The Special Tribunal responsible for recouping state funds lost to corruption has reviewed and set aside a R113 million personal protective equipment (PPE) contract that the Gauteng Department of Health unlawfully awarded to a private company during the COVID-19 pandemic.
South Africa’s anti-corruption watchdog, the Special Investigating Unit (SIU), took the matter to the tribunal after uncovering evidence that the department flouted procurement regulations when it allocated the funds to LNG Scientific (PTY) in April 2020.
According to the SIU papers, LNG was awarded the contract despite late registration on the department’s central supplier database.
The President of the tribunal, Judge Lebogang Modiba, noted that LNG did not file formal arguments against the allegations, prompting the SIU to request a default judgment in their favor.
LNG, on the other hand, argued that the court proceedings were procedurally unfair. They claimed ongoing appeals regarding the case documents and insisted that court directives should automatically suspend the SIU’s request for a default judgment.
Their failed case hinged on two key legal questions: automatic suspension and default judgment. The questions included whether an ongoing appeal automatically suspends all further proceedings, including the SIU’s request for a default judgment, and whether it was appropriate for the tribunal to grant a default judgment against LNG given their current legal actions.
Judge Modiba sided with the SIU on both points. She ruled that the appeals don’t automatically halt all proceedings and that the SIU’s request for a default judgment is valid given LNG’s lack of formal defense.
“The Special Investigating Unit welcomes the order of the Special Tribunal, which declared a R113,250,000.00 personal protective equipment contract awarded to LNG by the Gauteng Department of Health as invalid and unlawful. In a default judgment handed down on 7 February, 2024, the Tribunal ordered that LNG be divested of all profits enjoyed under the invalid contract.
“LNG was ordered to submit audited statements within 30 days setting out its income and expenses in relation to the PPE items it delivered to the Gauteng health department pursuant to the impugned contract, supported by expert reports. LNG was also ordered to pay the legal costs of the application and SIU. The SIU was ordered to file an expert report on the reasonableness of the income and expenses set out in LNG statements,” said SIU spokesperson Kaizer Kganyago.
Kganyago explained that on April 24, 2020, the then Chief Financial Officer of the Gauteng Health Department took a decision to procure 500,000 N95 masks at R55,50 each, 1,000,000 three-ply surgical masks at R18.00 each, and 250,000 boxes of 100 sterile, powder-free surgical gloves at R270 per box.
“An SIU investigation into the affairs of the Gauteng Health Department has found that the competitive bidding process was not followed, and deviation from this process was not duly approved, and the contracted prices were high. Furthermore, the SIU found that LNG was not registered on the government’s Central Supplier Database for the supply of PPE when it was awarded the multimillion-rand contract,” stated Kganyago.
