Auditor-General slams Gauteng misspending on Covid-19 that should have been used to save lives

Auditor-General Tsakane Maluleke has slammed a host of irregularities in the Gauteng provincial government’s spending on Covid-19 activities.

This highlights how misspent money could have been used to save lives as Gauteng public hospitals now struggle to treat a flood of Covid-19 patients.

Special Reports from the A-G’s office were recently tabled in the Gauteng Legislature and included the following findings:

  1. 23 unlisted suppliers were used to procure PPE amounting to R862.5 million.2. 300 000 K95 medical masks were ordered, but KN95 non-medical masks were delivered instead.3. R127 million worth of PPEs were ordered but not received by the Gauteng Health Department.

    4. There were 22 instances where PPE contracts were awarded to suppliers with no previous history of supplying PPE, the total value being R442 million.

    5. There were 6 instances where prices were paid in excess of Treasury regulations, with a potential loss of R182 million because of overpricing.

With regard to the NASREC field hospital which cost more than R260 million, the A-G said that payments of R22.5 million were made to the supplier outside the agreed terms in the signed contract. The Department paid for the purchase of items that were leased by the supplier, and did not invite as many suppliers as possible, with no prior approval from Treasury.

With regard to the refurbishment of the Anglo Ashanti mine hospital, the A-G says:
“There were 6 instances where emergency procurement awards amounting to R495 million were not reported to the provincial treasury within the required 30 days.”

According to the A-G, the root cause of all this malfeasance is the tone and culture at the top, which led to “a breakdown in the organisational level controls to enable an ethical and effective control culture, including leadership effectiveness and conduct.”

This is a devastating indictment of Premier David Makhura who has presided over all these irregularities without taking any accountability for his failure to prevent them.

The problem has not been a shortage of money but it has been spent poorly instead of properly preparing health facilities for the expected third wave of Covid-19 cases.

Going forward, we can do so much better as shown by the Western Cape Health Department which gets a clean audit every year and has better served patients affected by the Covid-19 epidemic.

 

 

Only 238 oxygen-needing patients at NASREC field hospital

Only 238 patients at the NASREC field hospital required oxygen treatment, but R216 million was spent on this 1000-bed facility from 1 April 2019 to its closure at the end of February this year.

This was revealed today by Health MEC Nomathemba Mokgethi in an oral reply to my questions at a virtual sitting today of the Gauteng Legislature.

This is a huge amount of money spent on a small number of patients who needed oxygen treatment for Covid-19, rather than the larger number of patients in quarantine or isolation at NASREC who could have been put up at much less cost at a hotel.

Field hospitals should ideally only be in use for less serious patients at the peaks of epidemics when other hospitals cannot cope with the volume of patients.

For a long time period the 1000 beds at NASREC were mostly empty of patients who required actual treatment rather than quarantine or isolation.

The Auditor-General has found that their irregularities in the choice of the NASREC facility to use as a field hospital. According to the Auditor-General “the department did not invite as many suppliers as possible and there was no prior approval from the relevant treasury for the emergency procurement of the NASREC Field Hospital as required by treasury regulation.”

Mokgethi said that an investigation would be conducted to determine the culpability for the irregularities in the choice of NASREC as a field hospital.

This investigation should also probe if there was any corruption in spending so much for empty beds at this field hospital.

The R216 million could have been spent more effectively in enhancing facilities at existing hospitals for COVID-19 patients.

NASREC Field Hospital cost R150 000 per patient

The Democratic Alliance notes the announcement last week by Gauteng Health MEC Nomathemba Mokgethi that the NASREC field hospital will be closed at the end of February as it is no longer needed.

According to Mokgethi, the field hospital only treated 287 intermediate level patients since it was opened despite a contract for 1000 beds that was signed in July last year.

This is separate from the 500-bed section at NASREC that saw 1254 Covid-19 patients who were there for isolation, and 117 people who were in quarantine but did not necessarily have the virus. These people could all have been given much cheaper hotel accommodation.

The overall cost of the NASREC beds is about R250 million, so this means that each person there effectively cost the provincial government R150 000 as they paid R380 per bed a day even when it was empty, and R390 per patient per day when occupied. It was even more expensive for the few actual patients who needed oxygen.

This has been an enormous waste of money and I suspect that there was corruption and gross overcharging. It is worrying that the

Auditor-General found that “the department did not invite as many suppliers as possible and there was no prior approval from the relevant treasury for the emergency procurement of the NASREC Field Hospital as required by treasury regulation.”

It is also suspicious that the Gauteng Department of Infrastructure Development has refused to make public the contract with NASREC my application to them using the Promotion of Access to Information Act.

The NASREC facility could have been closed even earlier if the extra beds at existing hospitals had been completed by November last year as promised by Premier David Makhura.

The premier cannot claim ignorance of the low utilisation of the NASREC field hospital as this is where his Provincial Command Council meets regularly.

It is yet another failure by Makhura which justifies our motion of no confidence in him as he is not fit to govern.

R380 000 a day for empty beds at Nasrec field hospital

Only 34 patients have been admitted to the 1000-bed NASREC field hospital so far this month, but R380 a day is being paid for each empty bed.

Acting Gauteng Health MEC Jacob Mamabolo revealed this yesterday in an oral reply to my questions at a virtual sitting of the Gauteng Legislature.

According to Mamabolo, there is a fixed cost per bed of R380 a day, and R390 a day for each patient.

This means that about R380 000 a day is being paid for 1000 empty beds in terms of a 6 month contract with the Johannesburg Expo Centre. The contract expires on 31 Januarynext year so the last three months of the contract is likely to cost more than R32 million.

This is extremely wasteful and cannot be justified even if we had a second wave of COVID-19 infections as fewer than 10% of the NASREC beds were used at the peak of the epidemic in July.

It would be far better to contract with private hospitals to take public patients if state hospitals ever overflow with COVID-19 patients.

I have requested the Auditor-General to investigate the NASREC contract which I suspect contravenes good practice and is possibly corrupt.

Gauteng Health pays millions for empty beds at Nasrec

Only 26 COVID-19 patients have been treated at the 1000-bed NASREC field hospital since 1 September, but the Gauteng Health Department is paying to keep it open until 31 January next year at a potential total cost of R256 million.

This was revealed yesterday by Acting Gauteng Health MEC Jacob Mamabolo in an oral reply to my questions at a virtual sitting of the Gauteng Legislature.

According to Mamabolo, R58.1 million was paid by the end of August for the 500 bed quarantine and isolation facility at NASREC, and R69.3 million for the 1000 bed step-down hospital facility. This is really exorbitant as only 604 people were quarantined or isolated, and only 96 patients were treated there for this period. It amounts to R96 000 paid for each quarantined/isolated person, and R720 000 for each patient treated at the field hospital.

Mamabolo says that the Department is paying for the 1000-bed facility to ensure that there is capacity for a possible second wave of infections or a spike over the December holiday period. The projected total cost was originally R350 million but the projection is now between R157 million and R256 million for all costs inclusive of assets to be recovered.

This is hugely wasteful expenditure. There were clear signs after the initial alarmist projections that the COVID-19 epidemic would peak in July rather than in August/September as was originally expected. There was no scenario that infections would be surging in January next year, yet a 6 month contract for 1000 beds was signed on 1 August with the Joburg Expo Centre which runs NASREC.

We are paying for hundreds of empty beds at NASREC until January next year even though fewer than 10% of these beds were used at the peak of the epidemic in Gauteng. A field hospital is meant to be set up and taken down in a few weeks to cope with the peak of an epidemic, rather than kept open for an extended period at great expense.

Premier David Makhura has not replied to my request for the contract with Joburg Expo Centre to be made public, so I have made an application in terms of the Promotion of Access to Information Act for this contract to be revealed.

We need to know why this contract is kept secret and whether there is any corruption in the sub-contracts that have been awarded for the NASREC facility.

DA gives Gauteng Premier 24 hours to reveal NASREC field hospital contract

Suspended Gauteng Health MEC Bandile Masuku threatened me last week with legal action if I did not retract within 24 hours my statement on the exorbitant costs of the NASREC field hospital.

I stand by the figures I gave – about R350 million spent on only 700 patients – as they were from official sources, but we need to know far more about the secret contract that was signed with the Johannesburg Expo Centre (JEC) which manages the NASREC facility.

This contract was signed in July and apparently runs from 1 August to 31 January next year. It was signed by Richard Makhumisani, the head of the Department of Infrastructure Development (DID), and Mkhululi Lukhele, the now-suspended head of the Gauteng Health Department.

DID MEC Tasneem Motara has written to the Chairperson of the Gauteng Legislature’s Health Committee in a letter dated 1 September that “The lease agreement is a confidential contractual document between the Department and the Service Provider.” She offers an arrangement to view the document at the Department’s offices but this will no doubt include confidentiality provisions as well.

It is unacceptable that this document is confidential as it deals with public money and any contracts awarded by the JEC to subcontractors should be done in a proper manner to obtain value for money. This includes contracts for security, catering, medical waste removal, furniture, back-up generators, and heating, ventilation and air-conditioning (HVAC).

 

Premier Makhura needs to confirm or deny whether the leasing contract with JEC includes the following:

 

  1. 1000 beds paid for at a tariff of R770 a day per bed for six months, which amounts to nearly R140 million, even if these beds are not filled with patients;

 

  1. A clause that does not allow for any refund of the above amount even if the agreement is cancelled;

 

  1. An infrastructure establishment fee of about R68 million for various furniture, HVAC and backup generators.

Masuku has defended the NASREC field hospital as a measure to ensure that beds were available for all COVID-19 patients if certain projections of the epidemic came true. But it was already evident from the Western Cape and the overseas experience that the worst projections were not happening and the epidemic in Gauteng was likely to peak in July rather than August/September as Masuku originally expected.

The real question is why a contract was signed so late into the epidemic and extending into next year, which was not predicted to be necessary by any serious modeling. Last month there were only about 21 patients at the NASREC facility which shows what a waste of money it has been.

I give notice to Premier Makhura that he has 24 hours to make the NASREC contract public, otherwise the DA will institute a Promotion of Access to Information (PAIA) application for this document.

Furthermore, the Auditor-General should scrutinize this contract to ensure that it is rational and legal in all respects, and the SIU should investigate whether all sub-contracts were properly awarded rather than given to connected people at rip-off prices.

Premier Makhura needs to show that the provincial government is not hiding anything and that all COVID-19 related contracts are investigated for possible corruption, including the NASREC deal.

 

R500 000 spent for each patient at NASREC field hospital

Only 700 patients have been admitted to the NASREC field hospital, which amounts to a cost of about R500 000 per patient.

According to a presentation made to the Gauteng Legislature’s Oversight Committee on the Premier’s Office and Legislature (OCPOL), the NASREC field hospital was commissioned on 15 June this year and has so far admitted 604 patients for quarantine and isolation, and 96 patients for intermediate care including oxygen.

The total bed capacity is 1500 but there were only 25 patients as at 28 August 2020.

The facility has cost about R350 million in total, which means that R500 000 has been spent on each patient.

This is a colossal waste of money caused by poor judgement and probable corruption as connected people benefited from large contracts.

The quarantine patients could easily have been accommodated at hotels, and private hospitals could have been paid to treat the 96 patients who required intermediate care.

Meanwhile, doctors at one stage had to appeal for oxygen to be donated to assist patients at NASREC.

The runaway costs of the NASREC facility are yet another reason why suspended Health MEC Bandile Masuku should be fired in addition to his failure to prevent the massive corruption in the PPE contracts.

Rip-off beds for Nasrec field hospital

The Gauteng health department spent R13 000 for each bed in the NASREC field hospital but could easily have bought them for less than half the price from other suppliers.

See here for a photo of the bed at NASREC and here for prices paid for these beds and other items.

According to a presentation to the Gauteng Legislature’s Health Committee, 1000 beds with mattresses were bought for R13 million, with each bed costing R13 000.

I have established that a fair price for this type of bed together with a mattress is about R5000.

This highlights yet again how the department is being ripped off by a poor and possibly corrupt choice of supplier, probably a middleman with an outrageous markup.

The total cost of equipment for the NASREC field hospital is R24.1 million, which is also likely to be about double what it should have cost. It includes, for instance, R18 000 spent on 40 wall clocks for R450 each.

I hope that the Special Investigating Unit (SIU) is investigating these contracts and the Competition Commission should also probe these prices and attempt to recover money from over-priced items.