Condom Rush 3.0 The Looters

R296.75m more for condoms and lubricants

From unusual deals involving multimillion submarines contract in exchange for a condom factory to schemery by unscrupulous suppliers, in South Africa condoms come with complex baggage.

In Brief

  • Government will spend an additional R296,747,892.70 to buy condoms and lubricants after officials at the Department of Health allowed some contracted suppliers to increase their prices
  • The development follows uSpiked’s reports on pharmaceutical tenders, specifically the dodgy contracts for condoms and lubricants that would have left taxpayers R1.9bn in the hole
  • Two of the eight companies allowed to hike prices by the director for affordable medicines shouldn’t have been awarded the contracts in the first place
  • The circumstances under which the suppliers got to be allowed the price hikes are not clear
  • Do we have a situation where bidders can under-quote for their products and only to increase the same upon winning tenders!  

Our reports on the controversial condoms and lubricants tender thwarted the looting of R1.9 billion from public coffers. It now appears officials at the department of health in collusion with contracted suppliers have dug deeper into the taxpayers’ kitty. Between December 23, 2015 and February 5, 2016, the department allowed specific suppliers to increase prices by up to 21.10%.

Two things related to Contract No. HM01-2015CNDM happened on December 23, 2015. Firstly, Medi-Core Technologies (Pty) Ltd., the company we exposed as a front for blacklisted suppliers threatened to sue uSpiked. Secondly, the department’s director for affordable medicines, Khadija Jamaloodien, curiously allowed eight of the thirteen contracted suppliers to hike their prices.

Among the eight suppliers are two companies that should not have been contracted in the first place - Barrs Medical (Pty) Ltd and Medi-Core Technologies (Pty) Ltd. We had reported that Barrs Medical had used particulars of Barrs Pharmaceuticals Industries (Pty) Ltd. to apply for the contract, yet the same directors own the two entities. We also established Medi-Core is a front for Chen-Yen Wu and his wife Li-Jung Wu. The Wu’s are on Treasury’s blacklist, and are under investigation for tax fraud, money laundering, identity theft and other public tender-related crimes.

Barrs Medical (Pty) Ltd and Medi-Core Technologies (Pty) Ltd were granted permission to hike their prices by 12.22% and 12.39% respectively.

The looting did not stop there. On January 4, two of the five providers contracted to supply female condoms, Bicor Hospital Supplies (Pty) Ltd and Isigidi Trading 389 (Pty) Ltd., were also allowed to adjust their prices by 10.27% and 11.09% respectively. The following day, Jamaloodien signed off permission allowing Fulloutput 1305 cc to increase its contract value by 11.77%.

Lubricated gravy train

By the end of January 2016, only two providers - Almika Trading (Pty) Ltd and SA Health Protection Services cc - had their prices stuck at the originally contracted values. Jamaloodien signed off on further price hikes on February 5, 2016. In just two months, she had allowed the providers to increase their prices by between 13.35% and 21.10%.

Our data and investigative teams set out to establish the Rand value of the percentages and found the contract is now costing the public R296,747,892.70 more than it was initially contracted for. No reasonable justification can be presented for the unreasonable hikes.

The increases could be attributed to the Rand/Dollar fluctuations that began in December, but we find it rather suspicious that this only affected condoms and lubricant suppliers and not other pharmaceutical suppliers who are all either importing products or the various Active Pharmaceutical Ingredients. What makes the suppliers of condoms and lubricants so special? Besides, if the price hikes had anything to do with the Rand/Dollar factor, why are the percentages not uniform?

CLICK HERE for the complete list of the escalating looting.