24 July 2024 | 06:06 AM

Tembisa Hospital to Masakhane: How Gauteng Health’s procurement failures cleared the way for a “bid-rigging” businessman

Key Takeaways

  • Johannesburg businessman Paul Mojalefa Mokoena, previously linked to irregular contracts at Tembisa Hospital, is now alleged to be involved in bid-rigging at the Gauteng Department of Health’s Masakhane Cook-Freeze and Laundry facility.
  • Mokoena’s companies, as well as those linked to him through family and associates, repeatedly applied for the same contracts engaging in what appears to be cover-quoting.
  • Amabhungane found repeated instances of apparent bid manipulation involving Mokoena’s companies and related businesses, highlighting the weak controls in Gauteng Health’s procurement processes, which have helped cement allegedly inflated “market prices”.

A Johannesburg businessman whose companies were flagged as seeming beneficiaries of irregular contracts at the infamous Tembisa Hospital appears to have been engaged in similar suspicious behaviour at another Gauteng health institution.

An investigation by amaBhungane has revealed that in addition to possible fraud at Tembisa, Paul Mojalefa Mokoena was seemingly engaged in repeated bid manipulation at the Gauteng Department of Health’s Masakhane Cook-Freeze and Laundry factory.

Masakhane is the same entity where alleged tender-rigging had, between 2016 and 2020, led to allegedly inflated prices for plastic food containers that facilitated “kickbacks” of R8-million for senior officials, as reported by amaBhungane here.

Mokoena was thrust into the limelight in late 2022 when the Special Investigations Unit (SIU) released a preliminary report looking at possible fraudulent suppliers and transactions at Tembisa Hospital, transactions flagged by the slain whistle-blower Babita Deokaran.

Weeks ahead of her murder, Deokaran prepared a report regarding hundreds of possible fraudulent payments made to over 200 service providers at Tembisa.

Among the multitude were four of Mokoena’s companies: Fairg Holdings, Oneall Distributors, Shiloba Holdings and Meiday Trading and Projects.

Mokoena was not named as a director of those companies in the SIU’s report.

However, the News24 Investigations unit would later reveal his identity by scrutinising a single R495 000 contract to supply the hospital with chicken pieces, a contract awarded to Fairg Holdings through a process which the SIU found wholly irregular. 

Fairg Holdings was awarded the contract even though the company “did not meet the RFQ [request for quotations] requirements” and had “provided the [department] with false information in respect of the current and correct director details and in doing so has possibly committed fraud”, according to the SIU’s findings. 

The SIU recommended that the company be referred to the NPA for possible prosecution.

That was Tembisa.

AmaBhungane has obtained copies of several bid documents about further contracts awarded to companies either directly or indirectly linked to Mokoena, this time by Masakhane, which falls under the Special Projects unit at Gauteng Health.

The documents include purchase requests, quotations and orders largely for plastic containers used to package frozen meals that Masakhane in turn supplies to six hospitals and 17 healthcare institutions across Gauteng.

Undercover?

The documents reveal that, at different times, different companies belonging to or linked to Mokoena through family and associates would apply for contracts at the same time in what could be interpreted as cover-quoting.

Cover-quoting is when two or more companies collude to submit bids for the same contracts in order to ensure that a particular company is appointed. On the surface this can come across as genuine competition.

The seven contracts evaluated by Amabhungane were all valued under the R500 000 threshold for public tenders and could instead be concluded using the request for quotation (RFQ) proces which is based on invitations to already accredited suppliers, further compounding the lack of competition.

Although the contracts are relatively small in value, they reveal how the same alleged bid-rigging practices can be constantly recycled without detection, even in the seemingly most obvious cases.

The earliest purchase requests reviewed by amaBhungane, which were also on the face of it the most obvious examples of possible collusion and cover-quoting, are from November 2019.

The concurrent purchase requests were for the supply of computers – one contract for five laptops and a separate contract for 16 desktop computers.

In both instances the same three companies responded, namely Mafahla Logistics and Projects, Bitbest Investment and Oneall Distributors.

All three companies were owned by Mokoena and even though there was straightforward evidence of his involvement in at least two of the companies’ application documents, this was somehow missed by the bid adjudication committee members.

The contract for five laptops was awarded to Mafahla who submitted a R27 000 quote for the devices, which was significantly lower than the R63 750 quote put forward by Bitbest or the R65 000 quote from Oneall.

Oneall was however awarded the contract to supply the 16 computers at a cost of R307 000. In this instance Mafahla’s quote of R360 000 was the highest followed by Bitbest’s R336 000.

It’s clear from the bidding documents submitted by Mafahla that the company is owned by Mokoena who is its sole director.

It should however not have been hard to spot that Mokoena was at the same time tied at least one of the “competitors”, Oneall.

Oneall’s bid application is signed and submitted by Vukani Sibeko who identifies himself as a “member” of the company.

However, company registration information reveals that Mokoena was appointed as the sole director of Oneall in April 2019, six months before the RFQ was issued, replacing a man called Eric Mthai.

The change in Oneall’s directorship was however not updated in the company’s profile on National Treasury’s Central Supplier Database (CSD); Mthai was still listed as the director six months later.

If that was not enough to demonstrate Mokoena’s hand at play, the same email address Mokoena used in Mafahla’s bid documents could also be found in Oneall’s CSD profile.

On the other hand, Bitbest’s connection to Mokoena is a little harder to discern, or at least it was in 2019 when the computer contracts were awarded. Mokoena was appointed as the company’s sole director long afterwards in November 2022 according to company registration records.

At the time of the computer bidding, Tshepo Mei was correctly listed as the company’s director on CSD.

But even at that time serious inconsistencias could be found in the company’s declaration document – inconsistencies that once again lead to Mokoena’s door.

All the returnable documents submitted by Bitbest appear to have been signed by Mei using his first name but other documents were supposedly filled in by a Joseph Seloane as a “member” of the company while still using the same signature.

Seloane told AmaBhungane that he was only an employee at Bitbest and claimed that he was responsible for filling in and signing the company’s bid documents.

More importantly, Seloane said that Mokoena, not him or Mei, has “always been the owner” of Bitbest but he would not be drawn to answer questions about why three of his boss’ companies had submitted quotations for the same contracts.

Amabhungane has found that Tshepo Mei, who was a 21-year-old at the time, is the son of Anastacia Mei who is a former director in two further companies that are now controlled by Mokoena.

All of the above suggests that when these three companies bid for the same contracts Mokoena was the declared owner of one, the sole director of another and the seemingly undeclared owner of the third.

Containers

More recent contracts studied by amaBhungane, where the possible collusion was less transparent, still typically involved one company owned by Mokoena bidding against supposedly independent rivals that had links to Mokoena either through his daughter, associates or business partners.

In March 2022 four companies submitted bids to supply Masakhane with 60 000 food containers.

In a situation similar to the computer contracts, an analysis of the bidders by amaBhungane found that at least three of the four companies which responded to the call for quotations had links to Mokoena. 

After reviewing the quotations submitted by all four companies, members of the bid adjudication committee (BAC) recommended that the R477 000 contract be awarded to Mokoena’s Mafahla Group.

The next month, in April, Masakhane issued another purchase request for 60 000 containers and again Mafahla was awarded the contract this time beating four other bidders with a quote of R453 000.

Interestingly, the two “rival” companies which amaBhungane has been able to link to Mokoena kept their prices exactly the same in each bid.

For 60 000 containers, Tobetsa Trading submitted quotes valued at R495 000 and Talita Collection’s quote in both cases was R499 800.

Mokoena’s links to these two “competitors” can be discerned by way of company records, social media and dodgy paperwork.

Tobetsa’s director, David Motaung, is linked to Mokoena through another company called Freegift Projects. Mokoena was appointed as the director of Freegift Projects on the same day that Motaung resigned in March 2019. This suggests that they are, in a different context, business associates.

With the other losing competitor, Talita, there are a number of points of contact.

Social media searches reveal that the company’s sole director had previously been Thalitha Dlamini who is Facebook friends with Mokoena in two of the accounts that are linked to her on the social media website.

Dlamini, who works as a nurse for the state, resigned as the company’s sole director in 2021 and was replaced by her nephew Samuel Mashishi before the bids in question.

When amaBhungane tracked Mashishi down at his home in a small village in the North West he claimed that he has never heard of the company while acknowledging that Dlamini was his aunt.

It is also noteworthy that Talita had bid against Mokoena in the past under suspicious circumstances.

It was one of the rival bidders in the chicken pieces contract featured in the SIU’s Tembisa Hospital report – the contract that went to Mokoena’s Fairg Holdings.

Regarding Talita’s documents, the SIU found that the dates on the bid documents were altered to the same date as the winning bidder, Mokoena’s Fairg Holdings. This is suggestive of collusion.

When Talita bid against Mokoena for the plastic container contracts at Masakhane its documents again contained seemingly tell-tale inconsistencies where bid dates do not correlate with the submission dates and appear to be altered or partially complete. This raises the question of whether they were boilerplate cover quotes.

After the March and April contracts won by Mafahla (with Talita submitting identical losing bids) Masakhane issued more calls for quotations in May and July 2022.

These were for dual film cling-wrap and more containers respectively.

Talita would once again bid for both contracts – and once again lose against Mokoena companies.

In the dual film bidding Talita was joined by another losing bidder called Sentebale99 which amaBhungane established is owned by Mokoena’s daughter Itumeleng Mokoena.

The winner: Mokoena’s Bitbest, once again signalling potential cover-quoting by friends and family.

Following the process

Asked to explain, Mokoena told amaBhungane to direct our questions to the department and Masakhane.

Mokoena maintained that he followed the bidding processes of the department and “if the documents were not fine, they (department) were supposed to return them to me.” 

“I don’t force anyone to give me a job,” Mokoena added.

Questions sent to the department’s media team and spokesperson Motalatale Modiba were not answered despite Modiba stating that the media team would “process” our request.

Attempts to get hold of Thalita’s Dlamini through calls, email and social media were unsuccessful. 

AmaBhungane also made a trip to her home in Tembisa but no one was at the house which also acts as Talita Collection’s registered business address.

Her nephew Mashishi told amaBhungane that Dlamini was his aunt, however, the man said he knew nothing about Talita Collection despite being listed as the company’s director.

“I don’t have a company,” said Mashishi. “I don’t remember being told anything about being appointed to join a company”.

When we showed him the bid submissions made under his name and using his identity number, Mashishi immediately said the signature on the documents was not his.

Mashishi showed us a letter he previously signed to prove that it did not match the signature on the documents.

“I don’t disagree that this is my aunt, but I don’t know what is happening here,” said Mashishi.

Malito

The May contract for containers was awarded to a company called Malito who beat Talita Collection and another contender called Seyakhuza with a bid of R492 160 for 64 000 units.

Seyakhuza is owned by 20-year-old Nkosinathi Shezi who is the company’s sole director.

While evaluating the company’s documents we found a similar mistake in Seyakhuza’s bid documents and those of Sentebale99 owned by Mokoena’s daughter. While filling out the local content declaration form, both companies state that they are replying to a bid issued by “Sebokeng Hospital”. 

Further, even though Seyakhuza was applying for a contract in May 2022, the company’s documents appear to have been repurposed from a December 2021 version.

Malito’s bid documents show one Victor Mohale as a director but the company records and the information on CSD list the director of Malito as none other than Mokoena.

Malito had 90 000 containers available which gave it an advantage against the other suppliers who would only get stock in six to 12 weeks or 14 days according to emails seen by amaBhungane.

Prices “too low”

Malito would go on to win another bid for 60 000 containers around the same time, this time charging R8 per unit as opposed to the R7.69 charged previously.

It’s not clear why Masakhane released two purchase requests for containers around the same time or whether both of these orders were processed.

However, an internal letter shows that the bid adjudication committee responsible for vetting the various applications was, counterintuitively, not happy with the unusually low bids received from Malito’s competitors E6 Trading and Logistics and Bonang Sechaba Solution.

The two company’s prices were significantly lower than the R8 per unit being charged by Malito.

E6 Trading’s per unit price was R2.50 while Bonang Sechaba came in at R4.99, with the companies’ bids totaling R150 000 and R299 400 respectively while Malito came in at R480 000. 

In a letter to Masakhane’s manager Matthews Ledwaba, the adjudication committee requested leave to appoint Malito instead of one of the other two cheaper companies.

In motivating for Malito, the committee alluded to concerns about the quality of the other suppliers’ products and whether they would be safe and maintain the quality of meals for patients.

“The supplier quoted upon the market price range which is R8,00 and the last two suppliers quoted R7.99, other one has quoted R7.80.”

The request was not approved, but flags the potential for lasting price distortion if previous bid manipulation had occurred.

Bas Medxpress’s shadow

A 2023 quote, obtained by amaBhungane, shows that one of the “approved” manufacturers who make the containers used by Masakhane sells the containers for R2,03 per unit where a batch of 64 000 containers would be R103 108.61.

But Masakhane buys these containers for a “market price” of between R7 and R8 from middlemen, almost up to 300% more than the wholesale price.

In a previous article we showed that BAS Medxpress (BAS Med), the company that previously had the tender to supply these containers, allegedly inflated its prices to make room for supposed kickbacks destined for three senior Gauteng Health officials.

Our April report revealed that the acting head of department Arnold Malotana and his colleagues Edgar Motha and Sherriff Lecholo were under investigation by the Directorate for Priority Crime Investigations (the Hawks) and the SIU after whistle-blowers separately filed allegations of tender-rigging and corruption against them.

The three officials were accused of fixing and grossly inflating the BAS Med plastic container tender to allegedly make room for kickbacks “of up to R8-million” for their alleged assistance.

Documents submitted to the Hawks by a whistle-blower with an intimate knowledge of the events shows that the company initially priced its containers at R7 excluding VAT but after negotiations with the department it was finally awarded the tender at a unit price of R6.84 including VAT.

This price was however far from being the most competitive, as the whistle-blowers’ documents suggested that prices were padded to pay “commission”.

These documents revealed that BAS Med was paying R2.05, VAT included, to manufacture the containers.

BAS Med’s 2016 contract, which would remain active for four years until April 2020 would seemingly cement the so-called “market price” that sees Masakhane still paying around 300% more than the cost price of these containers.

This highlights the lack of rigour in Gauteng Health’s procurement processes in the wake of multiple scandals which have undermined service delivery in public health institutions and the pervasive role of middlemen.

Gauteng Health has repeatedly ignored questions about the progress of investigations into allegations against the three officials.

The Hawks told amaBhungane that their investigation was “still ongoing”.

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Tebogo Tshwane

Tebogo joined amaBhungane in September 2020 after leaving Moneyweb where she worked as a financial reporter. Tebogo is a Journalism and Media Studies graduate from the University of Witwatersrand where she specialised in radio, which led her to the Eyewitness News newsroom as an intern in 2017.

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