Public Works minister Dean Macpherson launches independent investigation into R800 million oxygen tender scandal

The Minister of Public Works and Infrastructure Dean Macpherson, has launched an independent investigation into the Independent Development Trust (IDT) following corruption allegations that relate to more than R800 million Pressure Swing Adsorption (PSA) Oxygen Plant tender.

Macpherson spokesperson, James de Villiers, said the minister’s actions follow an announcement by the IDT that the Department of Health intends to cancel the PSA Oxygen Plants tender.

He said the IDT has been implementing agent for the tender following allegations of corruption.

“The minister’s actions follow several attempts over the past weeks to obtain documentation from the IDT board regarding the PSA Oxygen Plant tender,” de Villiers said.

“The tender involved awarding contracts amounting to over R800 million to three companies to install oxygen plants in hospitals, despite two of the companies lacking South African Health Products Regulatory Authority (Sahpra) registration, and one potentially submitting fraudulent documentation,” he said.

De Villiers added that when the allegations regarding the tender surfaced, Macpherson engaged with the Independent Development Trust (IDT) on multiple occasions, requesting supporting documentation for the PSA Oxygen Plant tenders to get to the bottom of this matter.

Macpherson has dismissed the IDT's intention to investigate the processes behind the awarding of the Pressure Swing Adsorption (PSA) Oxygen Plant bids, citing the board’s shortage of quorum and that it cannot investigate itself. 

The IDT board currently comprises seven out of its 12 constituted members, with a quorum requiring eight eight members.

“This is an issue Macpherson is currently seized with and will announce a way forward in due course,” said de Villiers, emphasising that Macpherson as the ITD’s executive authority will monitor and oversee the investigation.

Macpherson “will therefore launch a full independent investigation into the IDT and its corporate governance challenges to prevent any possible abuses and corruption going forward,” de Villiers said.

This move follows a report that three companies were awarded an R836 million PSA Oxygen Plant tender, despite two of them lacking Sahpray registration.

Meanwhile, Macpherson expressed concern over governance within the IDT following his recent interactions, stating that they failed to finalise financial statements for the 2023 and 2024 financial year.

“It is patently clear that an organisation cannot and should not be allowed to investigate itself,” Macpherson said.

“Furthermore, due to the inquorate nature of the trust, it is not empowered to take such a decision,” he said.

He said that is the main reason he will be appointing an independent firm to investigate the alleged corporate governance failures that have led to the breakdown in trust.

Macpherson said he had asked Minister of Health, Dr Aaron Motsoaledi, whom he had briefed on numerous occasions and to whom he had provided as much information as possible for his collaboration and support.

“The way in which Minister Motsoaledi and I worked together in the best interests of South Africans on this matter is truly commendable to ensure access to life-saving oxygen, and to shed light and accountability on this tender when the facts became known to us,” said Macpherson.

He stressed that the government cannot allow close to a billion rand in public funds to be potentially lost through ‘alleged corrupt activities, especially concerning essential healthcare equipment intended to save lives.

Macpherson expressed that his department is working urgently to ensure accountability and to hold any wrongdoers responsible. 

“As I stated when I took office on July 3, the era of corruption and abuse within the Department of Public Works & Infrastructure is coming to an end,” said Macpherson.

In response to the corruption allegations, the Department of Health, the department said the decision to have hospitals manufacturing their own supply of oxygen stems from the days of Covid-19, with some hospitals  faced oxygen shortage.

During that time, the department decided to hand the IDT with managing the procurement procedures and contracts.

Departmental spokesperson Sello Lediga said the department noted the media reports of the alleged corruption, and that health Minister Aaron Motsoaledi has been in contact with Macpherson, whose department oversees the IDT.

He said despite the discussions between the two, media reports of the alleged corruption in the tender process continued to come into the spotlight.

Lesiga said the IDT reports to Macpherson, then Motsoaledi asked him to lead the investigations.

“Unfortunately it looks like in the exchange between the Minister of Public Works and Infrastructure and IDT, there was a lot of back and forth to an extent that it looked like the matter would end up in court,” Lediga added.

Lediga said Motsoaledi grew concerned as the project is funded by the Global Fund, a Geneva-based international health funder, established to fund HIV, AIDS and STIs, TB and Malaria. 

He said the department receives R18 billion annually from the Global Fund, which has been instrumental in funding the oxygen supply.

“The Global Fund was also worried by these media reports emanating from South Africa and the Minister of Health was in constant contact with them,” Lediga said.

Motsoaledi suggested to Macpherson that the contract be terminated, to allow the health department to seek other state entities to manage the oxygen supply.

Both the ministers agreed on this course of action.

Lediga said Motsoaledi instructed the department’s director-general of health to write to the IDT about this decision more than 10 days ago.

“We now wish to state very clearly that this course of action is taken out of pragmatism because whatever the final outcome, that is, whether the allegations are founded or unfounded, the Department of Health and the people of South Africa will be the ultimate losers. This is because the funding from Global Fund is time-bound and is designed to end in November 2025.”

Meanwhile, Motsoaledi said he believes the investigation must continue until the truth is uncovered, however , he added that waiting for the truth would affect hospitals and patients.

He expressed the urgent need for the state investigating agencies to be involved in the matter, a sentiment echoed by Macpherson.

“We hope that the IDT will understand why this course of action is necessary at this juncture – it is for the sake of our country and its international reputation,” said Motsoaledi. 

Motsoaledi added that the department is eagerly waiting for the outcomes of the investigation, stating that he believes the law would take its course.

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