Tembisa Hospital R2 billion corruption: How the CEOs 'failed to do their jobs'

The Special Investigating Unit (SIU) interim report into allegations of maladministration, which resulted in Tembisa Hospital being looted for over R2 billion, has exposed several ethical failures and a lack of tender due diligence by the CEOs, which led to widespread corruption.

Under the Public Finance Management Act 1 of 1999 (PFMA), the Chief Executive Officer (CEO) of a public hospital, as the Accounting Officer or as a delegate of the relevant Accounting Authority, bears a statutory and fiduciary duty to ensure that all financial and operational decisions are taken with due diligence, transparency, and accountability.

Section 38(1)(a)(i) of the PFMA expressly requires the Accounting Officer to ensure that the institution maintains effective, efficient, and transparent systems of financial and risk management and internal control. In the context of due diligence for potential partnerships or transactions, this translates to the CEO providing strategic leadership in evaluating the financial viability, compliance, and alignment of the prospective engagement with the hospital’s statutory mandate and strategic objectives.

Furthermore, in terms of Section 51(1)(b)(ii), the CEO must take effective steps to prevent irregular, fruitless, and wasteful expenditure, and to safeguard the hospital’s assets and interests. This duty inherently includes assessing legal, operational, and reputational risks that may arise from entering into partnerships or agreements.

Therefore, the CEO’s role in due diligence is both leadership-oriented and compliance-driven - ensuring that the decision-making process adheres to the principles of good governance, public accountability, and ethical financial management as envisaged by the PFMA and associated Treasury Regulations.

In summary, the hospital CEO must ensure that every potential partnership or transaction undergoes comprehensive due diligence, guided by sound financial management principles and consistent with the hospital’s mission and the broader objectives of the public sector integrity and value for money.

Whistleblower Babita Deokaran, who was assassinated in August 2021, had uncovered massive corruption related to fraud, corruption and maladministration at the hospital and how the syndicates had devised devious means to avoid regulatory triggers.

Deokaran was the first to identify suspicious payments to over 200 companies, totaling around R850 million at Tembisa Hospital. However, the amounts identified by the SIU investigation now exceed R2bn.

The SIU investigation found that the syndicates had bypassed tender processes, falsified documents and overpriced items.

The investigation also identified that the syndicates kept the value of purchase orders below R500,000, which is the threshold for formal tenders. This enabled them to use a less-stringent three-quote system for procurement, which was easier to manipulate.

The SIU found that this was intentionally abused to circumvent the tender process and to keep the authorisation level as low as possible.

It also found that suppliers were not sourced from the central supplier database (CSD) and the required commodity list. Instead of using the official CSD, the hospital allegedly used a non-compliant process that included no evidence of fair rotation among service providers, suggesting potential collusion or fronting. The SIU also identified significant non-compliance with procurement terms.

The SIU concluded that corruption at the hospital was not an isolated event but a deep-rooted pattern of fraud, collusion and maladministration enabled by a severe lack of oversight by officials.

Governance expert and political analyst Sandile Swana said the CEO at an institution like Tembisa Hospital is in charge of ensuring that all systems of oversight and control, as well as risk management, are in place in relation to the procurement and tendering processes.

“All of those things give the SIU a checklist to investigate. They are checking whether those things that are stipulated in law, have been followed for each tender and in each transaction,’’ he said.

While initially authorised to investigate transactions from 2020 to 2023, the SIU expanded its scope to include all transactions from 2018 to 2024.

From 2016 to January 2021, the hospital was led by the former CEO, Dr Lekopane Mogaladi. Gladys Bogoshi was appointed the acting CEO from February to April 2021. The late Dr Ashley Mthunzi, who was named as a central figure in the corruption scandal, was appointed in April 2021 until he was suspended in August 2022. The SIU interim report found that Mthunzi authorised the appointments of non-compliant service providers.

His wife, Lerato Mthunzi, recently said that her husband has been unfairly scapegoated.

Mthunzi, who is the spokesperson for the Independent Health and Allied Workers Union (IHAWU), said the service providers were already in business with the health department and the hospital when her husband was appointed as CEO in 2021.

In the statement issued by Mthunzi on behalf of IHAWU, she added that the SIU findings confirm that the crisis at Tembisa Hospital was never the doing of one CEO. She said several CEOs, including Mogaladi and Bogoshi, have managed the hospital.

Mogaladi declined an interview, while Bogoshi did not respond to calls and messages.

Mogaladi was suspended from his position as CEO in 2021 after a damning report from the Health Ombudsman regarding the death of a patient, Shonisani Lethole, in June 2020. The investigation found that Lethole received “substandard and negligent” care, including not being fed for more than 100 hours.

This was after Lethole tweeted to then-Health Minister Zweli Mkhize, complaining about the poor conditions and lack of food he was receiving at the hospital while being treated for Covid-19 symptoms. He died shortly thereafter.

Mogaladi appealed his suspension and the report's findings, arguing that the Ombud acted beyond his mandate.

An independent tribunal consisting of Professor Rudo Mathivha and Professor Ebrahim Variava, and a retired Constitutional Court Judge, Bess Nkabinde, heard his appeal, and in January 2023, the tribunal upheld the disciplinary recommendations against Mogaladi, stating he should be disciplined for the hospital's failings.

Another governance expert, Professor Andre Duvenage, said all three CEOs failed to take any responsibility when the Tembisa Hospital was looted.

This, according to Duvenage, includes the functioning of the hospital, financial management, and the sustainability of services that should be delivered in terms of quality and expected standards.

“So the CEO is responsible, as they say, 'the bus stops with him',’’ he said, adding that everyone who is associated with the hospital should be investigated.

Duvenage added that the investigation should include those who held management positions in the past.

“It is impossible that these CEOs couldn’t have known about what was going on at this hospital. And if that is the case, they are extremely bad managers or they are completely blind, or simply they are just not doing their job,” said Duvenage.

Professor William Gumede from the Wits School of Governance said even though the CEO of the hospitals do not have much signing powers, the three could have been investigated if they were aware of the situation at the hospital, adding that one of the responsibilities of the CEOs is to alert or blow the whistle, as accounting officers.

Gumede said the CEOs could sign off on purchases below R500,000, adding that the powers to sign amounts greater than this had to be authorised by the provincial health department and that both internal and external auditors should also be held accountable.

SIU spokesperson Kaizer Kganyago responding to a question on whether the CEOs will be held accountable, said the evidence from the investigation into the procurement processes leads to a person of interest, and then the investigating unit examines their involvement in the matter.

manyane.manyane@inl.co.za