How billions worth of Covid-19 funds were stolen in Africa

Prices of medical supplies inflated by nearly 1,000 percent, relief payments to illegal beneficiaries and powerful individuals rigging lucrative tenders are ways in which Covid-19 funds are being looted in Africa.

It is impossible to quantify how much has been lost, but the cases exposed so far of theft in procurement of personal protective equipment (PPE) and diversion of aid money meant for vulnerable people highlight the possible plunder of billions of dollars.

In South Africa, the auditor-general has uncovered massive corruption in the spending of 500 billion rand ($26bn) Covid-19 relief funds and several suppliers have pleaded guilty to inflating prices of goods such as face masks by up to 748 percent.

Kenya, Zimbabwe, Uganda, Somalia and Nigeria are other countries where cases of graft lords looting Covid-19 funds are public – but it is feared many more countries will be exposed as aggressive scrutiny and more information comes to light.

In an example of brazen profiteering, a South African pharmaceutical retailer, LevTrade International was found guilty of excessive pricing after inflating the price of a box of 20 respiratory masks from R139 on February 14 to R310 on March 23.
Yet another, Dis-Chem Pharmacies Ltd, inflated the price for a box of 50-piece blue surgical face mask by 261 percent as desperate customers scrambled for the protection against corona virus.

Dis-Chem was selling a unit for R43.47 in February, but it increased the price to R156.95 before taxes in March, when the country confirmed a case of Covid-19.

Reacting to numerous complaints about exorbitant prices for face masks, the Competition Commission on July 7 referred Dis-Chem, a national wholesale distributor and retailer of pharmaceutical products, to the Competition Tribunal for prosecution.

The tribunal on July 22 found Dis-Chem guilty of charging excessive prices for surgical face masks and fined the firm R1.2 million.

“… the exploitative conduct of Dis-Chem of excessive pricing was particularly reprehensible. It exploited customers desperate to lay their hands on an essential item in the fight against a pandemic of global proportions, with potential consequences for consumers and public health… we consider its conduct was not only exploitative of vulnerable consumers, especially the poor, but was especially egregious,” the Tribunal ruled according to a statement posted on the commission’s website.

A fine
On August 20, LevTrade agreed to pay a fine of R50,000 along with separate contributions to the Solidarity Fund and a children’s home.

Other penalties in the settlement agreement included a contribution of R10,000 to the Solidarity Fund and donation of surgical face masks and hand sanitisers valued at R25,000 to the Johannesburg Children’s Home.

The firm was also forced to reduce its gross profit margin on its N95 face masks to an agreed maximum percentage for the duration of the pandemic.

In Nigeria, an analysis by Dataphyte of data from the Open Treasury Portal exposed the spending of N5,600 ($15) on a 500ml bottle of hand sanitiser.

The Federal Road Safety Commission, an agency of the federal government, paid ₦5.6 million ($15,000) for the entire procurement deal, sparking protests.

It is similar claims of price inflation that have caused public outrage in Kenya and triggered an investigation.

Another two separate investigations into the alleged theft of consignments of PPE from Alibaba founder Jack Ma and the Chinese Government are ongoing.

The Kenya Medical Supplies Authority (Kemsa) is fighting accusations it gave out multi-billion shilling tenders at inflated prices and it’s now stuck with costly supplies whose market value has fallen drastically.

One firm caught up in the saga is Kilig Ltd, which in January had secured a Sh4 billion ($37 million) offer to supply hundreds of thousands of PPEs. Each kit was to be supplied at an inflated cost of Sh9,000 ($83) from the then market price of Sh4,500 ($41).

The complete kit includes N95 masks, body suits, goggles, waterproof shoe covers and gloves. The firm was to supply 450,000 of each item, but Kemsa later cancelled the deal following a falling out.

Another firm, Shop ‘N’ Buy Ltd, that was just four months old, was handed a Sh970 million ($8.9 million) contract to supply 100,000 PPE kits, each at an approximate price of Sh9,000 ($83), earning it Sh900 million. The company was also allowed to supply another 100,000 pieces of KN95 masks at Sh700 ($7) apiece.

Shop ‘N’ Buy owner, James Kipketer Chululey, however, defended the contract, explaining his company did nothing wrong.

Mr Kipketer told the Nation last month the prices were high at the time because he had flown in most of the items, paying excessive cargo fees of about Sh2,000 ($19) for every kilogramme of import.

“We quoted the Sh9,000 ($83) per kit because we were importing by air and a kilo of any import was going for about 20 dollars in March,” he said.

“Today, it might look inflated, but at that time, that was the price. Kemsa is now at a loss because the prices of some of those kits have dropped since we are now importing by sea.”

These cases highlight how the pandemic has become a gravy train for suppliers.

But in some instances, there were cases of outright theft of public funds at the expense of health workers, while the general population was unable to access the promised relief.

South Africa’s auditor general this week lifted the lid on the extent of the looting of the nation’s Covid-19 relief fund through overpricing and potential fraud.

In a briefing on September 3, Kimi Makwetu reported the audit on the spending of 500 billion rand ($26bn) had uncovered “frightening findings”.

In some cases, PPE was bought for five times more than the price the national treasury had advised. Some of the complaints relate to price increases of 1,000 percent and fraudulent relief payments to illegal beneficiaries.

‘Further investigation’
The BBC reports the audit also highlighted 30,000 relief grants which “require further investigation”.

“A lot of the effort that we put into this on the detection side of things has revealed a number of frightening findings that require to be followed up very quickly so that there is no significant passage of time before the required actions are implemented,” Mr Makwetu was quoted by BBC saying at a press conference on Wednesday.

The funds were meant to assist vulnerable households with relief food, unemployment grants, support to small businesses and farmers and to also procure personal protective equipment.

In neighbouring Zimbabwe, President Emmerson Mnangagwa sacked his Health Minister Obediah Moyo on accusations of seeking to enrich himself through a lucrative tender for medical equipment.

Mr Moyo is battling corruption charges related to a $20 million contract awarded to a Hungary-registered firm, allegedly without going through proper processes.

In Uganda, four top officials in the office of Prime Minister Ruhakana Rugunda, tasked with overseeing a programme to provide relief food for the most vulnerable, ran into trouble with authorities on accusations of graft. They were arrested on claims they occasioned the government losses in excess of $528,000.

In Somalia, a court this month jailed four government officials for the theft of public funds meant for Covid-19 emergency response.

Although court documents did not reveal how much each of them stole, in April the Ministry of Health had questioned spending of between $42,000 and $45,000.

World Health Organization Director-General Tedros Adhanom Ghebreyesus has equated corruption in procurement of PPE to murder.

“Any level or any type of corruption is unacceptable. However, corruption related to PPE … for me it is actually a murder. Because, if health workers work without PPE, we are risking their lives and that also risks the lives of the people they serve. So it is criminal and it is a murder,” Dr Ghebreyesus said on August 22.

By yesterday, Africa had 1,066,906 confirmed cases.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s