Condom Rush

as imports continue to harm local economic growth

08 Aug, 2015 by uSpiked Investigative Team

As condoms suppliers rush to share the multi-billion rand pie, a closer look reveals a system that aids capital flight.

In Brief

  • Alarming teenage pregnancy and STIs’ figures have South Africa's government pulling all the stops in the fight against the menaces
  • The budget for free ‘scented’ condoms runs into billions of rands. Included in the procurement is a huge quantity of lubricants
  • To the Department of Health, the phrase ‘local is lekker’ does not always apply – importers won the bulk of the R3.52b condoms and lubricants, Contract No. HM01-2015CNDM
  • Suppliers with Multiple Identity Disorder resurfaced, but this time with some ingenuity that borders on cheating
  • The department has undertaken to look into the discrepancies our system picked up 

In South Africa teenage pregnancy and Sexually Transmitted Infections (STIs) are huge problems. According to research done by Prof. Akim Mturi of the North West University, 22 286 schoolgirls fell pregnant in 2013 compared to 29 966 in 2012 and 36,702 in 2011. Most girls fell pregnant “by mistake” or a consequence of peer pressure.

Mturi’s research, which was conducted from 2007, shows consistent dipping of cases. But, the figures are still so alarming that the government is pulling all stops to curb the menace that is closely associated with STIs.

Among the interventions include the introduction of sex education and distribution of free condoms, which the Department of Health plans to procure over the next three years at a cost of R3.52 billion*. Curiously, the department’s supply chain managers have contradicted the ‘local content strategy’ spearheaded by Treasury and Economic Development Departments that favours local producers, with the aim of boosting manufacturing sector and job creation.

The tender includes scented condoms (vanilla, strawberry and banana), a few female condoms and lubricants.

The rationale behind the introduction of scented condoms is to reverse the declining use of condoms and to encourage uptake by teenagers. Research fellow at the South African Institute of International Affairs, Erica Penfold, argues there is no specific evidence of such a campaign working elsewhere, but if successful, it could be used as best practice for other countries with high prevalence rates. 

The need for lubricants is not clear in the tender documents provided to bidders. According to the documents, the lubricants are “…intended as a personal lubricant to moisturise and supplement the body’s natural lubricating fluids, and to enhance the ease and comfort of sexual activity.” Considering that nearly all condoms being procured under the same contract (HM01-2015CNDM) are already lubricated (as per the tender specifications), why is the department spending R1.97 billion on lubricants?

The department's specifications for lubricants

Thirteen (13) of the fifty-one (51) suppliers who submitted bids were successful. Our examination of the 13 tender winners reveals the failure of the department’s procurement team to comply with local content requirements. The bulk of the contract was awarded to importers. The only local condoms manufacturer, RRT Medcon (Pty) Ltd, clinched a piffling 5% of the total R3.52 billion.

The issue of suppliers with Multiple Identity Disorder (MID) resurfaced, but this time with some ingenuity. Elsewhere in this series we identified Supplier Code V4890 as Barrs Pharmaceuticals Industries (Pty) Ltd, whose two directors are South African immigrants in Israel and the USA.

For the condoms tender, Supplier Code V4890 adopted a different name - Barrs Medical (Pty) Ltd.

According to records obtained by our team from the Companies and Intellectual Property Commission - CIPC, the directors of Barrs Medical are registered as David Sepel of Southwind Irvine, California; Rubin Gabriel Norwitz of 1 Arbel Road, Kfar Saba, Israel and Joseph Lionel Morris and Graham George Feltham Michael, both of Newlands in Cape Town. The four got a R1.56 billion deal, 45% of the total contract value. Missing on this list is Elizabeth Le Roux, who is a director of Barrs Pharmaceuticals Industries (Pty) Ltd.

Barrs director's residence in Irvine California. Sustained by SA taxpayers? Powered by google

Barrs does not manufacture condoms in South Africa and so it must be importing. Flight of local capital is further evident when the immigrant directors receive their shares of profits.

Among the tender documents is Form PBD4 on which prospective bidders are required to fill their contact details. The appropriation of the Supplier Code issued to Barrs Pharmaceuticals Industries (Pty) Ltd therefore must have been drawn by the bidders associated with Barrs Medical (Pty) Ltd. Was this done in error or deliberately? Or did they assume that nobody would pick it up? Unfortunately our system did.

This could not have been a typo on the part of the bidder. In previous contracts, including those awarded as recently as last year, the contact person for Supplier Code V4890 was Graham George Feltham (for Barrs Pharmaceuticals Industries (Pty) Ltd) whose email address was given as M****m@barrs.co.za while in the bid for condoms, the same Supplier Code’s contact details were provided as Joe Morris of j***@qualitycondoms.co.za, who provided his cellphone number in addition to other contact details.

In the previous condoms tender (HM01-2012CNDM), Joe Morris, then identified as Joseph Lionel Morris was awarded a R47.2 million contract under the name of Sekunjalo Investments Corporation.

The domain qualitycondoms.co.za is registered to Barrs Pharmaceuticals Industries cc, an entity that has since been converted to a limited liability company. A search within the department’s database shows that Barrs Medical (Pty) Ltd has never secured any supply contract with the department, at least in the last two years.

Multiple Identity Disorder - outright cheating or just twisted smartness?

Alerted of uSpiked’s findings, the department’s top brass promised to thoroughly re-examine the discrepancies to understand how the managers could have missed this.

Medi-Core Technologies (Pty) Ltd, with R776.8 million, got the second largest share of the contract. Very little is available on this contractor. However, records obtained from CIPC indicate that the KwaZulu-Natal company was registered in 2013 to Moonilal Hansraj Seopursat and Nirmala Seopursat both of Sunford, Phoenix, KwaZulu-Natal. It is a new entrant in the tender business, hence the lack of assignment of a Supplier Code.

In our on-going examination of multi-billion rand pharmaceuticals contracts, we often come across gems such as RRT Medcon (Pty) Ltd, which got R149 million - 5% of the entire contract value. Going by Treasury’s General Procurement Guidelines, RRT Medcon would score highly against the core pillars highlighted in the publication. Of the winners, this is the only supplier with a local condoms manufacturing plant. 

RRT Medcon’s directors are Vera Marion Kohrs and Sikhulu Hugh Mtshali. In the previous contract, the company, then operating as Kohrs Medical Supplies (Pty) Ltd, was awarded a R50 million contract despite being a manufacturer.

The condoms and lubricant pie distribution

Other providers are:

  • Medproc cc - R148.3 million. Providing its business address as a shop in a mall in Cape Town, the close corporation lists its members as Arifa Allie, Saliem Bapoo, Allie Ebrahim Chicktay and Goolam Chicktay, all of Rondebosch.

  • SA Health Protection Services cc - R148.1 million. Based somewhere in Durban, the close corporation gives its members as Dereck Frank Boyd of North Durban, Sibusiso Thembinkosi Lushaba, Nokwanda Elaine Zwane, both of Kwamashu and Philani Eugene Zwane of New Germany

  • Fulloutput 1305 cc - R146.5 million. This Norwood-based close corporation lists two members; Sakie Mashaba and Mmapule Amelda Pitso

  • Bliss Pharmaceuticals (Pty) Ltd - R112.5 million. The Johannesburg-based company is wholly-owned by Contance Tloubatla

  • Almika Trading (Pty) Ltd of Durban, registered to Jeremy Javis Naidoo, got R111.6 million.

  • Abafazi Healthcare Services (Pty) Ltd, registered in 2009 to Janesha Govender, got  R71.9 million.

  • Isigidi Trading 389 (Pty) Ltd - R71.9 million. The company converted from a close corporation last year and has one member, Bernice Helen Klugman

  • Unitrade 1032 cc - R71.5 million. This close corporation has Manormonie Baitchu as its sole member.

  • Crystal Pier Trading 148 cc of Bellville. Listing Veon Lane Cupido as its sole member, the close corporation was awarded R71.5 million contract

  • Lastly, Biocor Hospital Supplies (Pty) Ltd - R71 million. We are confused with the registered name of this company and still trying to ascertain with the Department of Trade and Industries. According to data captured by CIPC, a company by the same names was registered in 1990 (CK No 1990/007212/07) that listed Penelope Ann Hohls and PW Business Services (Pty) Ltd as its directors. In 2003 it would appear there was a conversion of the same to a close corporation. Ultimately in 2007, the Biocor Hospital Supplies (Pty) Ltd (CK No. 2007/030175/07) listing Innocent Mkethwa as director was registered. According to Biocor’s website, the company was started in 1991 – this matches the 1990 registration of the first name. The same website further announces that it is owned by Innocent Mkethwa and Nomathemba Mkethwa, but registered in 2007.

 CLICK HERE for the complete details of the awards.
  • Additional data acquisition and processing by Miguel García of San Francisco, California
  • * This amount does not form part the R29 billion from previous and outstanding tenders/contracts.