KZN Health Dept in unhealthy deals


An amoral Compass. 

KZN Department of Health in hot water again after evidence of unconstitutional contracts and dealings.

The KwaZulu-Natal Department of Health is no stranger to chaos.

Its history is replete with tales of corruption, maladministration, a lack of consistent leadership, costly litigation due to staff negligence, collapsing infrastructure and poor service delivery. 

Many examples of such stories can be found on Noseweek’s website, www.noseweek.co.za.

A noticeably large swath of the troubles took place under the former MEC for Health, Dr Sibongiseni Dhlomo, now an MP tasked with the responsibility of ushering the controversial National Health Insurance Bill through Parliament.

Dr Sibongiseni Dhlomo, former KZN MEC, now MP, who is ushering the National Health Insurance Bill through Parliament...You must be joking!

His record as MEC in KwaZulu-Natal should worry most South Africans. It is littered with poor financial audits, accusations of nepotism, poor handling of the disaster in the oncology department and documentary evidence that showed clear political interference in a Health Care Risk Waste (HCRW) services contract.

However, Dhlomo is a member of the ANC’s Teflon Club and instead of being sanctioned, he was promoted to the portfolio chairperson of Health after the May 2019 general election.

Just a month after his departure to Cape Town the department’s Supply Chain Management Unit was disbanded due to corruption and placed under the control of the provincial Treasury.
 
But it is his last major act as KZN Health MEC for which he is now being dragged to court and which is expected to expose, yet again, how poorly the department was led.

The matter to be argued is simple: did the department commit a crime in order to fix another crime that was a result of its inability to carry out its duties – which in a sense is also crime?

Dhlomo had wanted to remove Compass Medical Waste, the Westville company that had run the provincial government’s medical waste contract since 2000. 

Eventually on 31 March 2019, his department’s acting head, Dr Musa Gumede, had a letter hand-delivered to Compass’s offices in Westville, Durban, telling them their contract would be terminated in 30 days. Compass tried to interdict the termination. 

But Pietermaritzburg High Court Judge Jerome Mnguni ruled on 29 April 2019 that their contract, which  had been repeatedly extended over 16 years on a month-to-month basis, was “irregular and unlawful” and that both Compass and the department’s role in rolling over the contract for such a long period went against the Constitution and “should be frowned upon”.
 
Compass had been operating the contact on a month-to-month basis since November 2003. The company claims this was no fault of theirs as the department had tried to put the tender out on at least six occasions but failed to follow through and make an award except for once in November 2013, where the Bid Adjudication Committee pronounced Compass to be the winner.

The KZN health department’s then CFO Enos Ravhura informed Compass of the award but hours later received an SMS from Dhlomo which said he was “shocked that this can happen with the ANC in power”. He instructed Ravhura to “withdraw the award,” which he did.

This SMS forms part of a labour dispute between Ravhura and the department. Eventually the department was instructed by the National Treasury to award the contract to Compass, but the parties could not agree on the service level agreement and litigation followed. In the meantime, Compass resumed operating the contract on the decade-old month-to-month contract.
 
A week after the failed interdict application, Dhlomo’s department released a statement congratulating the “100% Black-owned consortium”  led by Buhle Waste Services, citing it as “one of the biggest and shining examples of radical economic transformation”. The statement said the consortium replaced “a single, white-owned monopolistic waste management company”.
 
Ironically Compass is a Level 2 BBBEE contributor opposed to Buhle’s Level 3. Furthermore, while it is true that Compass was the sole provider of services in KwaZulu-Natal for 16 years, Buhle has the largest slice in the South African medical waste disposal pie, currently operating state waste management contracts in Limpopo, Mpumalanga, Gauteng (multiple vendors), the Free State, and now KwaZulu-Natal.

The provincial health department removed the contract from Compass via the National Treasury Regulation 16A6.6 which states that an accounting officer “may participate in any contract arranged by means of a competitive bidding process by any other organ of state”.

They piggybacked on a contract signed by the Mpumalanga Department of Health whose service provider was and still is Buhle. But the Mpumalanga contract was itself irregular and therefore illegal if one is to read Mnguni’s April 2019 judgment again, having expired in November 2018 and operated on a month-to-month basis ever since.
 
Compass wants the decision to award Buhle the KZN contract reviewed by the Pietermaritzburg High Court. It is set down for 7 February this year. They hope this review application will force the department to make public the pricing structure of its contract with Buhle, which it believes will vindicate their belief that the prices are inflated. 

There is a lot of money on the line. KwaZulu-Natal’s government health services generate up to 450 tonnes of waste per month. Depending on whose rate one believes, that is anything between R5-10 million per month for the service provider, excluding other income streams such as dealing with soiled linen.

According to an affidavit by Compass’s MD Ian du Randt, the entire affair was a hit-job designed to remove Compass at all costs, even if it was done illegally. 

He claims the cost of the contract cannot be ignored, claiming Compass would have charged the department R11.17 per kg of waste removed and disposed of, as opposed to Buhle’s R23.88 per kg.

“It is irrational to view the contract with Compass as irregular on one hand but to consider it appropriate to participate in the expired Mpumalanga contract with Buhle,”  said du Randt.

The KZN Department of Health will argue that, while all illegal contracts are borne equally, some are more illegal than others.
 
In its contradictory affidavit by legal director Willie Mkasi, Mkasi cries foul of Compass pointing out the irregular Mpumalanga contract and stating that they themselves had “enjoyed such indulgences to its advantage previously.” (So it is someone else’s turn at the trough? – Ed.)

However, in another sentence, he said that the department had considered partnering with the Free State contract but chose against it as it, too, had expired and was operating on a month-to-month basis.

Mkasi claims the review application is nothing more than “sour grapes” by Compass who is accused of using the court to fight an unrelated tender it lost in Mpumalanga several years earlier.

In its court papers, Buhle put the blame at Compass’s door, saying they should have “encouraged the department to comply with its own procurement obligations” instead of rolling over the contract for 16 years.

Meantime, in December 2019 the KZN Department of Health called for submissions for the province’s medical waste tender – which begs the question: why did the department go to such lengths to remove Compass by April 2019 when they planned to go out to tender just seven months later?

Was it because there was an election? Is the hidden hand of politics at play or was it simply sour grapes?

Footnote: In January the KwaZulu-Natal Democratic Alliance laid charges against former officials in the KZN health department and the former MEC Dr Sibongiseni Dhlomo for their alleged roles in a multi-million-rand tender fraud.

The charges were laid on the strength of a recently released Public Protector report which found that in 2012 the department’s then-HOD Sibongile Zungu, then-CFO Mashaka Ravhura and the Bid Adjudication Committee signed off on a tender that was four times the price of its nearest competitor. The tender was for the provision of four mobile hospitals, to be paid over 26 months, at a cost of R1.4m per month – a total of R37m. In March 2016 the winning bidder, Mzansi Life, successfully billed the department for R31m.

The Public Protector found however that only two mobile units had been delivered and neither were functional by September 2017.

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