In a matter of weeks, the directors of seven companies contracted to decontaminate Gauteng schools during last year's Covid lockdown blew through more than R40m in a spending spree that included designer watches, jewellery, luxury cars, plastic surgery, investment policies and paying off home loans.
This is according to the Special Investigating Unit (SIU), which wants the R63.5m paid to the companies back, claiming the contracts were awarded irregularly by senior Gauteng education officials.
It has frozen assets worth R40.7m, but the rest of the money has seemingly disappeared without trace.
A lawyer representing the companies, Siphile Buthelezi, denied his clients had done anything wrong, saying they were not fighting the preservation order "as it is not permanent".
"These are professionals and law-abiding citizens," Buthelezi said.
Central to the scandal is Durban businessman and HIV/Aids researcher Dr Sigwile Bright Mhlongo, whose four companies were paid the lion's share of the R63.5m. They received R41.6m in total.
Gauteng spent R431m on its classroom sanitisation programme last year. But the spending was largely unnecessary; in June last year, the department of health said "there is no need to deep clean or implement any other form of cleaning in areas that were unoccupied for more than seven days".
Mhlongo's companies that secured contracts are Insimu Projects, which was awarded a R13.9m contract; Insimu Consulting (R11.5m); Mangaliso Projects (R11.6m); and Insimu Medical Group (R4.6m).
His businesses are part of the Durban-based Insimu Foundation. Also scoring from the deal were Insimu Foundation co-directors Fikile Mpofana and Dr Njabulo Mabaso.
The Insimu Foundation owns Umlazi Private Hospital, Roodepoort Urogynae Hospital, a paramedic company, an agricultural foundation, medical equipment and linen manufacturing companies and Men's Sexual Health Clinics SA.
Mabaso is a co-director of Insimu Projects and Insimu Medical Group, and he and Mpofana share a residential address in Dainfern, according to company searches. Mpofana's companies, Fikile Mpofana and Lisondalo, which was registered in 2020, scored contracts worth R11.6m and R3.9m respectively.
Another of their associates, Lindokuhle Mkhize, landed a R6.7m contract through her company Zendalo, R2.3m of which she immediately transferred to Mhlongo, according to the SIU.
These are the first companies linked to the scandal to have their assets frozen. They are among 280 businesses that were allegedly irregularly awarded cleaning contracts during June and August last year by senior Gauteng education department (GDE) officials, in what the SIU says was a "haphazard" and "manifestly unlawful" manner. It claims contracts were approved via WhatsApp and telephone calls.
Affidavits filed by the SIU and Financial Intelligence Centre (FIC) in the Special Tribunal last week - which included extensive financial records - show the payments were for the cleaning of 237 schools.
SIU project manager John Neave says in an affidavit the investigation, which is still in progress, "revealed the procurement process was manifestly flawed and patently unlawful".
"On the face of it, it appears [the recipients] have been disposing of the funds with the intention of frustrating any claim that the SIU or the GDE may have to those funds."
The education department did not respond to questions about whether any of the schools or offices where Covid outbreaks occurred were actually cleaned.
The Special Tribunal last week granted the SIU a preservation order to seize the bank and investment accounts of Mpofana, Mhlongo, Mabaso and Mkhize and those of their seven businesses and the Shuphula and Madangu family trusts; also included were a Range Rover Sport, two Mercedes-Benz vans, a Haval H6 SUV and a Toyota Avanza.
But SIU spokesperson Kaizer Kganyago said only R40.7m had been recovered. He said after receiving payments, "the seven service providers began dissipating the funds".
"A portion of the funds were transferred to multiple beneficiaries who have, in turn, disposed of them."
The SIU documents show that on October 22 and 23 last year, 30-year-old Mpofana spent R399,000 on Baume & Mercier watches at RLG Africa jewellers; R190,800 on jewellery at Arthur Kaplan; and R4m for a Liberty Life investment policy. She also made a R2.8m deposit into her personal bank account.
The following month she went on another splurge, paying off a R750,000 home loan for her Dainfern View townhouse and paying R143,000 to Johannesburg plastic surgeon Dr Deon Weyers. She made a R1.7m payment to EB Motors Klerksdorp for a Mercedes-Benz V-Class van, which is registered in the name of the Shuphula Trust.
The bank balance of Mhlongo 's Mangaliso Projects, which was registered as a company in 2019, was R1,080.13 before the GDE paid it R11.6m.
Mhlongo's spending, according to the affidavits, included:
- R2.4m to Liberty Group for the reinstatement of investment policies;
- A R2.5m payment into a Liberty Group policy;
- R500,000 to the Madangu Family Trust;
- A R3.5m payment into an Investec Wealth and Investment account;
- R1.4m to EB Motors Klerksdorp for a Mercedes-Benz V-Class van; and
- R775,037 for a Range Rover Sport from a dealership in Hillcrest, KwaZulu-Natal.
Kganyago said the GDE obtained a deviation under Treasury regulations to conduct the procurement process without inviting competitive bids.
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"The request for the deviation expressly stated that the department would appoint accredited service providers from the CSD [central supplier database].
"The investigation revealed that the department failed to comply with the express requirement of the deviation. The vast majority of service providers appointed were not accredited and not on the CSD."
Kganyago said the investigation showed the procurement process was not cost effective.
"The service providers were not paid per square metre of the area cleaned. Rather, a senior official in the department appears to have arbitrarily decided to offer fees which bear no relation to the work done by service providers or the cost of material used."
Contacted by the Sunday Times, Mpofana, Mabaso, Mhlongo and Mkhize referred questions to their lawyer, Buthelezi, who said his clients were registered government suppliers.
• R431m - The total amount Gauteng spent on decontaminating schools in 2020
• R2.95m - The total amount the Western Cape spent on decontaminating schools in 2020
— In Numbers
"The deviation order was properly done. The SIU says there was a problem with the CSD. All of my clients are on the CSD, which we can prove."
He said payments could only be made by government entities if there were no issues with the CSD.
"Our clients were paid for the work which they did. Each school signed off on the work done and submitted these to the department. That is how my clients were paid."
Buthelezi said his clients had worked for the health department before.
"We will defend against the SIU's attempt to have the tenders set aside because my clients fully complied with the tenders' conditions."
GDE spokesperson Steve Mabona said the department had not received the SIU's report. "We are reluctant to run a parallel commentary until the report is presented to the MEC and department."
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