SIU: SANDF Wastes R33.4M on Unapproved Cuban Medicine

The Special Investigating Unit (SIU) has brought to light severe procurement irregularities within South Africa’s Department of Defence (DoD) following a R33.4 million deal to purchase Cuban medicine. This revelation is part of a larger investigation that exposes widespread corruption and systemic flaws in the country’s defense sector, including an alarming failure in governance at state-owned arms manufacturer Denel.

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Cuban Medicine Scandal: Unapproved and Unnecessary Expenditure

The investigation, spearheaded by SIU Chief National Investigations Officer Leonard Lekgetho, uncovered that the South African National Defence Force (SANDF) procured 930 units of the antiviral drug Interferon Alpha 2B Hebron from Cuba during the COVID-19 pandemic. The medicine was intended to act as an immune booster for SANDF soldiers tasked with enforcing lockdown measures. However, the deal was marred by irregularities at every level.

Firstly, the procurement agreement was signed after the drugs had already been delivered, which is a significant breach of standard procedure. Furthermore, the medicine was not approved by the South African Health Products Regulatory Authority (SAPHRA), making its importation and use illegal. Lekgetho also revealed that the procurement process lacked proper oversight, as the deal did not undergo a competitive bidding process, and crucially, the department’s accounting officer did not sign off on the deal. These failures violate established procurement protocols designed to ensure accountability and prevent wasteful spending.

Wasteful Spending: R33.4 Million on Unfit Medicine

The investigation exposed the complete inadequacy of the Cuban medicine. Of the 930 units imported, only 15 were used. Of these, 10 were given to a patient at a military hospital, while the remaining five were used for testing by SAPHRA. The rest were returned to Cuba following a court order, further highlighting the fruitless and wasteful nature of the entire procurement.

Lekgetho emphasized that the purchase was not only unnecessary but was also “fruitless and wasteful” expenditure. The department did not recover any of the payments made to Cuba for the interferons, and the drugs were ultimately deemed unfit for purpose. This failure to appropriately manage government funds raises serious concerns about the state of financial oversight within the SANDF.

Broader Corruption: Denel and Procurement Failures

The SIU’s investigation uncovered further systemic issues within the defence sector, particularly involving Denel, South Africa’s state-owned arms manufacturer. One of the most troubling revelations was a multi-billion-rand contract for the design and production of 264 armoured vehicles. Despite Denel receiving over R8.1 billion for the project, only 21 vehicles were produced, and these have yet to be delivered to Armscor, the state-owned procurement agency. Lekgetho revealed that funds allocated to the project were misappropriated for non-project-related expenses, such as salaries and operational costs.

Moreover, the investigation raised alarming concerns about intellectual property theft. SIU head Advocate Andy Mothibi revealed that sensitive defence technologies were stolen and transferred to companies in the United Arab Emirates (UAE). This breach could have serious implications for national security, as the loss of intellectual property gives foreign entities an unfair advantage. The legal challenges in recovering this stolen intellectual property are further complicated by contracts that specify foreign jurisdictions for dispute resolution.

Additional Irregularities: Microsoft Licensing and Pilot Training Scandals

The SIU investigation also uncovered further procurement irregularities. Between 2016 and 2018, the SANDF entered into three controversial contracts totaling over R500 million for Microsoft software licenses. However, the investigation revealed that many of these licenses were never used, as the department already possessed valid licenses at the time of procurement. Questions were raised about the need for middlemen in these transactions, with suggestions that such intermediaries often facilitate corrupt practices.

In addition to software irregularities, the investigation also uncovered issues in the SANDF’s pilot training programme. The SIU recovered R559,000 through an acknowledgement of debt letter and filed for default judgment on an additional R234,000 related to failed student obligations.

Recommendations and Next Steps

In light of these findings, the SIU has made several key recommendations aimed at addressing the flaws in the procurement processes and strengthening accountability within the SANDF and the wider Department of Defence. These include improving record management, enforcing consequence management for implicated officials, and developing a framework to prohibit the use of private email accounts for official business. The SIU is also pursuing civil litigation to recover funds and has made 41 criminal referrals to the National Prosecuting Authority (NPA).

The investigation has drawn attention to the urgent need for reforms in South Africa’s defence procurement system. The SIU has called for constitutional or legal amendments to make its recommendations binding, similar to the powers granted to the Public Protector.

The findings also sparked a broader conversation in Parliament about the need for systemic changes in procurement practices across government departments. There is increasing pressure on the Minister of Defence and the National Treasury to address these issues and prevent further wasteful expenditure.

Conclusion: The Need for Greater Oversight and Accountability

The SIU’s investigation into the Cuban medicine scandal and broader corruption within the SANDF and Denel highlights serious governance failures that have led to the mismanagement of public funds. The R33.4 million spent on unapproved Cuban medicine is a stark example of how inadequate oversight and poor procurement practices can lead to wasteful expenditure. It is crucial that the recommendations from the SIU’s investigation are implemented swiftly to prevent further losses and to restore public trust in South Africa’s defence sector.

The revelations also underscore the importance of continued vigilance in procurement processes, not just within the Department of Defence, but across all government sectors. The need for stricter controls, transparency, and accountability has never been more urgent, and the consequences of failing to act are clear.