South Africa’s Untouchables
health officials take the public and treasury for fools
- When the Department of Health officials take taxpayers for fools, the last laugh awaits. After uSpiked picked on a possible case of fronting, we investigated and gave health officials time to fix the mess, but they simply used the information to shield the offending company.
- With evidence that Medi-Core Technologies was a front for a couple restricted by Treasury and banned from doing business with government till 2023, we had expected the officials to rectify the mistake, but instead they rushed to amend the implicating records
- The department has also hastily signed-up the supplier for additional contracts worth millions of rands
- Attempts by officials to conceal evidence of their own failure has left it more exposed to complicity in what we can now declare as fraud
Between 1997 and 2008, Chen-Yen Wu and his wife Li-Jung Wu operated at least twelve (12) entities registered to their names. Due to a long string of blunders, the couple found themselves in hot water with Treasury and locked out of bidding for government work.
The couple’s plan to re-engage with the Department of Health likely began with the birth of Jiaxing U-Life Medical Device Technology Co. Ltd in the Chinese province of Zhejiang and Medi-Core Technologies (Pty) Ltd in South Africa.
Medi-Core Technologies, which was registered to Moonilal Hansraj Deopursat, a long-serving employee of the Wu's, was clearly a “front”. In its subsequent bid for condoms and lubricants tender with the department of health, Medi-Core reportedly provided Jiaxing U-Life Medical Device Technology Co Ltd. as its condom manufacturer.
After verifying all the data and records that we had obtained, uSpiked asked the Department of Health how such a clear case of fronting could have passed their scrutiny.
Thamishanban (Anban) Pillay, the deputy director general for health regulations and compliance, provided a masterpiece of government spin. Below is his full response:
“Fronting is a serious offence in terms of our conditions of contract and where we identify such an offence we will apply the necessary remedies. In the case you have reported below I have not been able to identify any evidence to support the suggestion that Medi-Core Technologies (Pty) Ltd is owned by Mr. Chen-Yen Wu. The certificate from the CIPC does not list Mr Chen-Yen Wu as a Director.” (sic)
“Secondly, the Treasury database of restricted suppliers does not reflect the name of Mr Chen-Yen Wu. This database id publicly available and you could also search the same.”
For any company to appear on the database of restricted suppliers, the affected department must submit relevant details to Treasury. Wu was listed for breach of contract with the Department of Health. On its submission to Treasury the Department of Health simply identified the supplier as L. Wu, leaving room to beat the same system.
Dr. Pillay must have known that the restriction was slapped on the couple in the names of Mrs. Li-Jung Wu, as was submitted to Treasury by his department. We have since learnt that the restriction was recommended to Treasury by the same Department of Health after one of the couple’s companies, Juel Health (Pty) Ltd, supplied defective condoms in 2007 and failed to make certain deliveries to the Western Cape using another company, Bathathe Health (Pty) Ltd.
Pillay continued; “Based on the information before me I cannot find any evidence to suggest that there is fronting by Medi-Core Technologies Pty) Ltd.
“Nevertheless, if you have any evidence that indicates that this bidder is guilty of fronting please supply this information so we can come to the same conclusion and implement the appropriate remedies.” (sic)
From previous dealings with Pillay, we knew he was just inviting us to his poker game. He simply wanted to know the magnitude of evidence in our possession. We provided detailed information and went further to direct him to where he could have the same verified.
Among the details we provided were the incriminating addresses provided by Medi-Core for the condoms and lubricants bid and the fact that the email address provided for Contract HM01-2015CNDM was regularly being accessed from computers whose IP addresses had links to the blacklisted Chen-Yen Wu. We pointed out that the latest tax returns for the registered director of Medi-Core Technologies indicated that he was an employee of Wu’s other companies. Also, there was the issue of who had been paying bills for the cellphone number listed on the contract.
It is now clear that our misgivings regarding Pillay’s intentions were not misplaced. He did not request the information to launch investigations, but to cover-up failures by officials in his Unit. The officials rushed to isolate the incriminating records of Medi-Core.
About four days after we provided the information above, on November 9, 2015, Khadija Jamaloodien (who works under Pillay and had been copied in all email communication), signed off Contract No. HM04-2015SS for supply and delivery of surgical sundries to the department.
Therein, Medi-Core Technologies was awarded a contract to supply various items including aprons, gowns, shields and spatulas worth R6.335 million. But, upon feeding the records of the new contract into our system, we picked up some ingenuity that could only have been effected in coordination with Medi-Core and the individuals behind it. The contact person for the supplier had been changed to Moonilal Seopursat, from the original name of Ajithi Seopursa. The cellphone number that had previously been given for Contract No. HM01-2015CNDM, which we had linked to Mr. Wu, was missing from the new contract.
This hastily signed contract also displayed a new postal address for Medi-Core Technologies - PO Box 1803, Verulam 4340 as opposed to PO Box 446 Hyper-By-The-Sea, which has long been for the Wu family.
In essence, all information that we had provided to the department proving a case of fronting had either been removed or amended. What Pillay and his team never counted on was the fact that we had kept a vital ‘card’ on our deck: the link to Jiaxing U-Life Medical Device Technology Co. Ltd., which was founded with the help of the couple in 2009 just as Treasury was blacklisting them. All the products contracted for supply by Medi-Core Technologies in Contract No. HM04-2015SS bear ‘Ulife’ as the ‘Brand Name’.
Two days after we published our revelation of how a blacklisted contractor landed a R776.8m contract, instead of reviewing their defensive stance, Pillay had Jamaloodien sign off another tender, Contract No. HP14-2015PM for ‘supply and delivery of pharmaceutical packaging materials to the department of health’.
In this deal, Medi-Core Technologies was contracted to supply various packaging items worth R32.533 million. And just like in the earlier contract, all the packaging products are branded ‘Ulife’.
While we appreciate that the department may not have the capacity to verify the true ownership of U-Life Medical Device Technology Co. Ltd in China, there are more local links to the restricted supplier.
We know that the department banned Juel Health from ever bidding for contracts after the defective condoms saga of 2007. Listed as the directors of Juel Health are Chen-Yen Wu and Selina Naidoo.
Soon after the restriction by Treasury in 2009, U-Life Medical Device Technology was created. And without shame, their listed South African ‘agent’ turned out to be Wupro Technologies (Pty) Ltd, with Selina Naidoo being the contact person. So, with the department purportedly contracting Medi-Core Technologies to supply U-Life products, the officials have, with impunity, contracted the entities they had banned from doing business with them.
While we have not obtained any evidence of back-scratching, when Pillay told a Health-e journalist last month that some suppliers are often in breach of their contracts and that it was making it impossible to deliver services to the public, he should explain whether a two year-old entity has the capacity to handle close to R800 million worth of contracts.
The officials were in such a rush to conceal the rotten transaction that they lacked the time to include the latest contracts in the Master Procurement Catalogue the department published on December 1, 2015.