First two 'irregular' PPE tender cases referred for prosecution
The Competition Tribunal will hear the first two cases relating to irregular procurement processes of personal protective equipment (PPE) in the public sector.
The cases were referred to the tribunal by the Competition Commission.
The first case is against BlueCollar Occupational Health (Pty) Ltd from Gauteng and KZN-based Ateltico Investments (Pty) Ltd.
The second is against Tsutsumani Business Enterprises CC, which is based in Gauteng.
In each case, the firms have concluded public procurement transactions that the commission found to have contravened the Competition Act, read with the government's lockdown regulations during the national state of disaster, the commission said.
Both cases, it said, emanated from its investigation of complaints lodged by the South African Police Service (Saps) for its own procurement of PPE.
“In the BlueCollar and Ateltico matter, in March 2020, [the company] responded to the Saps' request for a quotation for the supply of bulk hand sanitisers in 25-litre containers,” said the commission.
“BlueCollar was appointed and subsequently approached Ateltico for funding. BlueCollar and Ateltico entered into a memorandum of understanding in terms of which they agreed to share the profits earned from the transaction.
“BlueCollar then supplied the Saps with 10,000 25l containers of hand sanitisers at the price of R3,550 per 25l, with a gross mark-up of 123%.”
The commission found the price to be excessive and was concerned that the funding arrangement between the parties contributed to the mark-up.
“The second case relates to Tsutsumani, wherein the Saps procured 500,000 surgical face masks from Tsutsumani at R32.50 per mask. Tsutsumani earned a gross mark-up of 87% on this transaction, which the commission deems excessive.”
The commission said it would contact the office of the auditor-general to follow up on the former’s report on the procurement of goods, services and infrastructure to fight the coronavirus.
“The commission is further participating in the fusion centre, which brings together all the relevant law enforcement agencies looking into the PPE procurement,” it said.
“We therefore call upon all suppliers who have charged excessive mark-ups as exemplified by these two cases to present themselves to the commission for a speedy resolution of all the matters.”
The nature and scale of these investigations and prosecutions is unprecedented.Competition Commission
It called on all public institutions that procured PPE to exercise caution in making payments to suppliers while investigations of excessive prices were in progress.
“The commission will further engage National Treasury on how best to deal with awarded contracts and cases where the goods have already been supplied and services rendered at what appears to be excessive prices.
“The nature and scale of these investigations and prosecutions is unprecedented. Individual investigations will not address what appears to have been a systematic failure of the public procurement system.
“We call upon authorities and policy makers to address these systematic failures as individual cases of this nature are complex, expensive and may overwhelm the capacity of institutions,” said commissioner Tembinkosi Bonakele.
“The commission is reprioritising its work to ensure that it is able to deter excessive pricing in the public sector and to hold the companies involved in the worst price abuses accountable.”