Fraudsters' paradise
The Eastern Cape health department has lost R1.4-billion to fraud, most of it discovered in the past three years.
The alleged rip-off artists range from an ambulance driver without a paramedic's licence to a former chief financial officer, who has been accused of siphoning off almost R7-million in payments to relatives.
A 55-page document in The Times's possession shows that about 23 221 of the health department's 56 000 employees were selling services and goods back to their employer.
But the health department has denied these allegations, saying about 9000 employees are listed on their supplier database, a fifth of all employees.
Thanks to the corruption-busting efforts of the health department's superintendent-general, Siva Pillay, more than 1000 staff were fired or "encouraged to resign" between 2010 and 2012.
But some of them were reinstated by the health MEC's appeals committee - including the unlicensed ambulance driver.
The evidence of systematic corruption, gathered over two years, was distributed at a special anti-corruption meeting of about 150 top government officials in Bhisho in December. Eastern Cape health MEC Sicelo Gqobana and Eastern Cape Premier Noxolo Kiviet were present.
According to the document seen by The Times, tracking down fraudulent staff helped the department recover R600-million of the stolen R1.4-billion.
But the health department, while admitting yesterday that millions had been stolen by staff, called the figure of R1.4-billion a "gross exaggeration".
Gqobana's office said it had "handed over several people to the police" and the superintendent-general, who spent two years chasing down corrupt employees, has left the department, declining to renew his contract, which expired in December.
Pillay, a family physician and qualified lawyer, was the crime-busting superintendent-general who made it his mission to rid the department of corrupt employees when he was appointed in 2010. With the help of auditors PricewaterhouseCoopers, he followed paper trails and scrutinised relationships between employees and service providers. What he found was corruption on a staggering scale.
Over the next two years Pillay fired or "encouraged" 1200 employees to resign for non-performance, theft or fraud. Some employees were so brazen that they made no attempt to conceal their wrongdoing.
The health department's internal investigation found that:
- Almost half its employees were "doing business" with their employer, sometimes creating fake companies run by their relatives, who cited stolen VAT numbers;
- A health department official stole a credit card off a corpse in a mortuary and spent R15000 while the dead man lay unidentified for seven days;
- 1939 service providers and suppliers of medical equipment had more than one bank account, enabling them to receive duplicate payments for the same service or product. More than R300-million was stolen in this way; and
Blank invoices stamped and approved by health department officials allowed companies, often bogus, to fill in whatever payment amount they thought they could get away with.
At the anti-corruption meeting, Pillay was heard telling the audience: "We complain about a shortage of skills but when it comes to corruption there is no skills shortage: people are ingenious."
Nepotism was rife in the health department, the internal report said, with senior officials funnelling millions to the businesses of family members.
The department's chief financial officer, Pumla Vazi, was fired by Pillay for gross misconduct in 2011. This was after auditors Price-waterhouseCoopers linked her to payments made to relatives' companies totalling almost R7-million.
In 2011, Vazi approached the Labour Court to stop a disciplinary inquiry into her conduct, but failed.
Two years later, on January 10, at an arbitration hearing, arbitration commissioner Mangisi Mrwebi ruled that Vazi's dismissal was fair. He found her guilty of 12 counts of gross misconduct.
At the hearing, former police officer and associate director of PricewaterhouseCoopers Gerald Sutton testified that Vazi did business with seven companies linked to relatives, including her husband.
Sutton stated that, between 2003 and 2009, Vazi paid R1.3-million into her husband's business, Jolyn Printers, while she was his bookkeeper. She sold 5000 hospital folders to him at a cost of R29 990. The two other stationery companies that gave Vazi quotes for supplying hospital folders - three quotes are required - were both registered to her daughter.
It is also alleged in the PWC documents that Vazi paid more than R3-million to her daughter's catering company, Khazimla, in 230 payments, most of them between 2007 and 2010. In the record of the disciplinary hearing, Vazi is given as saying that she did not appoint the service providers but merely approved the spending, which she said she was authorised to do.
Eastern Cape health spokesman Sizwe Kupelo this week confirmed that Vazi had been fired.
Vazi's former colleague, accountant Nommiselo Mxinwa, is now "being investigated by the Hawks," said Kupelo.
According to a PWC document presented at an anti-corruption crime meeting in December, health department accountant Mxinwa was so confident that she would note allegedly illegal payments in her desk diary.
Mxinwa's modus operandi was said in the PWC report to be similar to that of Vazi. Each month, she allegedly paid just under R30000 - the maximum allowed without inviting tenders - to members of her family and her friends.
It was alleged at the anti-corruption meeting that auditors had discovered that Mxinwa awarded contracts to 13 companies owned variously by her sisters, a sister-in-law, a niece and her husband, to the tune of R4-million.
PricewaterhouseCoopers alleged that, between 2008 and 2009, Mxinwa worked in cahoots with at least five other health department managers, including one who would approve purchases, another who would sign invoices and another who would make payments.
This week the MEC's office "commended" Pillay's efforts in rooting out corruption in the department.
Said Kupelo: "The MEC is against corruption and he allowed Dr Pillay to personally go undercover to expose corruption . the MEC went after a syndicate responsible for the theft of medicines."
Kupelo said that health MEC Gqobana "had personally approached senior police officials to have cases investigated and several have been referred to the Hawks''.
"Special Investigating Unit reports, and reports by the provincial treasury released two weeks ago, showed that 9000 health department employees were listed on the database as doing business with the department.
"Some of the 9000 will be handed to the police. Others will be given a chance to explain themselves," Kupelo said.
Pillay told The Times: "I feel that the task of stabilising the department was not completed.
"This leaves me sad as, with the proper commitment and direction, the task is doable."