In September 2021, investigations by Daily Maverick brought to light one of the largest acts of dodgy and overpriced personal protective equipment (PPE) procurement during the Covid-19 state of disaster. It was reported how Red Roses Africa, also using the name Mainstreet 699 and registered in Mpumalanga, had scored a contract from the South African Police Service (SAPS) worth nearly R600-million for the supply of hand sanitiser and masks.
At the time, Blessing Qwabe, the director of Red Roses Africa and family member of Gumede, and his lawyer vehemently denied there was any impropriety involved. His lawyer described the report as “filled with, inter alia, inaccuracies, innuendos, sensationalism and assumptions”.
But an application filed by the Special Investigating Unit (SIU) at the Special Tribunal on 26 March puts prominent businessperson Robert Gumede at the centre of the alleged unlawful contract, and has provoked a bitter dispute between him and the SIU.
Daily Maverick was only recently able to obtain a copy of the application and can reveal details of the application for the first time. In it, Gumede is described as “a well-known businessman who is associated with many businesses that conduct business with government in various and vastly different aspects of trade”. The SIU says he is a “critical player whose role appears crucial from the start until the end”.
The SIU asks the Special Tribunal to “review and set aside” the contract between Red Roses and the SAPS, and to order Gumede, Qwabe and Red Roses to repay the SAPS R390,754,000 plus interest within 30 days of the SIU obtaining a successful order from the tribunal.
It calls the amount it seeks to recover an “unlawful overcharge”.
Although four months have passed since the SIU filed its application, Gumede, Qwabe and Red Roses have yet to file answering affidavits. But they are fighting back.
Last week, in response to questions, Daily Maverick received a 20-page statement plus annexures from them, disputing almost every “baseless and unsubstantiated allegation” made by the SIU, and accusing the SIU’s chief forensic investigator of “perjuring himself for his own motives and agenda”.
Read the full application filed by the Special Investigating Unit at the Special Tribunal: SIU Red Roses
The facts according to the SIU
The SIU’s case is set out in an affidavit by Jackey Mathabathe, its chief forensic investigator. Although providing much more detail and supporting evidence, it bears out what Daily Maverick first brought to light in 2021 when it was noticed that Red Roses Africa received one of the largest payments to suppliers listed on the Treasury’s publicly accessible Covid-19 database.
Essentially, the SIU alleges that, on 25 March 2020, a mere five days after President Cyril Ramaphosa had declared a national state of disaster because of Covid-19, Gumede wrote to Molefe Fani, a senior official in the National Treasury, to persuade it to buy PPE (mainly hand sanitiser and masks) from Red Roses Africa. He is the company’s board chairperson and his nephew is its director. His letter stated that his company “offers end to end testing and protective gear solutions against the coronavirus Covid-19 pandemic”.
“Through our partnership with certified and approved global suppliers of Covid-19 protective and testing products, that were supplied to Wuhan to fight the scourge, Mainstreet 699 is well positioned to supply internationally certified goods and products on an urgent emergency basis at the shortest time.”
Over the following days, similar letters were sent to senior generals in the SAPS. On this basis, a procurement authorisation worth R596,720,800.00 was signed by one SM Mahlangu on 1 April 2020, with the handwritten note that “verbal authority granted Col Ngobeni on emergency delegation”.
However, according to the SIU, this deal violated the Constitution, the Public Finance Management Act, Treasury regulations and other laws governing public procurement.
The SIU’s investigators were able to demonstrate and uncover one of the biggest fraudulent schemes that has been mastered by the First to Third respondents who have unlawfully extracted and defrauded SAPS and the public purse of hundreds of millions. SIU affidavit – para 409
The SIU’s investigation makes a host of far-reaching allegations. Among them are:
- The SIU claims that Gumede had told the SAPS the PPE could be imported immediately from China and brought to South Africa on a “specially chartered Airbus”. But Mathabathe says “there never was any airbus that was ready and waiting or even readily available … in China with the required PPE equipment….” Instead, the respondents “appeared to have been either lying or fraudulently misrepresenting the truth to SAPS so as to induce the conclusion of an urgent contract, or were only going to look for an airbus after the payment was made to them”. Gumede and Qwabe dispute this and say the source of the PPE and how it would be transported is irrelevant to the terms of the contract.
- The SIU says that, instead of being imported from China, the hand sanitiser was sourced from local companies, including Dis-Chem, and that far less was delivered than contracted. Red Roses was contracted to supply 90,000 25-litre containers. Gumede and Qwabe insist they fulfilled the whole contract, but they do not provide any documentation to prove this. Of the 12 million masks, only two million were provided, according to the SIU.
- The SIU says Red Roses Africa paid R162-million to the companies that supplied it with the hand sanitiser and masks it provided to the SAPS, allegedly making nearly R400-million that the SIU says is an “unlawful overcharge”. Gumede and Qwabe do not dispute the amount they made from the PPE sales, but say it was reasonable and not an overcharge.
- The SIU says Red Roses Africa paid R1,150 for a 25-litre vat of hand-sanitiser inclusive of VAT, but it sold the same on to the SAPS for R5,405 – “78% above the unit costs resulting in a 370% gross profit”.
- The SIU says Red Roses Africa was not tax compliant at the time it entered into the contract with the SAPS. Gumede and Qwabe dispute this.
- Although not referred to in the SIU affidavit, Daily Maverick has also established independently that Red Roses was not registered as a supplier of PPE with the SA Health Products Regulatory Authority or the SA Bureau of Standards.
- The SIU says that, after delivery, it was discovered during random spot checks by the SAPS that some of the sanitiser Red Roses Africa had supplied was diluted to below the required 70% alcohol content. Gumede and Qwabe say this related to only one of their suppliers.
- Despite the level of detail in the 20-page statement, similar averments have not yet been made under oath in an answering affidavit at the Special Tribunal. This must normally be filed within 15 days of a respondents’ notice of intention to oppose an application.
A source claimed that this is because intense efforts are under way to try to pressure the senior leadership of the SIU to withdraw the case. As the billionaire owner of the Guma group of companies, including IT company Gijima, and as an ANC funder, Gumede is politically connected.
Read: Joint Response by Robert Gumede and Blessing Qwabe to Daily Maverick – 21 August 2024 [FINAL]
The SIU contends that not only was he the main person involved in initiating and negotiating the contract with the SAPS, but he was also the main beneficiary of the profits. It alleges that, in total, R514,694-million was paid to Red Roses Africa in three instalments between 21 April and 21 May 2020. This is not disputed by Gumede in his response to Daily Maverick.
The SIU alleges that, post-payment, these monies were paid on through his network of companies, service providers and associates – six of them are listed among the 47 respondents in the case. Following the “money trail”, says the SIU, it found that “soon after the funds were received” they were transferred “to beneficiaries with close links to [Robert Gumede] and with no history of supplying PPE related goods and services”. In its affidavit, the SIU invites all the respondents “to demonstrate any value rendered to the SAPS and/or [Red Roses Africa] that warranted payment of the monies” to them.
Gumede himself received an amount of R4.2-million, according to the SIU’s affidavit. His nephew, Qwabe, was paid only R250,987.
Mathabathe’s affidavit sums up his findings by saying: “These first to third respondents may have, through their insatiable greed, directly or indirectly caused the unnecessary deaths of front-line police officers and has certainly resulted in the theft of SAPS’s funds.”
Gumede and Qwabe’s rebuttal
Daily Maverick approached Gumede and Qwabe for comment separately. In their 20-page joint statement, they provide what they say is a detailed rebuttal of the SIU’s application.
But in addition to putting their side, they add a new dimension. They allege that the SIU’s chief forensic investigator has concocted the case against Red Roses, although their letter does not say why Mathabathe – who sources say has been a trusted employee of the SIU for nearly 15 years – would have done this.
Gumede and Qwabe claim: “There has been a blatant disregard, distortion and withholding of the evidence in the SIU’s possession. We have pointed this out to the senior management of the SIU and they are currently reflecting on this. We can demonstrate that the SIU has committed a serious abuse of process and the investigation officer … has in our view perjured himself for his own motives and agenda.”
Perjury is a criminal offence, but it does not appear that any charges have been laid against Mathabathe.
Their statement repeats this serious allegation several times, claiming withholding of “critically available information”, “suppression of information”, “dishonesty”, “bringing the SIU into disrepute” and a “false and contorted narrative” on Mathabathe’s part.
In essence, it says the contract was lawful and fully performed, that Red Roses was tax compliant, and that Mathabathe has exaggerated issues such as the availability of the plane from China and the diluting of some of the sanitiser to suit his own narrative.
An unlawful surcharge?
Their statement touches only briefly on the allegations of excessive pricing, what the SIU calls the “unlawful surcharge”. On the issue of how and why the R515-million paid to Red Roses by the SAPS was distributed among the companies the SIU lists as respondents in its application, they say: “The Guma Group assisted Red Roses to pay for PPE upfront since the government would only pay 30 days after delivery. The Guma companies such as Gijima have been repaid the loans.”
But it would appear that the prime motivator for the contract was the Guma Group. Correspondence annexed to the SIU’s founding affidavit shows that most of the correspondence to the SAPS and National Treasury came from senior employees of the Guma Group who are not listed as directors or employees of Red Roses.
Judging by its slapdash and neglected website, which was created in 2020 and has not been updated since September 2021, the company is not involved in business. This appears to be confirmed by its unused offices, which are still given as its physical address on its website.
In response to questions, SIU spokesperson Kaizer Kanyago confirmed “that all respondents are opposing our application”. But he stated: “We cannot comment on the case as the matter is subjudice.”
Because the respondents’ answering affidavit has not been filed, a date for a hearing at the Special Tribunal has not been set.
Other investigations
Gumede and Qwabe say a number of times in their statement that the contract was investigated and cleared by the SAPS and the Auditor-General. This is not quite true.
This week, Daily Maverick confirmed that an excessive pricing complaint against Red Roses Africa is still waiting to be heard by the Competition Tribunal. Siya Makunga, the spokesperson for the Competition Commission, said the Commission is pursuing “charges for contravention of section 8(1)(a) of the Competition Act”, which states that “it is prohibited for a dominant firm to charge an excessive price to the detriment of consumers or customers”.
But he added: “The parties are still engaged in talks on a possible settlement agreement.”
Similarly, although Daily Maverick has not yet been able to establish what is happening in the SAPS with its PPE procurement investigations, it is not true that its internal auditors “have not found any evidence of any irregularity or breach of procurement laws or protocols.” In fact, the opposite.
A draft internal audit report into PPE procurement by SAPS between March and August 2020 found 34 orders for PPE to the value of R1,620,694,361.20 were “concluded on verbal authorisation without obtaining the sufficient number of quotations”. Mainstreet 699, the supplier of “multiple goods” in a contract of R596-million, is listed as one of the companies where there was “irregular expenditure” because of “verbal authorisation and no sufficient quotations obtained”.
The report recommends an investigation.
However, Major-General Dinah Nkosi, the chief audit executive of the SAPS who signed the report, was subsequently demoted to a lesser position. Her report was never acted upon.
In 2021, the Hawks announced it was undertaking investigations into “fraud and/or corruption by the SAPS in the procurement of PPE between April and July 2020”. It’s also not clear what happened to these investigations.
Read more: Competition Commission and SIU investigate police’s disinfectant supplier Red Roses Africa; and Latest SIU report reveals billions more rands of unlawful and dodgy Covid-19 spending exposed; SAPS PPE scandal: Clash of top brass amid claims of massive corruption
Judging by Gumede and Qwabe’s media response, there may still be some way to go in securing truth and justice in the Red Roses Africa matter.
However, the recent decision of the Special Tribunal to set aside a R257 million contract for PPE between Nkhane Projects and Supply and the Gauteng Health Department, as well as the SIU’s vigorous investigation into the corruption at Tembisa Hospital that led to the killing of Babita Deokoran three years ago, suggests law enforcement authorities remain seized with PPE corruption.
Justice may yet eventually catch up with companies and individuals who exploited an emergency for enormous personal gain. DM
Who is Robert Gumede?
Early Life
Robert Gumede (61) is a South African businessperson, born in Nelspruit (now Mbombela), Mpumalanga, in 1963. His Guma Group profile says he has seven siblings from a single mother who was a live-in domestic worker. He was raised by his maternal grandmother, and at seven years old, he worked as a golf caddy at the Nelspruit Golf Club.
Education
He studied law and became a state prosecutor, resigning a few years later to pursue his business interests. He has built a global group of diversified companies.
Today the Nelspruit Golf Club is named after him. He married Dr Portia Gumede (née Mkhize) on its fairways.
Businesses
He is the executive chairperson of the Guma Group, a conglomerate of businesses spanning a range of industries, including mining, energy, infrastructure development, tourism and hospitality, rail and ports, healthcare and real estate. Gumede is the founder and chairperson of the IT firm Gijima Technologies and its holding company, the Gijima Group.
His Guma Agri and Food Security is one of the businesses making up Vision Investments, the consortium that won the bid to take over distressed sugar producer Tongaat Hulett this year.
Controversy
It is not the first time a company linked to Gumede has been mired in controversy. In 2014, the Special Investigating Unit indicated that a R360-million tender awarded to his company Gijima AST by the Department of Rural Development and Land Reform and the State Information Technology Agency was irregular and should be set aside. Gijima AST denied any wrongdoing. In the SIU’s annual report for 2022/23, the matter was listed among the “high court ongoing matters from previous financial years”.
Philanthropy
Across Gumede’s profiles on the websites of groups he’s connected to, there are certain recurring descriptors such as “serial entrepreneur”, “philanthropist” and “pan-Africanist”. His profile on the Guma Group site says he’s a believer in the phrase, “sharing is caring”.
The Robert Gumede Family Keni Foundation was formed to provide scholarships for students from Mpumalanga.
ANC donations
Gumede is a close friend of former deputy president and Mpumalanga premier David Mabuza, whose spokesperson told City Press in 2016: “It is not a secret that Mr Gumede is the premier’s personal friend.”
He is a long-standing benefactor of the ANC and City Press reported in 2016 that he donated R7.5 million and 12 vehicles to the party. He also publicly undertook to spend R40-million to tar more than 10km of gravel road in Kanyamazane and Kabokweni, where he grew up.
Rich life
Gumede celebrated his wife Portia’s 40th birthday by flying her and six close friends in his private jet to the Seychelles, Madagascar and Mozambique, and chartering a Boeing for 60 other friends, as reported by News 24 in 2016. SLN24 also reported that Gumede gave his son, Matana Robert Junior Gumede, a Porsche GT3 for passing his matric exams in 2018. DM
This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35.
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