‘Amigo case’: Testimony of how a R144m tender was irregularly awarded to Gaston Savoi

PricewaterhouseCoopers forensic auditor Trevor White’s testimony shifted its focus from controversial businessman Toshan Panday and his alleged involvement in a dodgy KZN SAPS procurement deal to the “Amigos” case. Central to the case was Cape-Town based businessman Gaston Savoi who is said to have cashed in on a R144-million contract from KwaZulu-Natal’s Department of Health and local government for the supply of water purification plants and self-generation oxygen equipment.

The first arrests of the 21 suspects charged with racketeering, corruption, and fraud in the case were made in 2010 and almost 10 years later the matter is still dragging before the courts. Some of those arrested during this period were ANC heavyweights in KZN, then MEC for Health Peggy Nkonyeni and MEC for Co-operative Governance and traditional affairs (Cogta) Mike Mabuyakhulu. By 2018, charges against Nkonyeni, Mike and those said to have political connections were withdrawn, leaving only nine suspects to face the dock.

“Amigos” is the name the suspects used to address one another, courtesy of Savoi, who according to White introduced the name to the group.

In 2009 the department of health in KZN appointed PwC to investigate some contracts. White told the commission that during the initial stages of the investigation it became clear that the matter involved more than one government department in the province and the scope was broadened to include the province’s treasury.

The erstwhile head of department for KZN Treasury and CEO of Ithala, Sipho Shabalala and his wife Beatrice Shabalala, are said to have played the leading roles in the scheme. White told the commission that in his capacity as head of treasury in the province Shabalala travelled to South America to meet with Savoi for a first-hand experience of how the oxygen tanks manufactured by his company Intaka were of use in other countries. Suspiciously, the trip was paid for by Savoi.

Earlier on Monday 20 January, Shabalala and his wife attempted to delay White’s testimony in an application before the commission. The couple’s legal team argued that White’s testimony would jeopardise their chance of a fair trial because he will address matters for which they are yet to appear in cour. Zondo declined this request, citing that the commission cannot be delayed any further as it is running out of time.

Following the South America trip, White told the commission that Shabalala would draft various memoranda proposing the use of Intaka to procure water purification plants and gas generating equipment.

“Going through communities during the pre-Budget road shows, we experienced first-hand that communities need water desperately… we still have to contend with the fact that our communities still do not have access to clean water,” an extract from one of Shabalala’s memoranda is quoted in White’s affidavit. 

According to White, Shabalala made recommendations to the health department to finalise the procurement of the oxygen tanks. 

“He recommended that an amount of R22-million be allocated to the poverty alleviation fund managed by the finance department to provide the water purification equipment to all municipal districts,” White said. 

White further testified that 20 water purification plants were bought from Intaka at the cost of R44.5-million, including delivery, but three years after they were bought some of them remained uninstalled despite Shabalala using an “emergency purchase” waiver, to avoid an open tender process. 

“One of the key things they needed to do was to obtain a waiver of the tender requirements with the assistance of provincial treasury, of which Mr Shabalala was the head,” White told the commission. 

In addition to the approval from the treasury, Cogta had to obtain approval from the central procurement committee for a waiver of tender procedures. White testified that, at the time, KZN had a central procurement committee that approved tender processes. This very same committee was chaired by Shabalala. 

Three weeks after Shabalala penned the memorandum to push for the waiver of tender procedures, he sent an email to Savos. 

“Ola Amigo… I wish to ensure you that the province is really doing its best to ensure that by the end of the year there is progress on this issue,” the email as read by White. (sic)

Furthermore, White said that six months after the water purification plants were manufactured, a back-and-forth ensued between Intaka and Cogta regarding where these plants should be delivered. He added that during this time, despite Shabalala’s push to purchase the plants urgently, Cogta had not even begun to identify sites where these plants would be installed. 

A visibly surprised Chief Justice Raymond Zondo asked: “How can you take all kinds of measures to say we don’t have time to follow procurement procedures because this is urgent and yet you don’t know where it will be put once it’s delivered?” 

“Everything goes against the fact that it was urgent,” replied White. 

“During the investigation, we received information that some of the plants were left on vacant industrial land. 10 of the plants were standing – I physically went there myself. This was more than three years after they were paid for and they were still uninstalled,” said White. 

White’s testimony continues on Wednesday 22 January to provide evidence on the R1.4-million paid to an ANC event in KZN following the approval of the contracts between Intaka and Cogta. DM