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How to make a killing off hand sanitiser and still come up smelling of Red Roses

How to make a killing off hand sanitiser and still come up smelling of Red Roses
78 alcade road lynwood glen pretoria.Photo:Supplied
Mark Heywood
By Mark Heywood
15 Dec 2022
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SIU investigations have uncovered that hand sanitiser sold at the height of the Covid-19 pandemic to SAPS at a cost of R5,400.05 per 25 litres, including costs of ‘airfreight, customs, clearance and VAT’, was in fact not sourced from China… but instead round the corner at Dis-Chem at a mark-up of 400%.

Last week Maverick Citizen reported how a July 2022 report from the SIU to President Ramaphosa had included a section on an ongoing investigation into a company called Mainstreet 699, which changed its name to Red Roses Africa Pty Ltd, that largely confirmed the findings of an investigation we had conducted into the company in 2021.

At the time we reported how:

“A small, unknown company operating under two names, with a Barberton, Mpumalanga, business address, no traceable history of supplying personal protective equipment (PPE) products and a sole director (with an underwhelming online presence) scored contracts worth hundreds of millions of rands from the police at the height of the Covid-19 pandemic last year. Not only did it score the questionable contracts, it also managed to get R515-million paid for supplying masks and hand sanitiser and disinfectant at what is difficult not to describe as criminally inflated prices.”

Read more in Daily Maverick: “Latest SIU report reveals billions more rands of unlawful and dodgy Covid-19 spending exposed”

Fast forward to today and let’s recap what the new SIU report tells us.

In a section on “Ongoing Matters”, the SIU says that in the early days of the Covid-19 pandemic, very soon after the declaration of a National State of Disaster, a company called Mainstreet 699 made an “unsolicited bid” to SAPS to supply it with PPE, including hand sanitiser and masks. The company claimed that, in the middle of the worldwide shortage, it had sourced the hand sanitiser from China and that an Airbus was ready to bring it to South Africa “once an order was issued.”

A deal was struck and in April and May 2020, the 90,000 containers of hand sanitiser were supplied and Mainstreet 699 scored R423-million.

In total, for all the PPE it supplied to SAPS, Mainstreet was paid R596-million.

This was one of the largest and most costly purchases registered by the National Treasury, which at the time seemed to have thought nothing was suspicious.

However, it seemed odd to Maverick Citizen. Raising further suspicions, at the time the Treasury’s Covid-19 Reporting Dashboard revealed two payments of exactly the same amount to two different companies (which turned out to be the same company.)

This “administrative error” was corrected without explanation after we pointed it out.

However, after a whistle-blower came forward, investigations have now uncovered that the sanitiser, which was sold to SAPS at a cost of R5,400.05 per 25 litres, including costs of “airfreight, customs, clearance and VAT”, was in fact not sourced from China … but instead round the corner at Dis-Chem.

The cost at which Mainstreet 699 bought the sanitiser from Dis-Chem was R1,150 per 25l container, meaning they made R4,250.05 on every container — a mark-up of 400%.

Making a killing




However, what is still not clear from the SIU report is where (and possibly even if) Mainstreet Africa obtained the other 57,000 containers it said it sold to the SAPS. We do know it billed for R423-million — so about R250-million remains unexplained. 

Not a small sum.

Dis-Chem delivers: No questions asked


In response to our questions, Dis-Chem has confirmed that CJ Distribution, “an independent wholesaler owned by Dis-Chem”, did indeed supply 32,055 containers to Mainstreet 699 in April and May 2020. It says that it had had no previous or subsequent business with the company, pointing out:

“Large orders like this were not out of character and CJ Distribution saw a significant increase in new business customers, many of whom had never engaged CJ Distribution or Dis-Chem before as they had never had to order bulk PPE equipment and supplies.”

“CJ Distribution receives orders from and services hundreds of third-party customers, retailers, and intermediaries for whom on selling is common practice.”

Dis-Chem said it was not aware of the ultimate destination of the hand sanitiser and “not privy to the price its customers on-sell at, or whether they on sell at all.” 

Dis-Chem says that the order, made up of 25-litre containers, was supplied “only to one delivery address in Silverton, Pretoria”. Significantly, this means that it was supplied directly to a SAPS warehouse, not to the offices of Main Street 699.

The SIU report claims that a Mr Mario Pillay, the director of Mainstreet 699, had first made the unsolicited bid to provide PPE to SAPS. A Google search reveals that Mario Pillay is a former spokesperson of businessperson Robert Gumede and the Guma Group.

However, the report also names Mr Blessing Qwabe, its CEO, as a person the SIU subpoenaed to interview. That interview has now taken place.

In response to our questions about who it had done business with, Dis-Chem responded “we can’t provide detail on this due to POPI regulations”.

Finally, Dis-Chem says that “there was nothing outside of the normal scope of business that would have been flagged as reason for any misgivings or anything out of the ordinary.  As with hundreds of other new customers at the time .. it was viewed purely as a business transaction. There was no misconduct from Dis-Chem’s side at all.”

However, Dis-Chem is cooperating with the SIU having provided it, under threat of a section 5(2)(a) notice, with all the invoices for medical products bought by Main Street 699 between 1 April 2020 and 30 May 2020.

Keeping mum


The evidence gathered by the SIU points to massive price gouging and possible corruption in the sale of PPE to the SAPS. DM168 can confirm that the SIU will provide a final report on this and other matters to the President on 15 December 2022. Kaizer Kanyago, spokesperson for the SIU, told us that its investigation, and all interviews, are now complete.

Overall, this confirms earlier reports in Daily Maverick highlighting irregularities in the massive R1.6-billion PPE “splurge” by the SAPS. But, strangely, despite the seriousness and scale, those implicated or involved seem reluctant to say anything.

The SAPS failed to respond to our questions.

Sindisiwe Seboka, spokesperson for the Investigating Directorate (ID) in the NPA, told us that while the ID has investigated three small matters concerning PPE corruption in the SAPS resulting in officers being dismissed, the Mainstreet 699 matter “is not in our space”.

 

sanitiser qwabe The Red Roses Africa Pty Ltd office at 78 Alcade Road,  Lynwood Glen, Pretoria. (Photo: Supplied)



This week Blessing Qwabe, the CEO of Red Roses Africa Pty Ltd, failed to respond to a request for comment.

After more than two years, the Competition Commission is still deciding whether to hand its investigation of Mainstreet 699/Red Roses Africa to the Competition Tribunal and says it is waiting for a ruling by the Tribunal in a similar matter. That judgment has taken more than two years.

Finally, despite a senior Treasury official being identified in the SIU report, the Treasury says that no investigation is being conducted by the Office of the Chief Procurement Officer. Strangely, for reasons unknown, all reference to Mainstreet 699 has been scrubbed from its Covid-19 Reporting Dashboard. DM168

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