Investigation Reports

Madam Speaker and Honourable Members of Parliament

I have the honour to submit a special report in terms of Section 8(2) of the Public Protector Act :23 of 1994 regarding my investigation of the play, Sarafina II

S A M Baqwa

Public Protector of the
Republic of South Africa

20 May 1996

INFORMATION ON THE OFFICE OF THE PUBLIC PROTECTOR

1. INTRODUCTION
2. PROCEDURES FOLLOWED
3. BACKGROUND TO SARAFINA II
4. THE EUROPEAN UNION FINANCIAL AGREEMENT

4.2 Background to the European Union financial agreement
4.3 The HIV/AIDS contract
4.4 Awareness of Sarafina II by the European Union
4.5 Public statements by the Department concerning European Union Funds

5. DONOR FUNDING

5.1 Initial Confusion
5.2 Attempts to clear confusion
5.3 The correct position concerning donor funding

The role of the International Development Co-operation Committee (IDCC)
The role of the RDP Fund and the voting process
Exchequer Act and Treasury Instructions applicable
State Tender Board regulations applicable

5.4 Evaluation of the Department's actions
5.5 Conclusion

6. TENDER PROCEDURES

6.1 Call for tenders
6.2 Errors made when calling for tenders
6.3 Going out on tender
6.4 Evaluating of the tenders
6.5 Conclusion

7.  CONTRACT WITH COMMITTED ARTISTS

7.2 Shortcomings of the contract
7.3 Cost of the play
7.4 Content of play
7.5 Reaction within the Department to the contract

Director: HIV/AIDS and STD Programme (Mrs Abdool Karim)
Director-General: Health
September 1995 meeting
Draft amendment to the contract

7.6 Press releases by the Department
7.7 Portfolio Committee meeting

8. FURTHER DEVELOPMENTS AROUND THE CONTRACT
9. FUTURE OF THE CONTRACT

9.4 Continuation of the original agreement
9.5 Negotiating an amended agreement
9.6 Termination of the contract

10 SUMMARY OF FINDINGS
11. RECOMMENDATIONS

ANNEXURE A

INFORMATION ON THE OFFICE OF THE PUBLIC PROTECTOR

Definition

The Public Protector is an official is independent of government and any political party. He is appointed by Parliament in terms of the Constitution. He receives complaints from aggrieved persons against government, government departments, government agencies and government officials. He has powers to investigate matters referred to him, recommend corrective action and issue reports to Parliament. The office is established under Chapter 8 of the Constitution of the Republic of South Africa Act 200 of 1993. The operational requirements of the office are provided for under the Public Protector Act 23 of 1 994.

The Public Protector is appointed by the President subsequent to the approval by Parliament (by a 75% majority) of a candidate nominated by a joint committee of the Houses of Parliament.

The Office of the Public Protector was established on I October 1995. Previously, the office was known as the Office of the Ombudsman which was established on 22 November 1991. The latter office evolved from the Office of the Advocate General, which was established on 18 July 1979.

The Constitution provides that the Public Protector shall be a South African citizen who is a fit and proper person to hold such office. and who -

1.  is a judge of the Supreme Court of South Africa: or
2.  is qualified to be admitted as an advocate and has. for a cumulative period of at least 10 years after having so qualified practiced as an advocate or attorney. or lectured in law at a university; or
3.  has specialised knowledge of or experience for a period of at least 10 years in the administration of justice, public administration or public finance.

Jurisdiction

Section 112 of the Constitution provides that the Public Protector shall. in addition to any powers and functions assigned to hem or her by any law. be competent to investigate on his or her own initiative or on receipt of a complaint, any maladministration in connection with the affairs of government at any level. He also has jurisdiction to investigate any complaint against any person performing a public function or against public entities and any institution in which the State is the majority or controlling shareholder.

Nature of complaints

Any person or institution may complain to the Public Protector.

The Public Protector may investigate -

1.  Maladministration:
2.  Abuse or unjustifiable exercise of power or unfair. capricious. discourteous or other improper conduct;
3.  Improper or unlawful enrichment or receipt of any improper advantage. or promise of such enrichment or advantage:
4.  Improper or dishonest acts. or omission or corruption. with respect to public money:
5.  Any act or omission which results in unlawful or improper prejudice.

Powers

The Public Protector is competent to -

1. Direct any person to appear before him to give evidence or to produce any document in his or her possession or under his or her control which, in the opinion of the Public Protector, has a bearing on the matter being investigated. and may examine such person for that purpose; and
2. Enter or authorise another person to enter any building or premises and there to make such an investigation or enquiry as he or she may deem necessary. and seize anything on those premises which in his or her opinion has a bearing on the purpose of the investigation.

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REPORT

1. INTRODUCTION

1.1  I received a request from the Democratic Party to investigate the issue of the play, Sarafina II which was commissioned by the Department of Health. I decided to investigate.

This investigation now has been finalised and I have the honour to present the following report for tabling in Parliament.

2. PROCEDURES FOLLOWED

2.1  Section 7(1) of the Public Protector Act 23 of 1994 provides as follows:

"The procedure to be followed in conducting an investigation shall be determined by the Public Protector with due regard to the circumstances case and the Public Protector may direct that any category of person or all persons whose presence is not desirable, shall not ire present at the proceedings during the investigation or any part thereof: "

2.2  When I received the complaint from the Democratic Party I also became aware that the office of the Auditor-General, acting in terms of the provisions of the Auditor-General Act 12 of 1995, had since 14 February 1996 been engaged in an audit investigation concerning the financing of the play, Sarafina II. I accordingly considered it prudent to approach the Auditor-General with a view to establishing whether it would not be expeditious to marry the two investigations not only to prevent duplication but also to conserve scarce resources. After some discussions we agreed that I should proceed with the investigation which would incorporate a person who would be seconded. from the Auditor-General's office.. I thereafter established an investigation team consisting of Dr M Schutte (Assistant to the Public Protector), Prof W Nkuhlu who is a Chartered Accountant with many years experience both in the private and public sector, a former Chief Executive of the Independent Development Trust and Chairperson of the Development Bank of Southern Africa, together with Mr L van Vuuren from the Auditor-General's office and myself. The team assisted and advised me throughout the investigation. I determined that the investigation would proceed on an informal basis. This would ensure that it proceeded swiftly, smoothly and as non-confrontationally as possible.

2.3  The first task was to obtain all the copies of relevant documentation from the Department of Health and other parties who had played a role in the bringing into existence of Sarafina II. The compilation of the documentation went on without any hitch and was done as quickly as possible because of the co-operation that my office obtained from the Minister, the Director-General, Auditor-General, Ambassador Fouere of the European Union and other departmental officials..

2.4  I determined that we had to call oral evidence. For this purpose I did not find it necessary to issue summons or to subpoena anyone to appear before me because of the co-operation referred to above. The process of hearing evidence began on 26 March -1996 and ended on 12 April 1996. A total of 38 witnesses were called the list of which is annexed hereto marked "A". The oral evidence which was mechanically recorded went into 1548 typed pages. I also received written submissions from witnesses who were unable to attend the hearing, or as supplementary evidence from those who attended. Witnesses also handed in exhibits which together with other documentation were in excess of 2 000 pages. I deal with the content of these exhibits in this report but they have not been annexed to the report to avoid it becoming voluminous. The exhibits referred to in this report are available from the Speaker of Parliament, should any party desire to have sight thereof

3 BACKGROUND TO SARAFINA II

3.1  The Sarafina II saga begins with the granting of funding by the European Community to the Department of Health during 1994. The Department of Health, acting as a representative of the Government of the Republic of South Africa, entered into three contracts with the European Commission which was acting as a representative of the European Union. The first contract was for Technical Assistance. The second contract was for District Support Assistance. The third contract, which is relevant to the matter under discussion, was for HIV(AIDS) Prevention.

3.2  The HIV/AIDS contract was signed by the Minister of Health and the representative of the Commission on 28 December 1994. It bears the title "National HIV/AIDS programme - South Africa". The total contract amount is 11.216.081 ECU. The details of this contract will be discussed under the relevant heading hereinafter.

3.3  It was in the implementation or execution of the latter contract that the idea of the Sarafina II play was conceived by the Minister of Health, Dr Zuma. She discussed the idea with, among others, the Director: HIV/AIDS and STD Programme, Mrs Abdool Karim. They thereafter decided to discuss the feasibility thereof with Mr Mbongeni Ngema at a meeting held during or about June 1995. In the evidence led before me it emerged that Mr Ngema was approached to give his views as a prominent theatrical personality. He was not approached with the view to giving him preference over other potential tenderers. Dr Zuma indicated at that meeting which took place in Durban that the play would be expected to travel not only in the urban areas but also in the rural areas. Mr Ngema thought it was a good idea and gave an off the cuff estimate of about R800 000. After the meeting Dr Zuma discussed the matter with Mrs Abdool Karim and they agreed that this play should form part of the activities surrounding the commemoration of World Aids Day on I December. Dr Zuma thereafter left it to the Director-General of the Department of Health, Dr O Shisana, and Mrs Abdool Karim to work out what was necessary for the play to materialise.

3.4  The person who was tasked to look into the implementation of the idea was the Chief Director: Departmental Support Services, Mr Badenhorst. Among other things he was instructed to establish the procedures that were to be followed in bringing the play idea into fruition. He was also instructed to establish procedures that were to be followed if government money was utilised on the one hand and if donor money was to be used on the other hand. The reason for this instruction was that there were two sources for the AIDS programme, namely the European Union funding and funding from departmental moneys. Mr Badenhorst later reported to the Director General that he had checked with the State Tender Board and that he had been informed that if they were to utilise donor funds they should follow the instructions and procedures contained in the relevant contract.

3.5  The Departmental Tender Committee and related matters are discussed below. It will therefore suffice to mention here that the AIDS Directorate issued what they referred to as a limited invitation for tenders. More precisely this meant that whereas under normal circumstances the open tender system would apply, in this case only three tenders were invited. Tenders were invited! from the Windybrow Centre for the Arts of Johannesburg, Opera Africa of Durban, and from Committed Artists Theatre Company of Mr Mbongeni Ngema. Two tenders were returned, namely from  Committed Artists Theatre Company and from Opera Africa. Windybrow Centre for the: Arts did not tender because according to them they were given a mere 24 hours in which to present their tender. Thereafter Mr Badenhorst summoned the Departmental Tender Committee and instructed them to consider the two tenders. The tender from Committed Artist Theatre Company amounted to R14,247,600. The tender from Opera Africa amounted to
R600 000.

3.6  The Departmental Tender Committee began to consider the two tenders on 8 August 1995. The Committee encountered an almost immediate problem when they considered Mr Ngema's tender. One of the stipulations in the specification that was sent out with the invitation to tender reads as follows: "The company must have the capacity and infrastructure to tour the production countrywide for twelve months." Mr Ngema's tender contained items such as luxury bus "45 seater", 24 ton tractor and semi trailer. The Departmental Tender Committee was of the view that these items represented what should have been the infrastructure of the tendering company. They therefore did not see their way clear towards granting or approving a tender which was inclusive of infrastructure costs. The Committee decided to hold the matter over pending discussion and further enquiries. They did not evaluate the tender further. The Committee thereafter discussed these difficulties with other departmental officials one of whom was Mr Badenhorst. Despite the fact that this matter had not been decided by the Departmental Tender Committee the Department of Health, represented by Mr Badenhorst entered into a contract with Committed Artist Theatre Company on 10 August 1995. The contractual amount was the sum of R14 247 600. At the time of signature of the contract a sum of R3 million was paid to Mr Ngema. The contract was for the production of the Sarafina II HIV/AIDS play. This happened even though the matter was still held in abeyance by the Departmental Tender Committee.

3.7  There was some unhappiness in the Department of Health about the signing of the contract with Mr Ngema's company. This was expressed in specific terms by the Director-General, Dr Shisana, in a memorandum sent to the Chief Director: Departmental Support Services, Mr Badenhorst, on or about 18 August 1995. This unhappiness was also expressed by the Director: HIV/AID', and STD Programme, Mrs Abdool Karim, in a letter written to the Minister of Health, Dr Zuma, on the 18th of August 1995. The concern arose out of the signing of a contract with a company which clearly did not comply with the specifications and which did not have the necessary infrastructure. Further the concern expressed by both the Director and the Director-General was about the fact that the contract had been signed for an amount in excess of R14 million whereas the expectation had been that there would be a ceiling of R5 million to the contractual amount. This matter is also dealt with below and I am not going to deal with it in detail at this point.

3.8  The play was produced by Committed Artist Theatre Company. The Department represented by the Minister, the Director: HIV/AIDS and STD Programme and others attended some of the rehearsals of the play and made suggestions about improvement thereon with regard to content. The play was indeed staged on World Aids Day, I December 1995. The celebration of World Aids Day was attended by, among others, the Ambassador of the European Union, Mr Fouere.

3.9  The World Aids Day performance of Sarafina II was intended to launch the tour of the play. That milestone was achieved and more. A debate soon began about a number of issues concerning the play. This debate was avidly taken up and carried on in the print and electronic media.

3.10  The debate revolved mainly around the following questions: How the play was financed, the spending of the R14 million on a play was appropriate and justifiable, whether there was a budget line for the funding of the play Sarafina II in the European Union contract, whether the European Union was aware of the play and the tune to which it had been funded, whether the message about HIV/AIDS was sufficiently encapsulated and transmitted by the play Sarafina II, whether the correct tendering procedures had been followed by the Department and whether sufficient controls were in place to ensure that moneys were spent appropriately and accounted for during the tour of the play.

3.11  The debate seemed to carry on interminably until the matter was taken up by the Portfolio Committee of Health in Parliament. The Minister of Health, Dr Zuma, and her Director-General, Dr Shisana, were called before the Portfolio Committee to give an account about the play and the funding thereof. The proceedings of the Portfolio Committee took place on 28 and 29 February 1996.  The proceedings revolved mainly around the following questions: The number of tenders received by the Department, whether notices inviting tenders were published by the Department, the selection criteria for the tenders, how the Department planned to address the issues that had been raised in the press, namely, criticism of the play as an art-form, the criticism of the content of the play and the criticism about the cost of the play, consultation with other role-players concerning the play and the strategy with which the Department had evaluated the effectiveness of the play. Questions were asked and answers were given before the Portfolio Committee by the Minister of Health, the Director-General and other officials of the Department. The matter was thereafter debated in Parliament. One would have ordinarily expected that the matter would have been laid to rest at that forum. In this case this did not happen. There appeared to be some serious differences of opinion among the Honourable Members of Parliament and there were calls for either a judicial enquiry or the referral of the matter to the Office of the Public Protector.

3.12  It was after the heated debate in Parliament concerning Sarafina II and calls for further investigation of the matter that my office received a complaint from the Democratic Party. In the letter lodging the complaint I was requested to investigate every aspect of the play Sarafina II. In particular I was requested to investigate how the play was funded and by whom, the tender system applied prior to the awarding of the tender, whether the tender that was drawn up and accepted by the Department was realistic in terms of what was to be and what had been achieved, the question of the Rl, I million that allegedly could not be accounted for at the time of lodging of the complaint and lastly the nature of the consultation process that was engaged in by the Department with other role-players.

3.13  I agreed to investigate the complaint mainly for two reasons. Firstly, because of the public debate referred to above, and the proceedings in the Portfolio Committee and Parliament, I considered it to be in the public interest to investigate. Secondly the matters that were raised in the letter of complaint are matters which are within the ambit of the provisions of Section 112 (1)(a) of the Constitution of the Republic of South Africa Act No 200 of 1993 (the Interim Constitution). l accordingly considered the complaint to be proper in terms of Section 6 (I ) of the Public Protector Act 23 of 1994.

4. THE EUROPEAN UNION FINANCIAL AGREEMENT

4.1  The persons who gave testimony in this regard were mainly the Minister, the Director-General, the Chief Director: Departmental Support Services, the Chief Director: National Programmes and the Director: HIV/AIDS and STD Programme, and officials from the financial section of the Health Department. Ambassador Fouere and Miss P Mashego of the European Union Delegation in Pretoria also gave us the benefit of their views in this regard.

4.2  Background to the European Union financial agreement

4.2.1 The European Union (KU) began its support for action against HIV infection and AIDS in 1987. As a major contributor to the world's campaign against AIDS, it has channelled more than USD 300 million. Among others, these include the provision of safe blood supplies, support strategies for the prevention of HIV infection, control of sexually transmitted diseases (STD) and programmes aimed at combating discrimination against people with HIV and AIDS.

4.2.2  For the year 1995, the European Union committed approximately R50 million for the [HIV/AIDS sector in South Africa. R45 million was allocated to the Government's national AIDS programme with more than Rl,5 million going to the National AIDS Committee of South Africa (NACOSA). Further, the AIDS Law Project and Puppets Against AIDS each received Rl,5 million.

4.3  The HIV/AIDS contract

4.3.1  This contract was entered into and signed on 28 December 1994 in Brussels. The contract provides for a number of matters which are usually found in contracts of this nature such as obligations of the parties, date of entry into force, duration of the agreement, payment procedures, tender procedures, dates for submission of reports, subcontracting and similar matters. The contract also contains provisions for deviating from stipulations contained in the contract. In this report I only concentrate on those provisions in the agreement which are relevant to the execution of the Sarafina II project.

4.3.2  The Commission's support focused on four main aspects:

• Support for the Government AIDS programme;
• Support for the National AIDS Committee of South Africa (NACOSA);
• Support for the AIDS Law Project;
•  Support for Puppets against AIDS.

4.3.3  The Commission aimed at bolstering the government national AIDS programme by giving specific support to strengthen HIV prevention initiatives, particularly the use of barrier methods, increasing HIV/AIDS education, the introduction and expansion of sexuality/lifeskills education in higher, primary and secondary schools, and through a variety of activities addressing children and young people in and outside the school environment, and by improving accessibility and provision of STD Management. The Department of Health through the Directorate HIV/AIDS and STD Programme, would be responsible for the administrative, technical and financial management of the programme.

4.3.4 The contract contained a budget for supplies and services to be rendered. R6,9 million was earmarked for mass media communication and activities which included radio production and broadcasting, TV drama, posters and comic strips. R14,489 million was for the printing and distribution of textbooks and manuals to teach lifeskills in the HIV/AIDS context and these were targeted at the youth.

4.3.5  Article 5 of Annex IV of the contract (General Conditions) concerned the executions the project. It provides as follows:

"The contractor shall provide evidence of a restricted invitation to tender involving not less than three suppliers from eligible countries (Member States of the European communities and countries where the execution of the contract takes place) in the case of supplies of goods valued in excess of ECU 10 000".

4.3.6  In a memorandum by the Director: Financial Management Services of the Department of Health dated 4 August 1995 the above clause was interpreted as follows:

"The exchange rate at present is 4, 7 ECU which means that at least three tenders must be invited for goods/services for amounts in excess of R47 000.
It is suggested that the Division: Provisioning obtains tenders with a minimum  closing, period of seven days to speed up the process.
Due to the fact that the donor funds is not state money, it is not necessary to work through the State Tender Board for amounts in excess of R75 000. "

4.3.7  It was in response to this advice from Financial Management Services that the HIV/AID; and STD Programme Directorate went on to invite three tenders. Only two of the invitations were responded to namely by Committed Artist and by Opera Africa. The Departmental Tender Committee sat on 8 August 1995 but they could not finalise consideration of the tender. Despite the absence of the decision by the Departmental Tender Committee, as stated above the Chief Director: Departmental Support Services, Mr Badenhorst, went on to sign a contract with Committed Artist Theatre Company on 10 August 1995. This was completely against the rules. The European Union expected to be consulted concerning the award of tenders. This was not done by the Department. Article 5.3 quoted above specifies a restricted invitation to tender involving not less than three suppliers. The Department indeed invited three suppliers but received only two responses. Two suppliers were not in compliance with Article 5.3. The Department however, continued to consider these two offers whereas they should have more properly cancelled that invitation for tenders and advertised anew for fresh tenders. The advice from Financial Management Services states that provisioning should be obtained for tenders with a minimum closing period of seven days. According to the Manager of Windybrow Centre for the Arts, he received an invitation and was expected to tender within 24 hours. This action by the Department was clearly not only against established practice with regard to tenders but it was cutting across even the advice of their own Financial Management Services Director. The departmental actions were accordingly not only outside the terms of the contract but they amounted to negligence.

4.3.8  Article I I of Annex IV of the contract is entitled "Provision of information to the Commission" and it states as follows:

"The contractor shall inform the Commission as soon as possible in meriting of: Any delay or any difficult which might jeopardise compliance with the planned timetable and/or implementation of the project;

any changes made in executing the project covered by the Agreement. Where such changes entail a significant modification of the nature of the project and/or a significant alteration of the financing structure, the Contractor shall, in writing, request the Commission's prior written consent. In such circumstances appropriate observations shall, in principle, be included in the interim and/or final report;

any additional information on the progress of the project that is requested by the Commission "

4.3.9  In this regard the Department sought to divert R5 million from the R6,859 million mass communication budget line and R9,247 million from the R14,489 million lifeskills program targeted at the youth in order to finance the Sarafina II play. In the budget attached to the contract the youth programme referred to textbooks and manuals. The mass media communication item referred to broadcasting, magazines and newspapers, radio documentaries, TV drama, posters, radio slots and comic strips. Applying the moneys to produce Sarafina II therefore clearly implied a significant modification of the nature of the project and/or a significant alteration of the financing structure. It was therefore quite surprising to learn from departmental officials such as the Chief Director: National Programmes (who is in charge of the HIV/AIDS and STD Programme Directorate) that they did not consider such a departure to be a significant modification of the project. In line with this view the Department failed or omitted to write to the EU requesting authorisation of the deviation which was envisaged when the Sarafina II play was conceptualised. The Department therefore in their actions were once more acting outside the clear terms of the contract. The officials concerned did not study the terms of the contract properly. Alternatively, they did not apply their minds properly to the issues at hand and this resulted in unauthorised expenditure which just about tripled the figure originally understood to be the ceiling for the play.

4.4  Awareness of Sarafina II by the European Union

4.4.1  The Department and the EU have been involved in what seemed a never ending contest concerning what the Department had told the EU about Sarafina II and what the EU knew or did not know about Sarafina II. Reports were written by the Department during August and during October 1995 about the HIV/AIDS project and presented to the European Union in Brussels. These reports merely announced the existence of Sarafina II but they did not contain any detail in that regard nor did they contain any financial budget concerning Sarafina II. These reports were clearly not couched in the terms envisaged in Article 11 of the contract. It is true that Ambassador Fouere attended the celebration of World Aids Day on I December 1995 in Durban where Sarafina II was first shown. It is also true that Ambassador Fouere expressed support for the play. He however went on to explain that he was neither the main speaker nor did he open the play. He understood the invitation to have been on the basis of the European Union's long standing support for the HIV/AIDS programme around the world and their co-operation with the Department of Health and their commitment to support the efforts of the Minister in addressing the key issues facing the country and in particular the HIV/AIDS programme. He also stated and I accept that at that stage the R14,27 million budget for the play had not been mentioned to him or the European Union. He further stated and I accept that in the contractual agreement with the Department of Health there was no budget line for Sarafina II nor was there any amount allocated for that purpose.

4.4.2  Another controversy in this regard emanates from the hearings of the Portfolio Committee when the following question was asked of the Minister:

"Dr Zuma, maybe I should just begin by the EU funding. There had been reports in the newspaper that in the contract there is no budget line for Sarafina II ".

Reply:

"That is true. In the contract was signed between me and the EU in January there was no Sarafina II. The idea of a play called Sarafina II had not been decided at that point, but as soon as that was decided the EU was informed ".

By the word "informed" the Minister has explained to me and I accept that she was referring to the reports mentioned above namely the reports of August and October 1995. The problem about these reports in this context is that they did not specify that Sarafina II had been conceptualised and funded as part of the European Union project, hence the denial of any knowledge of the play by Ambassador Fouere as being part of that project. Indeed the European Union would appear to have taken the mention of Sarafina II as just part of the expansion of the larger HIV/AIDS project of the. I accept that this understanding of the European Union was reasonable in the circumstances because no reference was made to the terms referred to in Article 11 of the agreement. Indeed this whole saga and debate has been characterised by a series of misunderstandings, accusations and counter accusations which could have been easily avoided had the Department adhered to the stipulations contained in Article 11 of the agreement, and obtained prior approval for the play.

4.4 3  Indeed it would appear that in a meeting held between representatives of the Department of Health and the delegation of the European Union on 6 March 1996 the two parties came to understand in a very simple way what had happened. I quote from the minutes of that meeting:

"The delegation was generally aware of a play, but were not aware that the bill was to be paid by the EU. Mr Fouere attended the launch of the play in Durban at international World Aids Day I December 1995. The EU assumed that an invitation was extended to them as they support some components of the National Aids Program. The EU therefore pledged their support to the play in that context. In the EU's opinion, the Department misunderstood the message. "

4.4.4  Currently the Department is trying to do what it ought to have done in terms of Article 11 of the agreement with the European Union. The Department has lodged a request for a shift in line items to enable it to get authorisation to access EU funds. It is a pity that this is happening seamen months after the contract for the play was signed and the first payment released and nine months after the tenders were invited by the Department. It would be mischievous to speculate about the reaction of the EU to the Department's application. That matter ought to be resolved now between the parties in terms of the spirit and the letter of their agreement.

4.5  Public statements by the Department concerning European Union Funds

4.5.1  Since the advent of democracy during the 1994 elections, international donor agencies have been approaching the South African Government and government departments in increasing numbers to offer support for a wide range of programmes.

4.5.2  International funding is a complex business. It may come with strings and sometimes with no strings attached. It is a volatile source which can indeed dry up at the drop of a hat if not handled properly. This is a point that needs to be emphasised and noted generally by all government departments.

4 5.3  The Government of National Unity is presently engaged in the vital Reconstruction and Development Programme: (RDP Programme). Any acceptable source of supplementary funds is critical to the delivery process without which South Africa's rosy prospects could turn into a mirage.

4.5.4  Numerous articles appeared in the press concerning the theatre production on AIDS awareness, SARAFINA II. In some of the articles departmental officials were quoted as having said to this effect: "No taxpayers' money went to the project, the entire amount was donated by the European Union." Alternatively the suggestion was made that EU money was used and this was put forth as a justification for using "relaxed tender procedures". The impression that is created by these statements is that firstly, EU money is not taxpayers' money. Secondly these statements imply that you can spend as much as you want and not take as much care as you would with South African taxpayers' money.

4.5.5  During the hearings concerning this matter it was brought home to my mind that nothing could be further from the truth. International donor funds are in most cases also taxpayers' money. This is the case even with regard to EU funds. The statements referred to above caused ripples as far afield as the European Parliament where Member States remain concerned about how EU funds are used. They are concerned because at the end of the day they are accountable to their taxpayers. Statements which do not take this into account are potentially detrimental and do a disservice not only to those issuing them and the Government of National Unity, but also, and most importantly, to the people of South Africa. It does not seem that the Department of Health officials were mindful of these realities when they issued their statements.

5. DONOR FUNDING

5.1  Initial Confusion

5.1.1  At the time of entering into an agreement between the EU and the Department of Health (28 December 1994) the International Development Co-operation Committee (IDCC) and the Reconstruction and Development Office (RDP Office) had only just begun their operations and procedures were not then clear and widely known. The IDCC was established on 24 September 1994 and the RDP Office only in November 1994.

5.1.2  The IDCC made its guidelines for dealing with donor funds available only on 4 April 1995 to all Departments. The document was called "The Co-ordination and Management of Foreign Official Development Assistance to the South-African Government Institutions: Guidelines and Functions".

5.1.3  The IDCC was aware of the agreement between the Health Department and EU but only took note of the fact that such an agreement was signed between the EU and the Minister of Health. They did not get involved and they were not called upon by the Department to do so. This can be ascribed as suggested in Dr Link's evidence to the fact that they were still in their formative stages.

5.1.4  Because South Africa was at that stage not familiar with foreign development assistance the officials in the Department were also not familiar with the way in which to deal with these funds. Some of them were not even aware of the RDP Fund Act 7 of 1994, and its implications.

5.1.5  For reasons mentioned in paragraph 5.1.1 the Department was also mistakenly of the view that it was European Community funds and not State money and that it could deal with the donation without any intervention by other bodies.

5.1.6  The Department therefore at that stage also did not work through the RDP Office and no business plan was drawn up as was required by the RDP Office in order to draw money from the RDP Vote. This was only done at a later stage when it was requested to do so by the RDP Office. Up to the compilation of this report no business plan concerning the HIV/AIDS project has been approved by the RDP Office because what was submitted was not according to the guidelines for business plans.

5.2  Attempts to clear confusion

5.2.1  The Chief Director: Departmental Support Services, Mr Badenhorst, had a meeting with officials of the State Tender Board on the issue of what tender procedures to follow when donor funding was used to fund the procurement of services on behalf of the Department. This inquiry was made in May 1995 before Sarafina II was conceptualised. He was advised that the Department had to determine whether the funds in question are State money or not. If identified as State money, the normal tender procedures would apply, if not, the procedures as set out in the contract with the donor should be followed. In the latter event the Department would be expected to stay as close as possible to normal State tender procedures. The State Tender Board would however not be involved if it was not State money. If the contract does not state what procedures should be followed, normal State tender procedures should be followed. The officials of the State Tender Board indicated however, that if the money came through the departmental budget it should be dealt with as State money.

5.2.2  As stated above the matter of implementation of the AIDS play idea was left to Mr Badenhorst regarding the departmental procedural aspects. The Director: Financial Management Services, Mr D Vorster, was asked by Mr Badenhorst to advise him on whether the donation from the European Union was to be treated as State money or not. Mr Vorster's reply in writing to Mr Badenhorst and the Director-General was as follows: "Due to the fact that the donor funds is not state money, it is not necessary to work through the State Tender Board for amounts in excess of R75 000-00".

5.2.3  On the strength of the note by the Director: Financial Management Services and his own perception, Mr Badenhorst accepted that the European Union donation was not State money. He conveyed this view to junior officials within the Department when they queried the procedures followed.

5.2.4  It was accordingly decided to use the tender procedures as set out in Article 5.3 of Annex IV of the general conditions of the contract with the European Union, which reads as follows: "The Contractor shall provide evidence of a restricted invitation to tender involving not less, than three suppliers from eligible countries (Member States of the European Communities anal countries Inhere the execution of the contract takes place) in the case of supplies of goods valued in excess of ECU 10 000" (at the time 1 ECU was valued at about R4.70).

5.3.  The correct position concerning donor funding

The role of the International Development Co-operation Committee (IDCC)

5.3.1  In the wake of the substantial amounts of money that were to be made available to South Africa by foreign donor countries for the new government's Reconstruction and Development Programme, the International Development Co-operation Committee (IDCC) was created by means of a Cabinet decision on 24 September 1994. Its task was to look at all development assistance so as to utilise it in the best interests of the country. It is chaired by the Department of Finance and its members are the Department of Foreign Affairs, Office of the President (RDP Office), Department of State Expenditure, Department of Trade and Industry, Central Economic Advisory Services, and the Reserve Bank.

5.3.2  Two important functions of the IDC are:

• To co-ordinate and approve all inter governmental and inter-agency framework agreement involving aspects of foreign Official Development Assistance (ODA), for submission to the Government of National Unity; and
• To advise the Government of National Unity on problems that may occur when its wishes and the International Development Assistance Community's requirements cannot be accommodated or reconciled, and to act as the Government of National Unity's negotiator in the event of disagreement with International Development Assistance Communities.

5.3.3  The procedure would be that a donor would get in touch with either the IDCC or the RDP ministry (as it then was) and they would discuss in broad terms the area of interest of the donor. The RDP ministry would direct the donor to a line ministry or a Province dealing with projects in that area of interest. Alternatively it would direct the donor to the IDCC, the Department of Finance, or State Expenditure, to finance projects that are already on budget. The whole purpose of this process would be to bring the donor to an identified approved project area. Once this has been achieved the next step would be to work out a project proposal in collaboration with the implementing agent, which can be either a national Department or a Provincial Administration. Once a project proposal is finalised it is given either to the IDCC or the RDP ministry. All these project proposals would go through the RDP Programme Steering Committee which scrutinises the projects for specific criteria (for example: is there a business plan which meets the requirements as set out in the guidelines for business plans?). If the project is accepted it will be given to the relevant Ministry and the donor to finalise the agreement which would have to get Presidential approval.

The role of the RDP Fund and the voting process

5.3.4  The RDP Fund was established in terms of section 2 of the Reconstruction and Development Programme Fund Act 7 of 1994 which reads as follows:

"Establishment of the Reconstruction and Development Programme Fund

There is hereby established a fund to be known as the Reconstruction and Development Programme Fund, which shall be credited with -

1.  money appropriated by Parliament for the fund;
2. Domestic and Foreign grants,
3.  interest derived from the investment of money standing to the credit of the find;
4.  the proceeds derived from the sale of state assets for the reconstruction and development projects and programmes referred to in section 3; and
5. money accruing to the fund from any other source.

In terms of Section 3 of the Act the Fund shall be utilised -

1. "to finance reconstruction and development projects and programmes identified by the Minister responsible for the co-ordinated implementation thereof; and
2.  for the defraying of costs incidental to the administration of this Act."

5.3.5  In terms of Section 4 a banking account in the name of the Fund shall be kept with the South African Reserve Bank

1. "into which all money received for the benefit of the fund shall be deposited; and
2.  from which transfers shall be made to the national Revenue Fund for the financing of the reconstruction and development projects and programmes referred to in Section 3."

5.3.6 The procedure that is laid down by Sections 2(b), 3(a) and 4 is that all donor Finds must be deposited into the RDP Fund, From the RDP Fund money is transferred into the State Revenue Fund from which it is released through an appropriation Act. Section 185(2) of the Constitution of the Republic Of South Africa Act 200 of 1993, states that "No money shall be withdrawn from the National Revenue Fund, except under appropriation made by an Act of Parliament in accordance with this Constitution ...". This means that all money paid into the State Revenue Fund must be voted before it can be spent. In other words it is not possible for a donor to give money directly to a department.

5.3.7  In practise the process as set out in paragraph 4 of Annexure A of the document entitled "The Co-ordination and Management of Foreign Official Development Assistance to the South African Government Institutions: Guidelines and Functions', is as follows:

"Foreign overseas development aid will be deposited in the RDP Fund from where it will be transferred by the Department of Finance to the Revenue Fund on request of the RDP Office. In view of the fact that no funds can be withdrawn from the National Revenue Fund other than by virtue of an appropriation Act, allocation to specific spending agencies and for specific projects will have to be appropriated on the Vote: Promoting The Reconstruction and Development Programme. As is the case with Exchequer funds allocated to this Vote, the funds will be drawn by spending agencies. Funds appropriated on' a Vote of a spending agency (normal departmental funds) can be utilised to finance official development assistance programmes funds for such a programme can be included in an appropriation bill. (Estimates of Expenditure in March or the Adjustments Estimate in February). cashflow problems arise the Minister's authority in terms of section 7 of the Exchequer Act 1975 (Act No 66 of 1975) can be utilised ".

5.3.8  As soon as the money is deposited in the RDP Fund and the spending agency (Department of Health in this case) has lodged an approved business plan with the RDP Office the project may commence. No funds are released to spending agencies other than by virtue of an approved business plan Funds are made available by means of transfer payments.

Exchequer Act and Treasury Instructions applicable

5.3.9 In terms of Section 1(1) of the Exchequer Act 66 of 1975 "State money" means -

1. " all revenues; and
2. all Other moneys whatever received or held by an accounting officer for or on account of, the State".

5.3.10 The purpose of the Exchequer Act 66 of 1975 is "To provide for the regulation of collection, receipt, control, custody and issue of State moneys and the receipt, custody and control of State property... " In terms of the above mentioned sections it is clear that the money paid into the RDP Fund and the National Revenue Fund falls within the jurisdiction of the Exchequer Act and the Treasury Instructions in terms of Section 39 of the Exchequer Act.

State Tender Board regulations applicable

5.3.11 Section 6 of the Reconstruction and Development Programme Act 7 of 1994 stipulates with regard to the control and administration of the Fund that -

6.(1) The Director-General: Finance shall be the accounting officer of the fund mid shall, subject to the directions of the Minister

1. control the fund;
2. cause a proper record of all the financial transactions, assets and liabilities Blithe fund to be kept; and
3. cause, as soon as possible after the end of each financial year, accounts of the revenue and expenditure of the fund for such year and a balance sheet of its assets and liabilities as at the end of that year, to be prepared.

(2) The fund shall be administrated, subject to the provisions of the Exchequer Act 1975 (Act No 66 of 1975), by officials of the Department of Finance designated by the Director-General: Finance."

5.3.12 With specific reference to Section 6(2) above donations that are paid into the Fund are transferred into the Exchequer and any expenditure regarding procurement will then be subject to the State Tender Board regulations, procedures and directives as prescribed in Treasury Instruction N4. 1.

5.3.13 In addition to Section 4 of the State Tender Board Act 86 of 1986, in terms of which the State Tender Board is authorised to arrange for procurement on behalf of the State, regulation 2 stipulates that:

"2.I Subject to the provisions of any Act of Parliament supplies and services for and on behalf of the State, the hiring or letting of anything or the acquisition or granting of any right for and on behalf of the and the disposal of movable State property shall be procured, arranged or disposed of only through the Board."

5.3.14 Section 187 of the Interim Constitution also stipulates as follows:

"187.(1) The procurement of goods and services for any level of government shall be regulated by an Act of Parliament and provincial laws, which shall make provision for the appointment of independent and impartial tender boards to deal with such procurements. "

5.3.15 The State Tender Board has delegated its powers to Departments to enable them to invite tenders themselves to a maximum amount of R75 000. A department could then on its ohm accept the lowest tender. However, if the lowest tender is passed over, the matter must be referred to the State Tender Board.

5.3.16 If these conditions are not adhered to, the action taken as well as the expenditure is regarded as unauthorised. This means that the Department spent money it did not have, or that it did not have the authority to spend. The matter can be resolved ex post facto by the Public Accounts Committee of Parliament or the Cabinet.

5.4 Evaluation of the Department's actions

5.4.1 The fact that the IDCC and the RDP Office were not in place at the time of entering into a contract with the EU and the fact that there were no written guidelines do not really exonerate the Department. There have always been procedures in place in terms of Treasury Instruction Xl.2 which reads as follows:

Gifts to the State

Xl.2.1 "The approval of Treasury shall be obtained in terms of section 31(1)(q)) of tile Exchequer

Act, 1975 (Act No 66 of 1975) before any gift to the State, whether in cash or in kind, is accepted. Submissions by departments to the Treasury shall state the purpose of and the conditions under which a gift is offered.

X1.2.2 Unless the Treasury determines otherwise, the following procedure shall apply in respect of gifts in cash:

• In the case of an unconditional gift to a State institution which is financed exclusively from voted moneys and where the purpose for which the money,' is to be used is not stipulated by the donor, the amount shall be paid into revenue.
• If the money is donated for a purpose which is a service normally financed from voted moneys, the amount received shall be paid into revenue and an equal amount or as much thereof as is required for the service shall be utilised front voted funds for the purpose.
• If an amount is donated for a specific purpose which is not a service normally rendered by the State anchor is financed from a department's vote as an annual recurring item the amount shall not be paid into Revenue but shall be dealt with as determined in conjunction with the Treasury.

  X1.2.3 If it is not apparent to what purpose a gift should be applied, such case shall be submitted to Treasury for a ru/ing by the minister of State Expenditure in terms of section, 37 of the Act. "

5.4.2 The Department of Health did not contact Treasury for approval neither did they contact the Department of State Expenditure or the Department of Finance for guidance.

5.5. Conclusion

5.1. I From the above it becomes clear that there was some confusion about the topic of donor funding; during 1994. The question is whether this could serve as an excuse for the mistakes that occurred around the production, Sarafina II. The situation does not save the Department from criticism because even if they were to suggest that their actions were in line with the opinion they obtained from the State Tender Board they ought to have gone to the Department of State Expenditure to seek clarity on whether or not the donor funds were State funds. At the time of going to tender on Sarafina II in July/August 1995 the confusion no longer existed since the structures and procedures for dealing with donor funding were already in place. The information on she correct position and correct procedures was therefore available and the failure of the Department to make enquiries in this regard amounts to negligence.

5.5.2 Further, it is quite clear from the discussion concerning the flow of funds (including donor funds) that such funds progress through the RDP Fund, to the State Revenue Fund and from there to the Departments. That process defines what State money is and it also becomes clear with reference to the definition of State money" (supra), that the opinion given by the Director: Financial Management Services to the effect that donor funds are not state money was clearly wrong and misleading to other departmental officials.

6. TENDER PROCEDURES

6.1 Call for tenders

6.1. I After the Minister met with Mr Ngema she and the Director: HIV/AIDS and STD Programme, Mrs Abdool Karim, had a meeting with the Director-General, Dr Shisana, to establish how to implement the AIDS play idea.

6.1.2 The Director-General gave the Chief Director: Departmental Support Services, Mr Badenhorst, instructions to investigate what methods and procedures should be used to use to realise the play, bearing in mind that the Minister wanted the opening of the play to take place on World Aids Day (1 December 1995). The Department was of the view that the play could be funded from two sources namely from the budget of the Department of Health or from donor funds.

6.1.3 It is not clear who made the decision to use donor funds from the European Union to fund the play and at what stage the decision was made. It was the responsibility of the programme manager to decide ~ how to fund the play. This decision should have been taken before calling for tenders. I consider it a dereliction of duty not to have done so. In this case the decision would be that of Mrs Abdool Karim in conjunction with the Chief Director: National Programmes, Dr Mtshali. It does seem, however, that the idea was to utilise a method which was less time consuming to fund the play as time was of the essence. These preparations were taking place during July 1995 and the idea was that the opening of the play should take place on 1 December 1995.

6.2 Errors made when calling for tenders

6.2.1 The Department did not make a formal decision on the amount of funds that were available for the play prior to calling for tenders as discussed above.

6.2.2 Officials of the Department planned the project and drew up the tender specifications themselves without consulting with any experts particularly in the artistic and theatrical aspects on how the project should be carried out and what the specifications should be. Had they called outside experts, it would have for example become clear to them that the amount available for the play should have been part of the specifications sent out with the tender. If this simple precaution was taken this might have ensured the production of specifications of a proper quality for the theatrical play envisaged, and the whole Sarafina II saga could have been avoided.

6.2.3 Restricted tenders were invited in terms of Article 5.3 of Annex IV of the contract with the European Union which stipulates that "The Contractor shall provide evidence of a restricted imitation to tender inching not less than three suppliers from eligible countries. (Member states of the European Communities and countries where the execution of the contract takes place) in the case of supplies of goods valued in excess of ECU 10 000" (at the time I ECU was valued at about R4.70). The phrase "not less than three tenders" clearly meant that more than three could have been invited. Because the Department was of the view that the donation was not State money, State Tender Board procedures were not followed. If State Tender Board procedures were followed or if the Department invited more than three tenders or even went out on open tender, that would have amongst other things resulted in the following:

• Other able contractors would have tendered and the Department could have secured a better deal after having a broad view of what was available in the market in artistic terms.
• An open tender would also have ensured a saving in financial terms because the choice of the Department would not be restricted to the two tenders they received.

6.2.4 The Department decided on its own on who the three tenderers would be and it would seem that insufficient consideration was given on who to invite. In fact, the process which was followed in order to finally decide on the three who were finally invited is not clear at all.

6.2.5 No consideration whatsoever was given to place a ceiling on the tender price. In fact the Department stipulated in its specifications to the tenderers that "In the evaluation Our this tender quality will be the only mail? criterion and not the lowest price ". This was open ended, unrestricted and carte blanche as if the Department had unlimited funds. This was contrary to what appeared to have been the understanding of the Accounting Officer, Dr Shisana, and the Director, Mrs Abdool Karim, namely a ceiling of R5 million.

6.2.6 Time allowed for the preparation and submission of the tender was too short. The date of the tender was 21 July 1995 whilst the initial closing date was 14 August 1995. The closing date was changed to 1 August 1995, which allowed only 12 days. The tenders were only dispatched on 24 July 1995 at 10h30 by courier and received by the tenderers 25 and 26 July 1995. This left them with between seven and eight days to prepare a script, cost the play and tender on a play that would tour for 12 months and present an adequate message on HIV/AIDS prevention. The normal period in terms of the State Tender Board procedures is 4 weeks.

6.2.7 Specifications of tender for the play were as follows:

"THE DEVELOPMENT OF A   NATION-WIDE HIV/AIDS THEATRE PRODUCTION TOURING
SOUTH AFRICA FOR 12 MONTHS

To supply a detailed script/framework and costing of the production.

The theatre production must consist of a play and music around the theme of HIV/AIDS awareness and prevention in South Africa. The play must be culturally sensitive to all people in South Africa. The company must have the capacity and infrastructure to tour the production comity wide for 12 months. the most important aspect of this play is the complete quality in all respects of the production It must therefore be stressed that the highest quality must be obtained in the production and not the least cost.

The opening of the play must take place on the first of December 1995.

Consultation with the National HIV/AIDS and STD Programmes Programme is essential.

The company must be committed not only to the prevention of HIV/AIDS and STD in South Africa, but the overall development of all its people.

The applicant must clearly show a record of successfully completed productions of this magnitude.

In the evaluation of this tender quality will be the only main criterion and not the lowest price."

6.2.8 The specifications were not properly drafted and can be criticised as follows:

• The purpose and extent of the play was not fully defined, thus it is difficult to determine the exact scope of the product. For example, the extent of the message to be conveyed in terms of what people presently think about AIDS, the fallacies and misconceptions would have had to be spelt out explicitly in the specifications to prevent the presentation of tenders with an inadequate message;
•  Insufficient background was given therefore it would have been difficult to develop a script. The background as to how HIV/AIDS has effected the South African population presently and its future impact in terms of areas and age groups was not given at all. This background would have been essential for the production of a proper script;
• The target group to be reached was not indicated, for instance the youth in rural and in urban areas;
• No ceiling was set on the amount to be spent (this would have given the tenderers an indication of the size of the play and the Department would also have been enabled to determine which tenderer would give the most value for money);
• Provision was not made for a final approval of the script by the Department to ensure that the message that would be conveyed would be factually correct and adequate. As things tuned out the script was only put together after the play had started running The Department was not satisfied with the adequacy of the message at the rehearsal stage. At that time however they were already tied contractually to Committed Artists. This was the result of not ensuring the quality of what they were getting even at the tendering stage;
• Sufficient guidelines regarding matters to be addressed and particulars of officials of  the national HIV/AIDS and STD Programme to consult with, were not furnished;
• No indication was given of the specific centres where the play was to be performed (for example rural or urban areas). "Country-wide" was too broad a description;
• Tenderers were also not requested to submit a proposed schedule, and the number of performances were also not specified;
• Tenderers were not requested to furnish a proposal indicating and demonstrating clearly how they met the requirement of "The company must be committed not only to the prevention of HIV/AIDS and STD in South Africa, but the overall development of all its people".

6.2.9 Because of the deficiency of the specifications there was an inadequacy of proper criteria to select a successful! tenderer.

6.2.10 Although the State Tender Board procedures were not used the Department still used all the forms prescribed by the State Tender Board which stipulate specifically that I/We tender for the supplies services as indicated herein subject to the Act on the State Tender Board /968 (Act 86 of 1968) the regulations promulgated in terms of section 13 of the Act and General Conditions and Procedures of the State Tender Board (ST36) . This created the impression that the State Tender Board Procedures were followed whereas they were not.

6.2.11 Because of the fact that State Tender Board forms were used as was mentioned above it would also have been necessary to mention in the tender documents that on acceptance of the tender a separate formal contract would be concluded in terms of paragraph 6 Part II of the general directives of State Tender Board Regulations ST 36 which stipulates "forma/ contracts are concluded with contractors only where this requirement is stated in the tender invitation". The successful Tenderer was required to sign a formal contract with the Department on 10 August 1995

6.2.12 The Department sought to justify the errors discussed above by referring to the following stipulation in the contract with the KU: '"The Contractor shall provide of a restricted invitation to tender involving not less that three suppliers from eligible countries (member states of the European Communities and countries where the execution of the contract takes placed in the case of supplies of goods valued in access of ECU 10 000". The Department was of the view that by only inviting three tenders they were adhering to this stipulation irrespective of the fact that only two tenders were returned. This was palpably incorrect. Invitation of three tenders meant that three tenders had to be returned and considered. This interpretation was confirmed by Ambassador Fouere in his evidence. The correct thing to do would have been to invite tenders afresh until three or more tenders were received. Moreover the discrepancy in the amounts tendered (R600 000 as opposed to R14,27 million) made it virtually impossible to compare the tenders in a manner that would have shown that one or the other provided value for money. This should have been another indication that the tender should have been cancelled and reinvited.

6.3 Going out on tender

6.3.1 Three tenderers were invited namely: Opera Africa, PACT Windybrow Centre for the Arts and Committed Artists Theatre Company. As stated above, the date of the tender was 21 July 1995 and the initial closing date was 14 August 1995. However, the closing date was changed to 1 August 1995, which allowed only 12 days The tenders were only dispatched on 24 July 1995 at 10h30 by Courier and received by the tenderers on respectively 25 July 1995 at 14hO0 by Opera Africa, on 26 July 1995 at 10hO7 by PACT Windybrow and on 26 July 1995 at 9h30 by Committed Artists Theatre Company according to the dispatch note, which left them with between seven and eight days to tender for the play. The tenders were signed and returned by Committed Artist Theatre Company on 25 July 1995 and on 31 July 1995 by Opera Africa. PACT Windybrow did not submit a tender.

6.3.2 Mr Ngema who acted on behalf of Committed Artists Theatre Company immediately on receiving the tender contacted a chartered accountant to help him to draw up a budget for the play. He gave the accountant a precedent of a budget format of a play that had already been produced This budget format was used by the accountant to project the budget which was subsequently submitted with the tender. This was done the same day that the tender documents were received. The tender documents were send back to the Department of Health via courier. The tender amount was R14 247 600.

6.3.3 Miss Sandra De Villiers from Opera Africa also submitted a tender for R600 0~30. Both Miss De Villiers and Mr Chakela from PACT Windybrow were telephoned by officials from the Department of Health after the tenders were sent off by courier. In the case of Mr Chakela he was telephoned and on 24 July at 11 h41 tender forms were faxed to PACT Windybrow by the Department. The Official who telephoned Mr Chakela requested that he fill in the forms and send them back within 24 hours. This gave Mr Chakela the impression that he was just beings used as a statistic. He was of the view that it should have been clear even to the official concerned that it would have been impossible to write a script, cost the play and submit a proper tender within 24 hours. He decided not to submit a tender.

6.3.4 Miss De Villiers on the other hand was telephoned after she drew up her tender but before submitting it. She was requested to courier the tender urgently. Apparently the official used the following words: "Please courier it because you are jeopardising whole legality of the thing if your tender is not in". The tender was then submitted.

6.3.5 Both Mr Chakela and Miss De Villiers can unfortunately not remember the name of the official who telephoned them.

6.3.6 Mr Ngema telephoned the Minister after he had submitted the tender to enquire whether he was successful or not. The Minister advised him that the tenders were still being processed and that he would be notified in due course. She also explained that she would not be the person to decide who the successful tenderer would be. Mr Ngema also telephoned officials from the Department to make sure that his tender had been received.

6.3.7 The Minister was not involved in the tender process or the recommendation of which tenderer should be awarded the tender. The tenders were evaluated and recommended by the Director: HIV/AIDS and STD Programme. There was also no evidence that the Minister influenced any official in this regard.

6.4 Evaluating of the tenders

6.4.1 After the two tenders were received a comparative schedule showing the detail of the two tenders was drawn up by the Provisioning Administration Section on 3 August 1995 and sent to the Director: HIV/AIDS and STD Programme, Mrs Abdool Karim. This document also contained other instructions, such as what to do if the lowest tender was not accepted.

6.4.2 The two tenders were evaluated by the Director: HIV/AIDS and STD Programme, Mrs Abdool Karim, on 4 August 1995, by comparing the criteria as set out in the specifications with the proposals from each of the two tenders. She drafted a recommended action. This recommendation was accepted by Dr Mtshali and sent through to the Chief Director: Departmental Support Services. The recommendation reads as follows:

"I have reviewed the tango tender documents submitted against the terms of reference.

I recommend that the Committed Artists Theatre company be awarded the tender as:

1.  they meet the requirements outlined in the terms of reference, and
2.  their submission clearly demonstrates their ability to deliver a quality product in the specified time period".

6.4.3 The recommendation was signed by the Chief Director: National Programmes, Dr Mtshali.

6.4.4 The Chief Director Departmental Support Services, Mr Badenhorst, instructed the Departmental Tender Committee to have a meeting urgently on 8 August 1995 and to consider the two tenders that were submitted for the AIDS play.

6.4.5 The Departmental Tender Committee sat on 8 August 1995 at 14h30. The Departmental Tender Committee had serious reservations concerning the tender of Committed Artists Theatre Company which had been recommended by the Chief Director: National Programmes, Dr Mtshali, because of the inclusion of items such as a luxury bus for R1 070 000, a truck for R600 000 and other equipment which should have formed part of the infrastructure which a contractor should had have in terms of the tender specifications. The Committee was of the opinion that these matters should be clarified first. The Committee's decision was minuted as follows in the minutes of 8 August 1995:

"6.2 Ges 37/95: The development of a national HIV/AIDS theatre production touring South Africa for 12 months:

Aansoek vir oorweging voorgele. Staan oor tot die teken van die ooreenkoms uitgeklaar is". ("Application submitted for consideration. Stands over until certain matters are clarified before the signing of the agreement"- free translation).

6.4.6 Members of the Departmental Tender Committee later discussed their concerns with the Chief Director: Departmental Support Services, Mr Badenhorst. He informed them that he had already contacted Mr Ngema in this regard by means of a letter dated 8 August 1995 which was faxed to Mr Ngema for his comments. In that letter Mr Badenhorst suggested that Mr Ngema should hire the items included in his budget that would constitute infrastructure, instead of buying it. Mr Ngema responded by saying that it would be cheaper to buy the vehicles and lighting equipment and that he agrees to hiring the other items. This was accepted by Mr Badenhorst without verifying whether it would indeed be the case.

6.4.7 The Departmental Tender Committee had several meetings after the one of 8 August 1995. The tender was however never approved to date by the Departmental Tender Committee. Such approval was required because, even if the Department was of the view that it was not State money that was to be used to fund the play, the State Tender Board had indicated that the Department still had to follow the normal procedures in so far as the contract with the donor is silent on procedures. This would include an approval by the Departmental Tender Committee.

6.4.8 On or about 8 August 1995 the Chief Director: Departmental Support Services, Mr Badenhorst, gave instructions to the Head of the Legal Section of the Department, Mr Ramasala, to draw up a contract between the Department of Health and Committed Artists Theatre Company. He was instructed to do it on the same day because it was very urgent. A contract was drafted and reviewed the next morning by Mr Ramasala and his personnel.

6 4.9 Mr Badenhorst requested the Assistant Director: Provisioning, Mrs G M Labuschagne, to make out a payment for the amount of R3 million to Committed Artists Theatre Company on 8 August 1995. She initially refused because the Departmental Tender Committee had not yet recommended the tender and there was no signed contract. Mr Badenhorst, however, responded that he had received satisfactory answers from Mr Ngema on all queries earlier by the Departmental Tender Committee. He was thereby indicating that the matter could be proceeded with. On his instructions, Mrs Labuschagne then ordered the officials responsible to reserve an order form for this payment (because no official order had been made out) and to issue a part payment advice for the amount of R3 million. To date no official order had been made out. Before a payment may be made to a supplier the acceptance of a tender must first be confirmed with an official order. Cheque number 34221 dated 8 August 1995 was then issued to Committed Artist Theatre Company. The cheque was later cancelled on request of Mr Ngema and a new cheque number 34240 issued dated 15 August 1995 payable to Committed Artist Theatre Agency CC.

6.4.10 The contract with Committed Artist Theatre Company was signed on 10 August 1995 by Mr Badenhorst on behalf of the Department of Health, without the official reccommendation by the Departmental Tender Committee and without the necessary authority to do so by the Director-General, who is also the Accounting Officer.

6.4.11 Mr Badenhorst should not have signed the contract because it was not formally recommended by the Departmental Tender Committee that the tender be awarded to Committed Artist Theatre Company. He also did not have the necessary authority from the Director-General do so. There were also still outstanding issues to be addressed such as the issue of the infrastructure, and how income would be dealt with. One cannot understand why he signed the contract under these circumstances, despite his many years of experience in the Civil Service.

6.4.12 During the whole process certain officials in the Department of Health, who had the necessary experience and knew the rules, regulations and procedures, raised important questions to official such as Mr Badenhorst as to why normal tender procedures were not being followed. why the Department did not get the necessary approval from the State Expenditure and the State Tender Board, and why the European Union money was dealt with differently. These questions were also raised by two officials to the Director: Financial Management Services, Mr D Vorster. In reaction to these questions he said to the officials: "If you do not do as you are told Dr Shisana will let you go". Mr Vorster admitted to saying this. The impression he created to those officials was that the Director-General would terminate their services. This was not only refuted by the Director-General but Mr Vorster himself admitted that this was false. I find this conduct of Mr Vorster totally unacceptable.

6.5 Conclusion

6.5.1 The tendering procedures which were followed by the Department were completely flawed and defective. Whether one were to view that process from the point of view of the State Tender Board regulations or the contract with the European Union there was material non-compliance. Some senior departmental officials did not seem to understand even the most basic principles underlying tender procedures. Whilst it became clear during the evidence presented before us that there was urgency to having to present the play by I December 1995, the officials proceeded with such indecent haste that they seemed to have completely thrown the rules overboard. They, for example, completely ignored and side-stepped the Departmental Tender Committee and signed a contract for R14 million without its approval. This was totally against the rules. What they should have done was to follow the proper procedures and if they realised that by doing so they could not meet the deadline, they should have brought this to the attention of the Minister.