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Gauteng government wasted R500m on Covid-19 hospital amid warnings from its own treasury, court hears

The two companies, Pro Serve Consulting (Pty) Ltd and Thenga Holding (Pty) Ltd, were among others that looted R500m meant to refurbish the AngloGold Ashanti Hospital. Picture: David Makhura/Facebook

The two companies, Pro Serve Consulting (Pty) Ltd and Thenga Holding (Pty) Ltd, were among others that looted R500m meant to refurbish the AngloGold Ashanti Hospital. Picture: David Makhura/Facebook

Published Jan 22, 2022

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Johannesburg - Two construction companies illegally awarded multi-million contracts for the upgrading of the AngloGold Ashanti Hospital have failed in their bid to unfreeze R7.9 million preserved by the Special Investigating Unit (SIU).

The two companies, Pro Serve Consulting (Pty) Ltd and Thenga Holding (Pty) Ltd, were among others that looted R500m meant to refurbish the hospital, which was donated by the mining company to the Gauteng provincial government to treat Covid-19 patients.

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The initial contract was R50 million, but the costs ballooned to R500m

On Friday, the Special Tribunal dismissed an application by the two companies to reconsider and set aside the court ruling – made on September 17 last year – which allowed the SIU to preserve R7.9m

The court heard that on April 20, 2020, the Gauteng Department of Health and the Gauteng Department of Infrastructure Development jointly appointed several service providers, including Pro Serve and Thenga, to upgrade, improve and/or refurbish the Western Levels Deep Hospital and accommodation, situated on a mining property in Carletonville, Gauteng, and owned by Golden Core Trade and Invest (Pty) Ltd. The hospital is known as the AngloGold Ashanti Hospital (AGA Hospital).

When the departments appointed the service providers, the AGA Hospital was not in use. The health department intended to use the hospital to accommodate seriously ill patients admitted for treatment of Covid-19. The service providers would provide professional services and construction works on the AGA Hospital.

Pro Serve was paid R17 733 690.40 for professional architectural, health and safety, and electrical, mechanical, civil, structural and clinical engineering services performed on the project. Thenga was paid R40 890 132.66 for mechanical and related works performed on the project.

The SIU only sought a preservation of Pro Serve and Thenga’s funds because when it investigated the status of the bank accounts of the other service providers, the bank accounts no longer held funds in deposit.

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Adding more damage to the reputation of the two departments, the SIU advanced the following grounds in support of the allegation that Pro Serve and Thenga’s appointment was unlawful and irregular: the department of infrastructure did not follow an open and transparent tender process; the departments did not obtain Provincial Treasury approval to deviate from the applicable Treasury Regulations when procuring service providers for the AGA Hospital project; and, Service Level Agreements (SLAs) were not concluded prior to the service providers commencing work.

When the service providers were paid, SLAs were still not in place. Similarly, the scope of works and contract price were not agreed and there was no approved budget for the project. Initially, the budget was estimated at R50 million, but escalated 10 times without a clear explanation for the escalation. Further, Pro Serve and Thenga overcharged the departments; and, wasteful expenditure has been incurred on the project because the AGA Hospital was not available for use during the first two waves of the Covid-19 pandemic.

Due to the reasons advanced by the SIU, Judge LT Modiba rejected the application by the two companies to unfreeze the cash.

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Judge Modiba ordered the companies to pay SIU’s legal costs.

SIU spokesperson Kaizer Kganyago said the SIU welcomed the confirmation of the interim preservation order, as it affirmed that the SIU was correct and within its right to seek an order to preserve the funds.

In November last year, Gauteng Health MEC Nomathemba Mokgethi revealed that only eight patients critically ill with Covid-19 have been treated at the Anglo Ashanti Hospital on the Far West Rand, which has cost more than R540 million to refurbish and staff.

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Mokgethi was replying to written questions from the DA’s health spokesperson, Jack Bloom.

Mokgethi said 109 Covid-19 patients in total were at the hospital between June and October last year.

Shocked by the revelations at the time, Bloom said the hospital has 175 approved beds, but only 15 beds were used for the Covid-19 patients.

All the beds were supposed to be high care or intensive care, so a mere eight critical care patients showed what a waste of money the hospital had been in saving lives during the pandemic.

“The money would have been better spent on existing hospitals that are short of staff and equipment. Another scandal is that the Special Investigating Unit (SIU) has uncovered evidence of massive corruption and issued a preservation order to freeze about R7 million in the bank accounts of two contractors in this matter,” Bloom said.

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