Yet to be delivered: The R3bn Solidarity Fund's promised spending transparency

“Transparency” is one of the most frequently used words in statements from the Solidarity Fund. Most of its press releases end with the line: “The Solidarity Fund is committed to transparency around all of its activities” – a pledge which also appears on its website.  

In reality, however, the information made public thus far on exactly how the fund is using the R3.06-billion it has collected to date is extremely limited.

In the five months since its establishment to help alleviate South Africa’s Covid-19 crisis, only a handful of media briefings have been held and just two reports released on its spending – both of which contain a low level of detail on which suppliers it has paid to provide which service.

Mostly, both the media and the South African public at large have seemed content to take it on trust that the Solidarity Fund is operating with the efficiency and financial probity promised from the outset.

Perhaps this is because, as fund chairperson Gloria Serobe stressed in one of their rare press briefings, “the fund is independent of government” – though as will be seen, this distinction is in reality quite hard to draw.

Perhaps this level of trust is because the fund’s leadership brings together some of the country’s heaviest private sector hitters.

Or perhaps it is because, as fund CEO Nomkhita Nqweni noted in the same briefing, the fund represents a “beacon of hope where South Africans have come together to help fight a common enemy”. The outpouring of support for the Solidarity Fund from both large corporates and ordinary citizens has been one of the few good news stories of the Covid-19 pandemic in South Africa.

But with the country still reeling from the news that hundreds of millions of rand earmarked for emergency PPE procurement were channelled to corrupt politicians, civil servants, and politically-connected companies, the Solidarity Fund owes the public far more rigorous evidence that the billions it has collected have been well-spent.

https://www.dailymaverick.co.za/article/2020-07-29-how-covid-19-emergency-procurement-turned-into-a-cadres-feast/

The Dis-Chem testing fiasco

On 22 June, a statement from the Solidarity Fund announced that it had teamed up with pharmacy giant Dis-Chem to offer free Covid-19 testing for those who could not afford a test.

“The Solidarity Fund has approved an additional R20m towards tests for non-medical aid members and vulnerable citizens in under-served areas. This project is being supported by Dis-Chem, who are carrying the testing station and overhead costs of the project,” read the statement.

Less than a month later, however, the programme suddenly stopped. There was no communication from the Solidarity Fund to explain what had happened – or, indeed, announce an end to the free testing. A statement from Dis-Chem explained that the chain was closing all its testing facilities due to the backlog in test results at testing labs.

There was no explanation as to what would happen to the Solidarity Fund’s R20-million.

Multiple health experts contacted by Daily Maverick expressed unease about this incident, though most declined to go on record. Among their concerns was the idea of the Solidarity Fund setting up parallel testing structures to the government in the first place: a concept which was bound to create additional strain on the country’s already overburdened laboratories at a time when long delays in test results were already being reported.

At Dis-Chem’s testing facilities, set up in the parking lot of shopping centres, there were reports of people who were paying for their tests waiting as long as 19 days for test results. It was also questioned why, if the purpose of the free testing on offer was to provide services for people “in under-served areas”, the testing centres appeared to be restricted to urban hubs.

Wits researcher Professor Francois Venter told Daily Maverick that the Solidarity Fund’s testing project with Dis-Chem was “totally incoherent”. (Venter added that the same criticism could apply to the government’s community testing programme.)

Said Venter: “The problem with that test is that for you to do anything with it, you need to have a result within, at a maximum, three days later. Otherwise you should just call it medical waste.”  

Another issue was why the Solidarity Fund would choose to partner with Dis-Chem in particular – when as early as April, two months before the testing project kicked off, it was publicly known that the pharmacy chain was being investigated for price-gouging on facial masks, a practice condemned by both the Competition Commission and government.   

Daily Maverick asked the Solidarity Fund for details of how Dis-Chem was selected as a testing partner and the fate of the R20-million.

“At the time of this decision the Competition Commission tribunal had not made a ruling on their investigation on excessive pricing of surgical masks. Once this was announced, in line with its governance processes, the Solidarity Fund cancelled the intended testing partnership with Dis-Chem Pharmacies,” the fund replied, in a response attributed to CEO Nomkhita Nqweni.

This claim is confusing, since it was reported at the time that the reason for the shelving of the testing scheme was simply Dis-Chem’s decision to close all testing facilities. As previously mentioned, there was no public statement whatsoever from the Solidarity Fund at that time that the free testing was ending. There is also no mention of the testing project in the Solidarity Fund’s Health Response Report.

The fund also told Daily Maverick that the R20-million was never actually paid to Dis-Chem, and thus never had to be recouped.

“The R20-million was an intended allocation to Dis-Chem to facilitate the laboratory testing cost for 30,000 individuals and Dis-Chem would be paid in tranches for tests performed. As this was an allocation, and there were no tests performed due to the changing priorities of the National Health Department to focus on healthcare workers, no payments have been made to Dis-Chem with respect to this programme,” it stated.

No harm done? Perhaps. But to the Solidarity Fund’s critics, the incident exemplifies a number of troubling features: in particular, a lack of transparency about how and why the project came about – especially as it would impact on the government’s own testing strategy – and a lack of transparency about the shelving of the project after expectations had already been created.

Gender-based violence mitigation efforts

The difficulty in getting clear answers out of the Solidarity Fund about where its money is going, and to what end, was experienced directly by gender activist Tian Johnson, a strategist for the African Alliance.

“We had been hearing for weeks there was this R17-million that had been given for GBV [gender-based violence prevention],” Johnson told Daily Maverick.

Johnson says the only information available on the Solidarity Fund’s website was vague and failed to answer his and other gender activists’ questions.

“I asked quite a few times via email politely, and then I decided to just go a bit wild on Twitter: ‘Just tell us where it’s gone!’ That dragged on for about two months.”    

After a further claim from the fund that all the relevant information could be found on its website, Johnson invited Wendy Tlou – the fund’s head of engagement – to join a weekly Covid-19 conference held by activists.

“To her credit she was totally open and agreed. And at the meeting she explained how the R17-million was being allocated,” said Johnson.

It emerged that the first tranche of funding for GBV prevention had gone towards scaling up the National GBV Command Centre, supporting existing victim shelters and Thuthuzela Care Centres, and a number of communications initiatives. The fund had received recommendations to this effect from a consultancy firm offering its services pro bono.

Johnson and his colleagues had no quibble with this allocation of funding – though he noted that it would be helpful to see the detail regarding the procurement of laptops and equipment for the National GBV Command Centre. The activists were also mollified by Tlau’s announcement that the second tranche of funding would be open to proposals from civil society.

“That kind of transparency could have been welcomed a lot earlier,” says Johnson. “But hey, they stepped up. What will be interesting is to see how the secondary allocation unfolds.”

The ambivalence from some activists towards the Solidarity Fund may be twofold. First, there is a sense that civil society is not being truly integrated in the Solidarity Fund’s response to the pandemic, although the actors in that sector are arguably best placed to give advice on social relief efforts.

(The fund does have a humanitarian task team which consults regularly to them and includes well-known activists such as Maverick Citizen editor Mark Heywood, though Heywood stressed to Daily Maverick that the team does not have decision-making powers and was formed only after the first tranche of GBV funding was allocated.)

Second, it is a fact that many local NGOs have seen their regular donor funds diverted to initiatives like the Solidarity Fund, heightening the need for transparency from the Fund when it comes to the disbursement of that money.

The Solidarity Fund reports

The fund states that “detailed information and reporting around donations received, how we allocate resources, as well as the impact we are having” is available on its website.

But although information is there when it comes to aspects like the identity of its largest donors, the quantum of funds collected and allocated so far, and the projects supported, anyone looking for more granular detail about where the money is going will search in vain.

The Solidarity Fund has released just two reports thus far – one on money spent on food, in June, and one on money spent on medical supplies, in July.

Between the two reports, spending totalling around R767,200,000 is accounted for. The Fund told Daily Maverick that as of 19 August, R1.123-billion had been disbursed, meaning that the fate of around R500-million has yet to be listed in reports thus far.

Despite the fund’s stated emphasis on tight controls at every point in the supply chain, the decision to partner with the government on some relief aspects means that certain choices seem to have been out of the fund’s hands.

For instance, R23-million was spent on food parcels distributed through the Department of Social Development’s partners, known as provincial implementing agents [PIAs].

States the fund’s food report: “Each province has an existing PIA, which DSD already contracts with, so there was no need for an application process to determine distribution partners for this Pillar”.

As is now well known, however, the fact that government departments have preferred partners is no guarantee of those partners’ probity.

In Mpumalanga, for instance, the chosen provincial implementing agent for the Solidarity Fund’s food parcels was Kago Yabana, a foundation which focuses on distributing sanitary pads.

The entity is already at the centre of a graft scandal involving the provincial head of the social development department, Xoli Mahlalela.

City Press reported in June that Mahlalela is accused of having irregularly extended the foundation’s contract for six months at a cost of R4.3-million despite lacking the authority to do so. Mahlalela is also accused of having used the sanitary towel distribution programme to benefit his “girlfriends”. He denies all allegations.

Such are the pitfalls of working with the government’s chosen friends. But when the Solidarity Fund has been operating independently, it appears to have relied entirely on the organisation Business for South Africa [B4SA] – an amalgamation of Business Unity South Africa and the Black Business Council – to make procurement decisions.

This was revealed when Daily Maverick asked questions relating to the disbursement of funds to particular service providers, since the fund’s report on medical equipment spending contains no detail as to what the money has actually been used to acquire.

To give one example, the fund’s report records R45.1-million as being spent on medical equipment with a company called Bliss Pharmaceuticals. On the website of Bliss Pharmaceuticals, the products it sells are listed. All are either medicines or supplements – yet the money disbursed in this report has ostensibly gone towards PPE and ventilators.

Another listed firm – the Lakama Group, which has been paid R38-million – appears to be a catering and logistics company, but the report states separately that all logistics are being handled by Imperial Health Sciences: again begging the question of what service or product Lakama Group is receiving money for.

When asked for more detail, the fund responded:

“The Fund leverages the B4SA procurement platform for its capability to procure PPE at the necessary scale and speed to respond to the COVID 19 emergency. B4SA would be best placed to respond with details about specific suppliers and its procurement process.”

It added: “All companies were required to provide the necessary company documentation, including company registration, bank statements and tax clearance certificates in line with our governance standards”.

The Solidarity Fund did not respond to a question asking whether the fund intends to release more detailed breakdowns of spending.

What oversight is there, really?

The Solidarity Fund has previously stated that it has made its disbursements as corruption-proof as possible by adopting a “three lines of defence risk model”.

CEO Nqweni told a July press briefing:

“In addition to the management and the board who provide the oversight, we also have external and internal auditors and legal teams that are continuously working with us on a pro bono basis to ensure that everything we do in the fund can stand up to scrutiny.”

Is that sufficient?

As early as May, human rights lawyer and activist Fatima Hassan argued that it was not.

In an op-ed published on GroundUp, Hassan pointed out that the governing board of the Solidarity Fund “mostly consists of people from the private sector who have, in some cases, a past association with government and/or the Presidency”.

The benefit of the Solidarity Fund’s ostensible independence was that it would be able to act with a speed and agility more suited to meeting the needs of a health emergency than the government, which even in a State of Disaster is still supposed to be subject to procurement systems and parliamentary oversight.

Yet, Hassan noted that there are a number of factors which make the fund more akin to a “quasi-state fund”: R150-million of public money went into it; it was established by the Presidency, accompanied by the president’s explicit encouragement to the public to donate to it; it includes two Cabinet ministers on its board; and it has largely been doing the work of government.

She also argued that if the purpose of the fund was at least partly to prevent the capture of its resources, strong oversight was non-negotiable.

“With all due respect, in this unprecedented time, this oversight cannot be the sole prerogative of handpicked board members and a handful of private auditors, lawyers and insurance company administrators that are not an arm’s length away from significant business and pharmaceutical interests,” Hassan wrote.

Her suggestion was that the auditor-general should play the oversight role. Thus far, there is no indication that this will happen.

Parliament’s finance committee has, however, indicated that it intends to invite the Solidarity Fund “to engage further on the procurement of Covid-19 PPE”.

This interaction may be crucial, as it appears that not just Parliament but also the government may be operating in the dark when it comes to the fund’s activities.

On Wednesday, the DA released a statement querying why 10,000 locally-produced ventilators – which were supposed to be delivered by the end of June – had not yet materialised.

“The DTIC [Department of Trade, Industry and Competition] has stated that R11-million has been spent by the Solidarity Fund (which the Department gave money to) on the development of the ventilators but has no idea how much money in total has been made available for this project, despite Minister [Ebrahim] Patel sitting on the board of the fund,” the DA statement read. DM