R800 Million Hospital Oxygen Plant Tender
By Lerato Mpembe
The Department of Public Works has initiated an investigation into an R800 million hospital oxygen plant tender following allegations of corruption involving the Independent Development Trust (IDT), the state-owned entity responsible for managing the tender on behalf of the Department of Health.
The IDT, established to oversee the implementation and delivery of essential social infrastructure for the government, has come under scrutiny after an exposé by the Daily Maverick’s investigative unit revealed irregularities in the tender process. The investigation uncovered that two of the three companies contracted to supply oxygen to South African hospitals lacked registration with the South African Health Products Regulatory Authority (SAHPRA), while the third company allegedly submitted fraudulent documentation.
Public Works Minister Dean Macpherson expressed concerns over the IDT’s ability to conduct an impartial internal investigation, citing the entity’s reluctance to share pertinent documents related to the corruption allegations. He noted that the IDT’s board of trustees is currently not quorate, with only seven out of the required twelve members in place, falling short of the necessary quorum. To address these governance challenges, Minister Macpherson plans to appoint an independent firm to investigate the alleged corporate governance failures that have led to the breakdown in trust.
In light of these developments, the Department of Health has indicated its intention to terminate its relationship with the IDT. The IDT’s recent history has been marred by corporate governance and performance challenges, as highlighted in its 2020/21 Annual Report. The report details a turbulent financial year, with the entity grappling with issues stemming from an interim board that lacked the necessary quorum to effectively direct the organisation. 
Further investigations have revealed that the Department of Health initially estimated the cost of rolling out the oxygen plants at approximately R256 million. However, the allocated budget has since ballooned to over R800 million, raising concerns about potential financial mismanagement. Both the Department of Health and the IDT have attributed the increased costs to “price escalations.” 
The IDT has defended its procurement process amid the corruption allegations, asserting that it adhered to all necessary protocols. Nonetheless, the controversy has prompted the Global Fund, a major international health financier, to deploy inspectors to South Africa to investigate the tender fraud linked to the R800 million contract it funded. 
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