Fraud revealed in R800 million oxygen plant tender, Macpherson announces disciplinary action against IDT CEO
Image: Thabo Makwakwa
Public Works Minister Dean Macpherson announced a series of disciplinary and criminal actions following the shocking findings of a forensic investigation into the controversial R800 million Pressure Swing Adsorption (PSA) Oxygen Plant tender.
During a media briefing on Tuesday afternoon, Macpherson revealed the final results of a forensic investigation into the controversial R800 million Pressure Swing Adsorption tender awarded by the Independent Development Trust (IDT)
The investigation was conducted by global consultancy firm PricewaterhouseCoopers (PwC), following months of scrutiny and allegations of procurement irregularities by the entity's officials.
The report exposes systemic governance failures, procedural breaches, and outright fraud that have plagued the IST for years and threaten South Africa's public health infrastructure and integrity.
"From the moment I stepped into this role, I was already aware of long-standing allegations of maladministration, financial misconduct, and corruption at the IDT," Macpherson declared during a briefing in Pretoria.
"These concerns have haunted the agency for years; unfinished projects, irregular tenders, and audit disclaimers have severely damaged its credibility."
The latest scandal, which came to light in October 2024, revealed alarming details about the procurement process for the PSA Oxygen Plant project. With a budget of R836 million, this crucial initiative was to supply oxygen systems to 60 hospitals nationwide. Of this, R528 million was allocated directly to the IDT.
The forensic report, which Macpherson presented publicly, indicates that multiple companies awarded contracts lacked proper certification, verifiable contact details, or legitimate operational capacity.
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According to the report, one company, associated with a 'ghost' entity, submitted questionable documentation and appeared to have no physical presence or regulatory approval, raising clear suspicions of fraud.
"This was a clear misrepresentation. It was fraud," Macpherson stated.
'The investigation further revealed that one company, Bulkeng (Pty) Ltd, submitted a SAHPRA license belonging to Atlas Copco Industrial SA without authorisation - a blatant act of fraud. Additionally, Bulkeng planned to subcontract over 25% of its responsibilities to Brutes Air Solutions but failed to disclose this, violating the Preferential Procurement Regulations.'
The procurement process itself was severely flawed. The report confirmed that the SAHPRA compliance requirement - initially included in the Project Execution Plan and the Department of Health's Memorandum of Agreement, was deliberately removed from the final Request for Proposals (RFP).
'This critical omission allowed ineligible bidders to participate and secure contracts worth over R428 million—more than double Bulkeng's CIDB grading limit of R200 million.'
The report highlights a litany of procedural breaches, including missing meeting minutes or incomplete procurement committees that were improperly constituted; bid evaluation scores were inadequately documented; and price negotiations lacked transparency.
'For instance, the project's initial budget of R216 million ballooned to over R590 million—without documented approvals or value-for-money assessments.'
Macpherson stated that the governance failure extended to the very top.
'The IDT's board lacked quota membership for months, internal audit functions were absent, and record-keeping was poor.
'Most critically, CEO Tebogo Malaka failed to exercise oversight, relying solely on internal SCM staff and ignoring red flags the Department of Health raised.
'She did not verify documentation or convene necessary risk committees, instead endorsing flawed processes.'
The report also criticises Dr Molebedi Sisi, the IDT's General Manager for Supply Chain Management, for misleading internal stakeholders.
Macpherson stated that despite urgent warnings from the Department of Health, he advised against canceling the RFQ, falsely asserting that procurement was compliant when key regulatory requirements, like valid SAHPRA licenses - had not been enforced.
'It is important to note that no Global Fund resources were involved in this project. This justified swift government intervention to safeguard donor funds.
'The procurement has now been redirected through the Development Bank of Southern Africa (DBSA), ensuring the oxygen systems are acquired without further delay.'
Macpherson announced that disciplinary proceedings are already underway against Malaka, Sisi, and other implicated officials, with referrals to the Hawks for criminal investigations, aimed at ensuring accountability and justice.
Macpherson outlined specific areas for immediate action.
'Disciplinary measures against Ms Malaka for confirming the procurement process despite irregularities, and for appointing Department of Health officials as members rather than observers, as prescribed.
Accountability for Sisi, who advised stakeholders to proceed despite warnings and regulatory breaches.
Review of procurement processes, including proper documentation, committee composition, and adherence to regulations.
He suggested Training and capacity building for SCM officials to prevent future irregularities and strengthen governance frameworks across the IDT and related entities.
"This is not just about one tender," Macpherson asserted.
"It's about the kind of state we are building - an ethical, capable, and developmental one." He said the government will leave no stone unturned in rooting out corruption and restoring public trust.
He also reaffirmed the appointment of a new full-term IDT board, led by Chairwoman Zimbini Hill and Deputy Chair Professor Raymond Nkado, tasked with turning the agency around.
Macpherson praised Hill's resilience amid attacks rooted in sexism and racism, and expressed confidence in the board's ability to implement the report's recommendations.
"This is about the kind of state we are building. Today's actions demonstrate our unwavering commitment to building an ethical, capable, and developmental state. Anyone who opposes transparency and accountability opposes the principles our democracy was built upon."
He warned that tolerating corruption undermines the very fabric of South Africa's democracy, erodes public trust, and betrays the people who rely on these vital services.
thabo.makwakwa@inl.co.za
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