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Gauteng schools’ R431m sanitising contracts: Special Tribunal orders companies to pay back profits

Gauteng schools’ R431m sanitising contracts: Special Tribunal orders companies to pay back profits
A team called The Germinators, from Ladium disinfecting classes and offices at Pretoria Muslim Trust Sunni School School in Laudium on June 12, 2020 in Pretoria, South Africa. It is reported that routine cleaning and disinfecting is key to maintaining a safe environment for faculty, students, and staff during the COVID-19 pandemic. (Photo by Gallo Images/Alet Pretorius)
Julia Evans
By Julia Evans
10 Feb 2022
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After Maverick Citizen exposed the Gauteng Department of Education’s expenditure of R431m on the sanitising of schools in 2020, the Special Investigation Unit filed an application to the Special Tribunal against the companies for the ‘disgorgement of all the profits they acquired’.

On Thursday afternoon, in what will set an important precedent for other irregular and unlawful contracts, the Special Tribunal handed down judgment in the Gauteng Department of Education (GDE) schools decontamination contracts, ordering the respondents to pay a determined sum within 60 days. 

The Special Investigation Unit (SIU) filed an application to the tribunal over R431-million spent on decontamination, disinfection, deep cleaning and sanitising contracts in Gauteng schools in 2020, financial misconduct that was first exposed by Maverick Citizen in January 2021. 

https://www.dailymaverick.co.za/article/2021-01-26-gauteng-department-of-education-spent-r431-million-in-three-months-on-unnecessary-deep-cleaning-and-decontamination-of-schools/

Because of Maverick Citizen’s exposé and continued investigations, Gauteng MEC for Education Panyaza Lesufi, who had claimed to Maverick Citizen editor Mark Heywood that he had no knowledge of the irregular expenditure, was forced to ask the SIU to investigate.  

After its investigation, the SIU filed an application to the tribunal against the companies involved for the disgorgement of all profits that they acquired as a consequence of the impugned decision – meaning they have to give up the profits they made. 

A team called The Germinators disinfects classrooms and offices at the Pretoria Muslim Trust Sunni School in Laudium on 12 June 2020. (Photo: Gallo Images / Alet Pretorius)



The application found merit in that the minimum price determined by the GDE’s chief director of physical resource planning and property management, Hudson Baloyi (the fifty-second respondent in the review application), and the total paid by the GDE “was astronomically higher than that for which approval was granted”. 

“The estimated cost of the service is R6.1-million. The GDE has spent R431-million in the procurement under review.” 

The Special Tribunal heard legal arguments from the SIU  and the 73 respondents in November 2021, when judgment was reserved. 

Today, Judge Lebogang Modiba, who heard the case of SIU v Fikile Mpofana (Pty) Ltd and 72 others, found that: 

  • The procurement process was not undertaken in accordance with a system that complies with section 217(1) of the Constitution;

  •  The irregularities are material – meaning they are of importance; and

  • The SIU has made out a case for the appointment of the respondent entities to be declared irregular and unlawful and to be reviewed and set aside – to cancel and invalidate the unlawful contracts that the companies had with the GDE.


Modiba deemed as unconstitutional the procurement process of the GDE to sanitise, clean and denominate schools in Gauteng that had been exposed to Covid-19 in 2020 and ordered the relevant respondents to pay the determined sum (upon a written demand of the SIU) within 60 days. 

This means the respondents have to prove what the work actually cost them to do and must pay back the rest (the profits). 

The Germinators disinfect classrooms and offices at the Pretoria Muslim Trust Sunni School School in Laudium on 12 June 2020. (Photo: Gallo Images / Alet Pretorius)



With this case, the SIU was seeking a just and equitable relief in terms of section 217(1)(b) of the Constitution and in line with the no-profit principle as applied in all pay. 

https://www.dailymaverick.co.za/article/2021-11-24-gauteng-schools-sanitising-contracts-special-tribunal-hears-siu-application-to-review-r431m-feeding-frenzy/

Maverick Citizen previously reported: “In the SIU’s eyes, this means that all 180 deep-cleaning contracts be declared invalid and that the profits the companies made from the work be ‘disgorged’ and returned to the state; a ‘no-profit principle’ that Chaskalson [the senior counsel who represented SIU] argued the Constitutional Court has elucidated in the high-profile case over the legality of the tender granted to Cash Paymaster Services to administer social grants (known to lawyers as All Pay). 

“What this means in practice is that while the companies may retain their actual costs of doing the work (if they did it at all), they may keep none of their profits.” 

This is not the first judgment to come out of unlawful Covid expenditure – but is the first time so many unlawful contracts have been set aside and the companies required to “disgorge” (pay back) all their profits.  DM

 

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