ANC allegedly benefited from corruption

The report says Hlongwa, the former MEC for Health in Gauteng, has emerged as a central figure in the tender scandal that threatens his career as well as that of other officials implicated. He allegedly received kickbacks from both firms. Allegations have also been made that the ANC in Gauteng benefited from the kickbacks. The report says the R1.4bn has become a honeypot in a tug-of-war between the government's Anti-Corruption Task Team (ACTT) and two companies, 3P Consulting and the Baoki Consortium. The two companies allege that they are owed the millions for services rendered in terms of two separate tenders granted by the Gauteng Health Department. However, the ACTT contends the millions the two companies claim belong to them, are proceeds of crime. In 2007, 3P won a tender to set up a Project Management Unit at R120m. But 3P contracted 144 entities to provide services to the department and extended their contract by three years, eventually paid R392m by the time Health MEC Qedani Mahlangu cancelled the contract in 2009. In 2008 Baoki was given a R1.2bn tender to set up a health information system and electronic health record. It was paid more than R400m without installing any system by the time its contract was cancelled a year later, says the report. Full report in The Sunday Independent

Meanwhile, the Gauteng High Court (Johannesburg) has granted a R1.4bn freezing order for the two tenders - the biggest ever obtained by the NPA asset forfeiture unit (AFU), according to spokesperson Nathi Mncube. On Friday, the Mail & Guardian reported that Hlongwa received millions from associates who were in business with his department. The M&G notes that in April 2009 Hlongwa reacted angrily to suggestions that corruption had funded his purchase of a R7.2m house in Bryanston, Johannesburg. He was insulted, Hlongwa said, at allegations that his salary could not support such a purchase, or that his long-time friend (and holder of a massive contract with his department) Richard Payne had helped him to purchase the property. So vehement were his denials - and his assertions that he was flush from legitimate business activity - that he ended up formally apologising to the ANC and the people of Gauteng for flaunting his wealth. But in court papers that became public last week the Special Investigating Unit (SIU) and the Hawks meticulously detailed a series of transactions that saw millions of rands flow from people doing business with his department to Hlongwa for the house. And those payments, which investigators unequivocally characterise as bribes, were part of the deal right from the start, although the picture painted in documents was refuted by one of those implicated. According to evidence put before the High Court, the R700 000 deposit on the house was paid by Niven Pillay, executive director of financial consultancy Regiments Capital, who later also made a R1m payment to prevent the sale from falling through. Hlongwa, investigators allege, was instrumental in helping Regiments win a vastly inflated contract. Pillay, however, has denied that he had been involved in the purchase of the house. He and Hlongwa had both been party to an unrelated property transaction, Pillay explained, according to the M&G, and the profits from that deal saw him make payments of R2.5m to Hlongwa. Full Mail & Guardian report

Hlongwa has accused his 'detractors' of using the media to taint his image - severely hurting his wife and children, according to a Saturday Star report. It says this was the only explanation given by Hlongwa in the Gauteng legislature on Friday following the Mail & Guardian reports. DA MPL Jack Bloom asked Gauteng Premier David Makhura whether he would ask Hlongwa to step down. Bloom asked the questions during the debate on the Premier's budget vote. Instead, Hlongwa took the opportunity and replied, saying: 'Indeed in 2006 until 2009, I was the MEC for Health. I take full responsibility for what had happened during that time. During that time, I lived with pain, anger and shame. I was tried, persecuted and sentenced in the media.' He said his accusers continued to make similar allegations against him after he quit his political office even when no criminal charges were brought against him. Full Saturday Start report (subscription needed)

The detail of the alleged schemes is fleshed out in the Mail & Guardian, which says in 2008, the joke around the office water cooler, as it were, was that a large part of the money spent by the Gauteng Health Department, amounting to billions, constituted a fundraising exercise for the ANC. And the chatter was that political battles were being fought with the proceeds. The M&G says these are some of the allegations contained in thousands of pages of evidence compiled by the Hawks and the Special Investigating Unit. Although the allegations seem based on hearsay, recounted by witnesses who themselves could face criminal charges, investigators believe they have found a solid example of the proceeds of corruption being used in an ANC election campaign, according to the report. It notes that on 27 January 2009, three months before national and provincial elections, a company called Amethst paid R100 000 into a FNB business bank account controlled by a senior official of the Department of Health in Gauteng, an account, it says, was apparently intended for fund-raising, judging by its name. Amethst noted the payment as 'election education'. The payment alone breaks all kinds of rules: Amethst was part of a consortium that hoped to do more than R1bn in business with the Health Department, a consortium that investigators believe received outrageously preferential treatment. The donation was never declared by either party, notes the M&G. Amethst is one of the companies that officials of the Asset Forfeiture Unit believe benefited from the proceeds of crime, and from which they hope to recover money.

The M&G says the fund-raising account had been almost empty before the Amethst payment. The day after it, the account reflected a payment of R5 500, described as 'ANC elections'. A flurry of similar payments followed, to T-shirt companies, caterers, photographers, a carpet-hire company, a marquee provider, a toilet-hire company, a company that prints flyers and a provider of electrical generators. Each transaction was described as 'ANC Gauteng' or 'ANC elections GP' or, occasionally, 'ANC Gauteng election'. The payments were small but there were many and, by the end of March, the account was starting to empty again. On 27 March, noted the report, Amethst made another transfer into it, this time for R200 000. More payments for the kind of services required to run an election campaign followed, claims the M&G. The ANC head office referred such questions to its Gauteng division. The ANC in the province, in turn, said it had no knowledge of the money. 'We did not receive money or any donation from the person who is mentioned,' its spokesperson, Nkenke Kekana, is quoted as saying. Full Mail & Guardian report