Court papers implicate top Gauteng ANC official in health corruption

January 26, 2015

Bloom,-JackRecently filed court papers provide more evidence that implicates Brian Hlongwa, presently the ANC’s Chief Whip in the Gauteng Legislature, in alleged massive corruption that occurred in the Gauteng Health Department when he was the MEC for Health.

These documents were filed in response to an asset forfeiture application by the National Prosecuting Authority in July last year against Hlongwa concerning his house purchased for R7.2 million in Bryanston, Johannesburg, and also against 3P Consultants and the Baoki Consortium, which had multi-million rand contracts with the Gauteng Health Department.

The Baoki Consortium was awarded a R1.4 billion contract by the Gauteng Health Department in December 2007 to provide a Health Information System and electronic Health Records (HIS-eHR) for Gauteng hospitals and clinics.

They have indicated to the court that they do not intend to oppose the NPA’s asset forfeiture application against them.

The reason they give is that they are not able “to address or refute the allegations set out in the documents supporting the preservation order granted on 21 July 2014 insofar as they related to the purchase of 163 Eccleston Crescent, Byanston and the sale of 26A College Drive, Bryanston (‘the property allegations’). It would accordingly not have served the court for the remaining issues to have been addressed, if the property allegations could not be addressed.”

Furthermore, they “were shocked to learn of the property allegations. Given these allegations, and as a matter of good corporate governance, it was decided not to oppose the application. This should in no way be interpreted as a concession that any of the other allegations … are admitted”.

This is a stunning climb-down in which they have relinquished a R1.2 billion claim against the Department for breach of contract.

The “property allegations” refer to the role of Mr Heinz Smidek in purchasing Hlongwa’s former home at 16A College Drive in Bryanston for R4.6 million as well as other gratifications to Hlongwa in order for him to improperly influence the award of the tender to Baoki.

Smidek is an Austrian citizen and the CEO of AME Africa and a director of Amethyst (Pty) Ltd, which were part of the Baoki Consortium.

According to the affidavit by the National Director of Public Prosecutions (NDPP), Kemsing Services, a Cyprus-registered company, bought the College Drive house for R4.6 million on 26 February 2008 for the use of Baoki or AME Africa. Smidek was a beneficial owner of Kemsing and facilitated the sale.

This money was used by Hlongwa to buy a R7.2 million house in Eccleston Crescent, Bryanston, along with other payments to him by Mr Richard Payne, the CEO of 3P Consultants, and Mr Niven Pillay, the CEO of Regiments Healthcare which also benefited from a department contract.

Kemsing allowed Hlongwa to remain in the College Drive house without paying the R40 000 monthly occupational rental as required by the contract, and on 8 May 2009, Kemsing transferred R1 563 674 from its Cyprus account into Hlongwa’s personal account, ostensibly for furniture purchased – but Hlongwa took the furniture with him when he vacated the premises.

In April 2010 Kemsing sold the house for a loss.

According to the NDPP affidavit: “The Baoki gratifications were given or received in order for Hlongwa to improperly influence the GDoH’s supply chain management officials … Hlongwa’s influence extended to:

· The award of the HIS-eHR tender to Baoki,
· The fixing of the price of the HIS-eHR,
· The conclusion of the main agreement for the HIS-eHR, and
· The terms of the main agreement for the HIS-eHR.”

Alleged irregularities in the award of the contract to Baoki include the non-inclusion of VAT and training costs in their bid, which enabled them to undercut Intersystems, a rival bidder.

Nevertheless, the Departmental Acquisition Council awarded a Proof of Concept (PoC) to both companies, but Ms Sybil Ncgobo, the Head of Department, advised Baoki that they had been awarded a PoC and advised Intersystems that they had not been awarded a PoC.

The NDPP concludes that the Baoki gratifications are corrupt activities under sections 3 and 12 of the Prevention and Combating of Corrupt Activities Act.

According to the NDPP, the evidence “indicates the existence of an apparent and generally corrupt relationship between Hlongwa and Payne. The evidence points out that Smidek and Amethyst associated themselves with, alternatively were part of the generally corrupt relationship that existed between Hlongwa and Payne in order to secure benefits for themselves and the entities under their control or associated with them.”

This is a really damning conclusion. Other court documents show that Hlongwa and 3P oppose the forfeiture applications on narrow grounds and provide little evidence to deny the allegations against them (all documents are available on request).

It should be noted that Payne is alleged to have paid R1.6 million towards the purchase of the R7.2 million house in Eccleston Crescent Bryanston, and R640 000 through various fronts to refurbish it.

Mr Niven Pillay also allegedly paid R700 000 for Hlongwa’s deposit on the house, and then R1 million to prevent the offer from falling through.

It was reported on 28 July last year that the allegations against Hlongwa have been referred to the ANC’s provincial integrity committee. They have taken an inordinately long time to take a decision in this matter.

Whilst Hlongwa is innocent until proven guilty, and due process must be followed in this matter, there is a huge corruption cloud that hangs over his head that undermines Premier David Makhura’s pledge to run his administration with integrity and free of corruption.

It is also a test of the ANC’s 2012 Policy Conference proposal that all deployed ANC members in government step down immediately when accused of misconduct or incompetence.

Makhura was quoted at the time as saying that stepping aside doesn’t mean a person is guilty, but the idea is that no-one will be able to “hide behind” the argument that they are innocent until proven guilty, and thereby worsen the “troubled image” of the party.

We still live today with the dire consequences in our hospitals of the disastrous period when Hlongwa was Health MEC.

Makhura needs to fire Hlongwa in order to distance himself from the increasing evidence of corruption against him.

Media enquiries:
Jack Bloom MPL
DA Gauteng Shadow MEC for Health
082 333 4222