Spotlight: Controversial ambulance company in line for new Free State tender

24 Apr 2018

Lucrative tender deals to private ambulance company Buthelezi EMS are on track despite investigations being launched about some of their existing contracts in the Free State and North West. Spotlight calculates that Buthelezi EMS has received well over R1-billion in revenue from government contracts over the last four years.

A Gauteng-based ambulance operator, Buthelezi EMS, which is currently the subject of both Hawks and Treasury investigations, has scored road and air ambulance contracts in the so-called Premier League provinces amounting to over a billion rand since 2013 and they are frontrunners to secure a lucrative new three-year tender for Emergency Medical Services in the Free State.

National Health Minister Dr Aaron Motsoaledi last Thursday told Spotlight that he asked Treasury to investigate the Free State and North West’s contracts with Buthelezi EMS. He also made it clear that he did not want the new Free State tender to be awarded at all and that the national department is not in favour of outsourcing ambulance services to private companies. Yet on Friday afternoon the Free State department of health told Spotlight that the award of the tender for outsourced ambulance services is going ahead and that the evaluation of bids is at an advanced stage. Free State Health MEC Butana Khompela previously said that he does not want to reappoint Buthelezi EMS, but he too hasn’t given any indication that the new tender will not be awarded.

The director of a rival ground ambulance company told Spotlight that industry rumours are that another company will front for Buthelezi EMS in the Free State and that such fronting is nothing new in the industry. While Spotlight could not find any evidence of fronting, Companies and Intellectual Property Commission records paint a complicated web of connections. So, for example, Thapelo Buthelezi of Buthelezi EMS and Clifford Mahlo, director of High Care EMS, are also listed as co-directors of two other companies. Both Buthelezi and Mahlo were previously co-directors of ambulance companies with Thomas Maponya, the director of Maponya 911 Rescue.

Several well-placed sources have told Spotlight that Buthelezi has been receiving special briefings from health department officials in the Free State.

Spotlight has also this week visited a smallholding in Eikenhof, Johannesburg, where at least 20 new ambulances appear to be in the processes of being branded as “B EMS” ambulances. These ambulances have Free State number plates and the emergency telephone number on the side of the ambulances is the same as that on Buthelezi’s ambulances in the Free State – and not the same as those seen on ambulances at the Klerksdorp base in the North West: (see pictures)

Photos: Buthelezi EMS’ new ambulances on a smallholding in Eikenhof in the south of Johannesburg waiting to be branded.

The Free State Department of Health denies that Buthelezi has been given any advance notice of the outcome of the new tender.

Spotlight has also been told that Buthelezi arrived 15 minutes late for the tender briefing for the new tender in November, but that a senior Free State health official opened the door after he phoned them. Invitations to these meetings explicitly state that the doors will be locked at the starting time and no latecomers will be let in. When Spotlight asked the department about this, they responded that “no bidder/s was allowed entry after 15 minutes after the meeting has started”.

As it stands, Buthelezi EMS’s previous contract with the Free State Department of Health is being extended on a month-to-month basis until the new tender is awarded or the relevant services is absorbed back into the department.

The controversial rise of Buthelezi EMS

Prior to Buthelezi’s arrival, the Free State was doing remarkably well with their government-run inter-facility transfer service. In August 2013 Professor Martiens Schoon reported in the South African Medical Journal that maternal mortality in the province decreased from 279/100,000 live births during 2011 to 152/100,000 live births during 2012. The improvement was mainly ascribed to the department procuring 48 new vehicles (18 dedicated to maternity care) and the use of these vehicles to transport women with pregnancy complications. For a while, this state-run programme was held up as an example for other provinces.

Then everything changed when late in 2013 the province decided to outsource its inter-facility transfer ambulance service to a private company. Well-placed sources in the province say that this move coincided with the scaling down of the province’s own capacity-building efforts in relation to emergency medical services.

The Free State Department of Health claims a tender was advertised, but Spotlight can find no record of this tender advertisement anywhere online or in a newspaper. Netcare 911, a company that would have liked to bid, say they never saw the tender advertisement despite subscribing to various systems that would alert them to such tenders. Spotlight twice asked the Free State Department of Health where the tender was advertised. Both times they dodged the question, merely saying:

“The requirement to advertise tenders online by law only came into effect in 2016.”

They did provide Spotlight with a copy of the province’s tender bulletin, but there is no indication of where it was published.

According to Mariette Pittaway, Democratic Alliance (DA) member of the Free State legislature and spokesperson on Health, the DA has also struggled to get hold of documents relating to the tender.

“I have requested these documents from the HoD and MEC of Health in a portfolio meeting; when this was not forthcoming, I submitted written questions, which remains unanswered,” she told Spotlight.

“There is a general disregard by the FS Executive Council, save for MEC Finance, to answer written questions submitted to them within the stipulated 10 working day period as contained in the Standing Rules and Orders. When questions are replied to, they lack detail and substance, and the tone is generally dismissive. When we raise issues in committee, which is constitutionally mandated to do oversight, and has the power to subpoena, the ANC uses its majority to protect MECs and dismiss DA concerns. So in effect the legislature is dysfunctional in this regard.”

Buthelezi EMS was awarded the contract in December 2013 – with the contract signed on 20 December, around the festive season. What followed was ballooning expenditure and, according to a range of sources, a decline in the quality of services (see the previous article in this series for details). The Free State and North West are the only two provinces to outsource their ground ambulance service – the North West gave Buthelezi a three-year contract in March 2016.

“The DA is of the strong view that the Buthelezi EMS contract is irregular, overpriced, ineffective and could possibly have links to ANC politicians, since the ANC has been on the defensive over this contract from the very beginning,” Pittaway told Spotlight.

How costs ballooned

Spotlight investigations show that although North West has been a good source of income for Buthelezi’s EMS operations, his stronghold and springboard into the so-called Premier League provinces (Free State, North West and Mpumalanga) has been via the Free State. We wrote previously about how Buthelezi was awarded a Free State air ambulance contract that North West, Mpumalanga and Limpopo all piggy-backed on.

Spotlight calculates that Buthelezi EMS has received well over R1-billion in revenue from government contracts, mostly in the Free State and North West, over the last four years – with annual revenue rising sharply over time.

In February Mondli Mvambi, spokesperson for the Free State Department of Health, was quoted in the media as saying the department had paid a total of R613-million to Buthelezi EMS since the 2013/2014 financial year. The breakdown given was as follows:

2013/2014 R4-million

2014/2015 R99-million

2015/2016 R159-million

2016/2017 R204-million

2017/2018 R147-million (Not yet full-year figures)

The year-on-year increases in the above figures raise eyebrows since the service Buthelezi EMS is contracted to provide does not change year-on-year. While some increase from the first to the second year might be explained by teething and scaling-up challenges, the steady increase over multiple years suggests another cause.

Spotlight asked the Free State Department of Health what the budget and what the overspend/underspend on Inter-facility Hospital Transfers was per financial year since 2015. We received the following response, signed off by head of department David Motau:

“Budget R531,297,000 (Total EMS budget); IFT expenditure R843,132,80 (for both Inter-Facility Hospital and Aeromedical).”

This response is incompatible with the figures previously given by Mvambi. It is also not clear which year it refers to. Spotlight wrote back to the department to request clarification, but the department failed to respond.

Spotlight has however had sight of internal Free State government figures that indicated extreme overspending on the province’s emergency medical services budget:

In 2015/2016 the department spent R152-million on EMS, overspending their budget by R88-million.

In 2016/2017 the department spent R163-million on EMS, overspending their budget by R86-million.

By the time the figures were generated, the EMS expenditure for the 2017/2018 financial year up to that point was R161-million, already overspending the budget by R117-million.

A pattern of alleged overcharging

The dramatic overspend in the Free State suggests that the province is either being charged more than expected (with invoices inflated as in the case in North West) or the service is being used much more than anticipated. Almost everyone Spotlight spoke to suggests the former. While Buthelezi EMS’s quoted rates are in line with the industry, it is on the billing side where red lights start going off.

A senior healthcare worker based at a Free State hospital alleges that Buthelezi EMS often transports multiple patients in a single ambulance as part of their inter-facility transfer service. Sometimes as many as five patients will be transported in one ambulance, but Buthelezi would allegedly then bill as if five different ambulances were used and write invoices with five different reference numbers. This pattern was confirmed by more than one healthcare worker we spoke to. (See the previous article in this series for more on the impact this has on patients.) At other times, patients who could safely be transported in cars are allegedly transported at great cost in ambulances.

It is also alleged that Buthelezi often charges for distances that are longer than the actual distances travelled. Spotlight was told of a case where a 2km trip was charged for as a 100km transfer. While we have not seen invoices proving such overcharging in the Free State, essentially the same allegations were repeated to us by senior hospital management as well as a well-placed person in the Department of Health in the province. This is also in line with what has been happening in North West. Part of the problem seems to be that Buthelezi EMS often does not have Advanced Life Support (ALS) capacity in all the districts that they are supposed to – and that as a result ALS vehicles and staff must be sent from other districts – thus increasing both cost and waiting times.

There has also been a shift in the Free State whereby from the 2016/2017 financial year invoices are submitted to the provincial emergency medical services department in Mangaung, rather than to hospitals as the case was before. According to Motau, the payment of these invoices was at the same time shifted from hospital budgets to the provincial emergency medical services budget. Some senior doctors complain that this shift has made it much harder for hospitals to verify that government is not being overcharged.

Spotlight sent Buthelezi a long list of questions about overcharging and a number of other issues. Buthelezi did not respond to any of the specific questions, but sent Spotlight an e-mail that has been published in full with a previous article in the Health4Sale series which can be read here.

No website, many companies

Despite having had revenues of over a billion rand in the last four years, Buthelezi EMS does not have a website. The www.ButheleziEMS.co.za domain has been registered, but the site has remained under construction for the more than two years that the company has been on Spotlight’s radar. Some posts are made on the company’s Facebook page, but the kind of information one expects to find on a company with this level of revenue is nowhere to be found online.

In addition, CIPC records and invoices that the company has submitted in North West indicate that technically Buthelezi EMS is sometimes one company, and sometimes another. In North West the company name on invoices did not correspond to the company registration number on the same invoices.

Thapelo Buthelezi is, or has been, a director of at least six different companies all named as variations of Buthelezi EMS:

Buthelezi EMS CC

Buthelezi EMS (PTY) LTD

B EMS CC (Currently some ambulances are being rebranded as B EMS)

Buthelezi HEMS CC

Buthelezi Helicopter EMS (PTY) LTD

Buthelezi One Stop Emergency Medical Services CC

A number of these companies have been in de-registration due to the non-filing of annual returns. Failure to file annual returns would result in companies not having a valid tax clearance certificate, and thus not be eligible for government contracts. The Free State contracts we have seen do not contain registration numbers – which makes it hard to verify with which of the various companies the Free State are in fact contracted. In North West, the name of the company on Buthelezi’s invoices did not correspond with the company registration number on the same invoices.

Apart from the above, he is listed as a director of at least 14 other companies, including Ndizani Funeral Services, TSB Motors, Thapelo Buthelezi Hospital, TSB Medics, Ikanyezi Trading and Construction, and Mt Ararat Apostles (a non-profit). DM

Note: While Spotlight is published by SECTION27 and the Treatment Action Campaign, its editors have full editorial independence – independence that the editors guard jealously. Spotlight is a member of the South African Press Council.

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