanding approval, together with the approaching expiry dates of March and April 2022, would most likely result in the Department not administering some, or all, of the remaining drugs. Therefore, the non-compliance had resulted in a likely material financial loss of R260 342 813 to the Department.

The Chairperson invited Members to have a discussion on the presentations.

Discussion

Mr Marais welcomed both presentations and said that there were no doubts on the findings that were presented -- everything was clear on the way forward that must be followed by the South African National Defence Force (SANDF). He was concerned about the possibility of loss that would result from the procurement that had happened without approval. There was a need to hold those that were part of the procurement accountable, since they were responsible. There must be no cover-ups on the matter, as it needed to be dealt with by Parliament so that a precedent could be set. The SANDF was not above the law, and they must abide by the laws of the country and make sure that they were accountable, because money was being wasted.

The Chairperson added that there was very little the Committee could say or do at this stage, because the presentations had been made, and they had to wait for a response from the SANDF. SAHPRA would provide a detailed report that could close the file and a conclusion could be reached.

Ms A Beukes (ANC) sought clarity on when the AGSA report had been sent to the Department, and if they were working on the recommendations.

Mr Mafanya said both presentations had been insightful. It had been a while since the Committee had been dealing with this issue, and there was a need to conclude the matter because a crime had been committed and it was important to refer the matter to legal entities that could assist. In one of the meetings, the Minister had acknowledged that she was not aware of some of the decisions that were taken. He encouraged the Committee to open cases.

The Chairperson reminded Members that in the previous meetings, they had discussed the matter with the Minister, and she had committed to providing the Committee with her findings. The report would be in writing, and the Committee would have an opportunity to discuss it. The Secretary for Defence must still respond to the report by the AGSA, then the Committee could discuss the matter.

Prof Helen Rees, Chairperson, SAHPRA board, thanked the Committee for their time and said that the regulatory authority was a creature of statute. They had tried to find a solution that would work, considering that the country was in a pandemic, but it had been difficult.

The Chairperson excused the SAHPRA team from the meeting, and asked for a response from the AGSA.

AGSA's response

Mr Lourens van Vuuren, Business Executive, AGSA, told the Committee that AGSA had been communicating with the accounting officer of the Department on the best way to deal with the matter. The last communication had been on 13 August, when she had committed to investigating the matter and taking appropriate action. The AGSA was waiting for her to act so that they could follow up, since she was aware of what must be done.

The Chairperson thanked Mr van Vuuren for his response, and asked for the next presentation from Department of Military Veterans (DMV).

Progress Report of Presidential Task Team (PTT) on Military Veterans

Ms Irene Mpolweni, Director General, DMV, introduced the team from the Department, and asked Mr Sandisa Siyengo, Chief Director: Research and Policy Development, DMV, to make the presentation to the Committee.

Mr Siyengo said the Presidential Task Team (PTT) on military veterans had committed to continuous engagements with military veterans in a bid to resolve issues raised during various interactions with military veterans since November 2020. Since the start of the engagements with different military veterans' associations, the PTT had employed a technical task team to establish work streams for the implementation of the issues contained in the consensus document. The draft Bill was in place, waiting to be consulted with the Ministry, the PTT, government clusters, the Gazette for public comments, Cabinet and Parliament.

The DMV had developed a transitional model for the funding of military veterans’ associations.  Freedom Park had been identified as an institution to assist until the end of the financial year. The South African National Military Veterans Association (SANMVA) conference would take place to give way for the new elected leadership. Draft guidelines for the registration of member associations had been developed and were still to be consulted with the Ministry.

The Department currently had 169 approved posts in the 2010-approved establishment, of which 19% were at the senior management service (SMS) level. It had 90 contract workers as of 31 March 2021, mostly below level nine. The DMV had partially addressed capacitating provinces by appointing provincial coordinators -- six had been appointed at the deputy director level. Three posts were vacant in the Northern Cape (NC), Western Cape (WC) and KwaZulu-Natal (KZN). The intention was to elevate these posts to director level with the reviewed structure. To date, more than 6 300 military veterans had accessed the counselling services since 2013, some through group and individual therapy interventions.

Compensation benefits had been implemented since 2015. 2 114 applications had been received to date, but 1 084 (51%) had not qualified for assessment. Of the 1 030 military veterans who qualified for assessment, 503 had qualified for payment after medical assessments were done. Of these, 427(40%) had been paid, while 76 (7%) were still in the payment process.

Referring to the remuneration of Mr Moopeloa, who was appointed as a panel member by a Ministerial directive in November 2020, Mr Siyengo said that his remuneration had been determined at the level at which he was appointed, using National Treasury regulations. He had not been satisfied with the payment at such a level, and had required a higher payment. The DMV was still exploring how best to manage these permissible prescripts.

The Chairperson asked the Deputy Minister to give his comments on the report.

Deputy Minister's comments

Mr Thabang Makwetla, Deputy Minister, said that this had been the report of DMV, and not the work streams of the PTT. There was a huge difference between the two, since the work streams would involve other entities. Some of the areas were not accurately reported -- for instance, the progress on the amendment to the Military Veteran’s Act. He said that the progress report would strictly highlight the position of the Ministry. They had read the draft, on which they had also made comments, but it still needed to address more issues. There was need for a clear way forward to be formulated so that all the issues were clarified. He added that the PTT had not yet dealt with some of the matters that were presented by Mr Siyengo. The DMV would report on their own work, and the PTT would cover its mandate so that there was no confusion on the Committee.

The report raised the establishment of a separate Ministry, and this matter had been set aside by the President, and would be discussed later. The PTT had not yet given its recommendations, so the Committee should not be confused on the progress of this matter. There was a lot that was expected to have happened from the Department, especially from the provincial departments, on how they were to help military veterans on social services, and the Department was still working on these matters.

The PTT was also still waiting on the information on how the Department was going to assist military veterans in terms of economic sustainability. The accounting officer had to generate a report and provide it to the Committee. The report should be comprehensive and show how many military veterans had received houses and educational grants since the Department was created.

The Chairperson thanked the Deputy Minister for his comments.

Discussion

Mr Shelembe said he was disappointed, because he had thought the report was from the PTT. The report did not cover the important matters that the Committee was expecting, so there was no point in discussing it, because it did not give the exact figures of how many military veterans had benefited from the different services provided. He suggested that the DMV should prepare another report and present it to the Committee again.

The Chairperson echoed the same sentiments as Mr Shelembe, and suggested that the Committee wait for the PTT report so that they could have a better discussion, even though the year was about to end and there were more presentations and oversight duties. The Committee would like to know the exact number of beneficiaries, because this would help them in their oversight role. Some of the issues could be addressed through the amendment of legislation, but that was a different matter. He suggested that another meeting be held around mid-2022.

Mr Marais suggested that the meeting be early next year, because it was important to have the discussion.

The Deputy Minister responded by saying that once the PTT had completed the report on work streams, it would be presented to the Committee.

The Chairperson thanked the DMV and Deputy Minister, and excused them from the meeting.

Committee matters

The Chairperson read a letter that he had received from the Department stating that they would not be present for the upcoming meeting because of commitments, and were asking if it was possible to have a closed meeting with the Committee.

Mr Marais raised his discomfort with the letter, and said that the same excuses had been used before. They must have the meeting because the Committee must be briefed on the funding issues and models of the Committee. He suggested that the Committee should go to Pretoria for a closed meeting with the Department as soon as possible. He dismissed the suggestion of postponing the meeting, because the Committee played an oversight role which gave them powers to direct conversations, and the Department had to attend the meeting since there was no justification to postpone it.

The Chairperson asked the Committee Secretary to check if it was possible for the Committee to schedule a meeting with the Department in Pretoria early next year.

He responded by saying that there was a process to be followed, and they needed to seek the approval of the Chair of the House.

The Committee agreed to reschedule the meeting to early next year.

Consideration and adoption of minutes

The minutes of 17 and 24 November 2021 were adopted.

The meeting was adjourned.

 

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