Covid-19 procurement a crime scene, but does law enforcement have capacity?

Law enforcement agencies have lamented a lack of resources and capacity as matters related to Covid-19 tender impropriety and corruption pile up.

The Special Investigating Unit (SIU) is investigating over 650 allegations of Covid-19 fraud and corruption totalling R5 billion, and said that reports of more malfeasance continue to pour in. The South African Revenue Service (Sars) is currently profiling 307 cases, representing a revenue loss of about R300 million.

Work is underway, but there is a risk that it could be undermined without the requisite technical, forensic and investigative resources required to strengthen the capabilities of the structures that have been charged with investigating and prosecuting Covid-19 corruption. 

Fighting a losing battle 

Sars Commissioner Edward Kieswetter told the standing committee of public affairs (Scopa) on Friday that Sars had made a detailed submission to the inter-ministerial committee that will be supporting the Covid-19 tender corruption investigations for more resources. 

“This is not just resources for this particular issue but this will strengthen the overall capability of Sars.

“Unless we significantly boost the resources at Sars, particularly in technical investigative areas, then we are fighting a losing battle and I have to say that very transparently,” Kieswetter warned.

In addition to the 307 cases, the revenue service has received a request from the Free State government to assist with 300 personal protective equipment (PPE) cases where 139 companies have been identified for potential tax evasion. 

Kieswetter said Sars had found “all kinds of shenanigans” employed by firms that are non-compliant.

Examples include not declaring they had received PPE contracts, having outstanding tax returns, filing fraudulent or incorrect returns, and not being registered for value-added tax. 

He said a number of the companies that were successful in receiving PPE procurement contracts had no experience in the field prior to the pandemic, stating that Sars had determined that some of these firms are registered as pubs, car washes, estate agencies, bakeries, event management operations and IT companies. 

Read: SIU investigating R5bn worth of Covid-19 tenders

Kieswetter said 17 tenders valued at R1.2 billion involve politically-exposed people and account for 60% of the total R2 billion under investigation at Sars. 

He said Sars has received 12 cases from the multi-agency ‘fusion’ centre set up to investigate and prosecute PPE corruption. Nine of these, valued at R410 million, are at various levels of investigation. However, three cases with a combined value of R171 million had “not been touched” yet “because of resource constraints”.

Kieswetter told Scopa that a significant amount of work is involved. “The dial is beginning to move, and if we are supported by the additional resources then we can move even faster.”

He added: “You will know that the burden for tax matters is lower than the burden for criminal prosecution and we think it is the low-hanging fruit for us to begin to keep these scoundrels busy, but also for us to begin to recover some money.”

Recruitment drive

Head of the National Prosecuting Authority (NPA) Shamila Batohi echoed Kieswetter’s sentiments, saying that resources are one of the key challenges for law enforcement. 

Batohi said the NPA has been on a recruitment drive to resource the specialised commercial crimes unit and asset forfeiture unit to ensure that they are able to respond to the Covid-19 cases.

Acknowledging that the fiscus is currently constrained, Batohi said the issue of resources must first be addressed and this cannot be overemphasised, whether in the NPA, the South African Police Service or the Hawks.

Read: Government mulls revival of Scorpions-like agency

“We need the investigative agencies to be properly capacitated so that the cases can come through in a properly investigated, speedily investigated manner to the prosecution authorities and [others].”

She said the agencies would welcome any government assistance in developing “desperately needed” forensic and analytical capacity and capabilities within law enforcement agencies.

She said most of this work is outsourced at a fortune. 

“We have limited resources so the fusion centre is looking at prioritising high impact cases, because we certainly won’t be able to do all. But we need to send out a very strong message that law enforcement is in charge and the wheels of justice are indeed turning.”

Accounts frozen

On Friday the Special Tribunal announced that it had granted the SIU an order to freeze the bank accounts of 40 companies that have been implicated in irregular PPE procurement contracts in Gauteng.

The accounts held a total of R38.7 million. 

A firm named Ledla Structural Development, which the SIU has established to be a front company for Thandisizwe Diko’s Royal Bhaca Projects, is among the companies whose accounts have been frozen. 

The SIU said the company was awarded contracts by the Gauteng Department of Health for the supply of Covid-19 equipment, which it believes were “unlawfully, irregularly and corruptly awarded, and at prices which were grossly inflated way in excess of market-related prices.”

Ledla then channelled R38.7 million to different entities and individuals that the SIU has listed as respondents. 

Read: Treasury works to reduce ‘plundemic’ opportunities

The Gauteng Health Department’s former chief financial officer Mantsu Kabelo Lehloenya, who resigned in June, is also facing allegations of illegality, misconduct and acts of dishonesty.

The Government Employee Pension Fund (GEPF) has been interdicted from releasing Lehloenya’s pension benefits, pending the institution of civil litigation proceedings by the SIU.

Auditor-General (AG) Kimi Makwetu informed Parliament that the “amounts that have exchanged hands are nowhere near the size of the money that has been put aside”, as detailed in the government’s R500 billion economic support package. 

He said it is clear that some of the money “had not left the corridors of the National Treasury”.

“So no one is going to steal it until the National Treasury has given it to someone,” said Makwetu. 

He reiterated Batohi’s point that systems within the government have to be fortified in order to prevent corruption.

The AG said so far it has come across “disturbing” administrative efficiencies related to the transfer of money from state institutions and individuals. 

“We know that all of us rely on databases but if those databases are so unreliable to start with, it means that it opens up space for all sorts of abuse to happen to state resources,” Makwetu said.

“This idea that we will chase after it afterwards is very expensive. It is wrong. and it drives anxiety unnecessarily in many places.”