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Red Roses Africa (Pty) Ltd, a company that sold hand sanitiser to the South African Police Services (SAPS) for R515-million in the early days of the Covid-19 pandemic, has been referred to the Competition Tribunal after an investigation by the Competition Commission found it had made a gross mark-up of 236% on the sale. The Commission’s investigations stem from special regulations issued under the Disaster Management Act, which aimed to protect consumers and customers from immoral, unfair, unreasonable, unjust or improper commercial practices during the state of disaster. Commissioner Doris Tshepe is quoted as saying the excessive price was exploitative and directed at taking advantage of the SAPS at a time when PPEs, particularly hand sanitisers, were in high demand. The company denied that it was being investigated by anyone and said the Competition Commission “had not made any adverse findings against Red Roses following its investigation”. The Daily Maverick reported on the R515-million contract Red Roses scored with the SAPS in November 2023.
The company has been investigated by the Special Investigative Unit (SIU) and has been featured in its two latest reports to the President. In April 2023, the Competition Tribunal found the company, Blue Collar Occupational Health, guilty of excessive pricing. The SIU reported that the sanitiser was purchased directly from Dis-Chem and delivered by them to the SAPS warehouse in Silverton, Pretoria. However, of concern is that in terms of the Competition Act, there is a cap (of 10% of a firm's annual turnover) on the administrative fine the Tribunal may levy on a guilty party. This means the penalty amount is significantly lower than the excess profit (i.e., the overcharge to SAPS).
Additionally, a person who has suffered loss due to a prohibited practice (in this case SAPS) may commence action in a civil court for damages arising out of a prohibited practice. The Special Tribunal has the power to declare the whole or any part of an agreement to be void and order a period of imprisonment of no more than 12 months. However, lawyers say the danger exists that hundreds of millions of Rand obtained through unlawful excessive pricing may only be recovered through civil litigation initiated by the SAPS or through an order of the Special Tribunal. On 3 May 2023, the Presidency published the Third Final Report of the SIU under Regulation 23 of 2020 into Covid-19 corruption on its website. This report declared that the procurement was unlawful and noted that a SAPS whistle-blower alleged that the contract had arisen from “a complete dereliction of duty and complete disregard of accountability by two senior managers”.
The SCM department is alleged to have been involved in collusion, price inflation, and flouting procurement processes and policies. The SIU has named two senior officials, Maj Gen J Riet and Mrs Duiker, who are “alleged to be involved in perpetrating these irregularities”. The investigation has now been finalised, with one criminal referral, three disciplinary referrals to the SAPS, and one civil matter which might be heard by the Special Tribunal or High Court. However, further investigation and time will be required, possibly taking several more years, while those who carried out and benefited from prima facie unlawful acts continue to hold onto the proceeds of likely corruption. This is the case with much of the Covid-19 procurement corruption, disproving the adage that crime doesn’t pay.
This article is originally published by dailymaverick.co.za under the Covid-19 Corruption updates.
