EXPLAINER | How Maumela syndicate used 14 companies to ‘loot’ Tembisa Hospital

Expired tax certificates, tampered-with B-BBEE documents and cover quoting were allegedly used by 14 companies linked to tender tycoon Hangwani Maumela to milk Tembisa Hospital of millions of rand.

The companies identified are either linked directly to him or his family, and proceeds were used to purchase multiple luxury homes and sports cars.

This is information contained in the National Prosecuting Authority’s (NPA’s) application for the forfeiture of Maumela’s assets, which was granted on Monday.

According to the affidavit compiled by deputy director of public prosecutions Wendy Lisa Da Silva, the Treasury had appointed Morar Incorporated to conduct a forensic investigation into the allegations of fraud and corruption at Tembisa Hospital.

The company reviewed the hospital’s central database, Basic Accounting System (BAS), and all other related procurement documents and data from the hospital. They identified role players within the syndicate and conducted financial flow analyses covering the period from January 2019 to August 2022.

The BAS showed all the payments to each syndicate company, the bank accounts and the amount paid to each account.

According to Da Silva, the report found that the 14 companies were involved in orchestrating widespread contraventions of the procurement process at Tembisa hospital.

“Hangwani Maumela and other members of the Maumela family are/were directors of the syndicate companies. There were instances in which crucial details of companies’ directorships were fraudulently misdeclared by the syndicate companies,” Da Silva said.

“The payments were purportedly for the supply of goods including medical equipment. The payments were just below the R500,000 threshold,” the affidavit reads.

“The syndicate companies were frequently awarded purchase orders and the frequency of these purchase orders suggested that these services should have been acquired through the competitive bidding process instead of the quotation process. The splitting of the orders to the values of less than R500,000 was clearly a scheme utilised to avoid the competitive bidding process.”

Documents such as the B-BBEE certificates and tax compliance certificates (TCCs) uploaded on the hospital’s central database by, or on behalf of, the syndicate companies, were fraudulent.

“In instances, B-BBEE certificates that were submitted had either expired or had been post-dated, reflecting an issue date in the future. There were also instances in which the TCCs that were submitted had expired or were postdated at the time of the RFQ closing date.”

Morar found that the documents submitted by the syndicate were tampered with and forged.

The syndicate abused the cover quoting system, which is an illegal practice in procurement where multiple “competing” bids are submitted in collusion to create the appearance of a fair, competitive process while ensuring a specific preferred supplier wins the contract.

“These cover quotations were captured in order to legitimise the process. The amounts submitted by the ‘cover quoting companies’ were always higher than the amount quoted by the syndicate company …. The syndicate companies were almost always successful with their quotations and were regularly selected/appointed over the cover-quoting companies,” read the affidavit.

Certain entities who participated in the scheme received kickbacks from the syndicate companies. In some instances, syndicate companies also cover-quoted for each other.

“In other instances, quotes that were submitted ostensibly by competitive bidders were found to be fraudulent.”

Morar also found that funds received from Tembisa Hospital were mainly used for the purchase of immovable properties, luxury vehicles, payments to attorneys, transfers between the syndicate companies and other companies associated with the syndicate, payments to the Maumela Family Trust and family members for their personal use to fund their extravagant lifestyle.

“Although no direct transfer of monies from the entities to the officials was detected, analysis of their bank records indicates in excess of R10m received by them in addition to their salary receipts.

The report also states that Maumela and/or the members of the syndicate could not have managed the kind of elaborate scheme without collusion with officials in the procurement and finance departments of Tembisa Hospital and the department of health.

“According to the financial analysis report, the activity on the bank accounts of the syndicate companies does not reflect ordinary business-related transactions indicative of companies that are trading in the normal course.”

National Prosecuting Authority spokesperson Kaizer Kganyago said the money that will be accumulated from the auctioning of Maumela’s assets will be channelled to the Gauteng department of health.

Sowetan