SIU recovers R25 million from irregular Gauteng Education COVID-19 deep cleaning contracts

In a significant victory for public accountability, the Special Investigating Unit (SIU) has successfully concluded settlement agreements to recover R25 million from various companies and individuals linked to irregular COVID-19 deep cleaning contracts.

This recovery stems from a 2022 Special Tribunal judgement which reviewed and set aside contracts worth R431 million awarded by the Gauteng Department of Education (GDE). The current settlements specifically involve entities and individuals associated with the Chachulani Group Investment Holdings, who have now agreed to repay R25 million out of the R40 million they were originally paid by the department.

A breakdown of procurement failures

The investigation into these contracts revealed a staggering departure from standard procurement protocols. During the peak of the pandemic in 2020, as schools prepared to reopen under disaster management regulations, the GDE bypassed its own Supply Chain Management (SCM) division.

Instead of a formal vetting process, service providers were sourced through informal channels including existing supplier databases, personal referrals, and even WhatsApp messages. This haphazard approach led to the appointment of numerous entities – such as Netvision Energy Savers, Psychin Consulting, and Home Ground Trading – without the necessary oversight required to protect public funds.

Arbitrary pricing and constitutional violations

Financial scrutiny by the SIU uncovered that the procurement was fundamentally not cost-effective. Rather than paying service providers based on the actual square meterage of the area cleaned, a senior official within the department appears to have arbitrarily set flat fees. These fees ranged from R250,000 to R300,000 for primary schools, secondary schools, and district offices.

The investigation concluded that these charges bore no proportion to the actual work performed or the cost of materials used, representing a clear violation of Section 217 of the Constitution, which mandates fair, competitive, and equitable procurement.

Asset forfeiture and financial recovery

To ensure the recovery of these funds, the Special Tribunal ordered the debiting of several bank accounts and offshore trusts. Significant amounts were pulled from the bank accounts of Chachulani Group Investment Holdings, Netvision Energy Savers, and Mpale Investments Holdings.

Notably, over R12 million was recovered from two offshore unit trusts belonging to the Naledzi Investment Trust, along with an additional R8 million from their local accounts. Financial institutions are now mandated to transfer these settled amounts into the SIU's bank account within seven days of the Tribunal granting the order.

Accountability and future actions

This outcome marks a critical milestone in the SIU's broader mandate, directed by President Cyril Ramaphosa, to investigate corruption and malpractice related to the COVID-19 national state of disaster. Beyond the financial recovery, the involved service providers have been forced to submit detailed financial statements to enable the SIU to calculate the exact profits derived from these contracts.

Furthermore, the respondents have formally agreed to withdraw their appeal before the Johannesburg High Court. The SIU remains committed to referring any evidence of criminal conduct to the National Prosecuting Authority to ensure that those who unlawfully benefited from state contracts are brought to justice.