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REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

(GAUTENG DIVISION, PRETORIA)

(1)    REPORTABLE:  YES

(2)    OF INTEREST TO OTHER JUDGES: YES 

(3)    REVISED.

DATE        12 April 2021

 Case No: P55372/2020

 

IN THE MATTER BETWEEN:

 

BANDILE EDGAR WALLACE MASUKU                                                     Applicant

 

and

 

SPECIAL INVESTIGATING UNIT                                                                 First Respondent

PREMIER, GAUTENG PROVINCE                                                               Second Respondent

PRESIDENT OF THE REPUBLIC OF

 

SOUTH AFRICA                                                                                                  Third Respondent

 

Headnote

Review of the special investigating Unit (SIU) – the SIU investigated allegations of maladministration and of corruption in the Gauteng Department of Health (GDoH)– it initiated action against several persons and entities in the special Tribunal on the grounds of gross irregularities  and prima facie corruption - However, in respect of the applicant, the political head of the GDoH, it merely submitted a report to the provincial premier – the report criticised the applicant as being in dereliction of his role as political head of the GDoH and expressed the opinion that action be taken by the premier against him

Whether or not a report of the SIU is reviewable under the principle of legality for want of rationality – Held that a report was an exercise of a public power and had an impact on persons implicated in the investigation which could be deleterious to their interests and of importance to the general public inasmuch as they had an interest in the conduct of elected officials of the state– accordingly, held that the report was a reviewable act under the principle of legality

As to the status and role of the SIU and its reports – Held that the very purpose of the SIU is to investigate and reach conclusions which may found accusations of wrongdoing or impropriety –this role is purely investigative and not determinative - the enabling statute requires a report to be furnished to the president, and in the case of an investigation into the affairs of a province, to the premier, thus the SIU acted rationally in relation to the purpose for which the public power was vested in it.

On the facts, held that the report was not irrational – the foundation of the criticism was rationally connected to the opinion in the report that there was a case to be met on the allegation of dereliction of duties:

First,  that the applicant’s own version of his conduct demonstrated a lack of professionalism in that he neglected to monitor his emails, and especially an email that contained critical information which he had solicited, but never read , which had he done so he would have been apprised of the prima facie inappropriate award of lucrative contracts to an entity whose director had a close personal relationship with him, which awards had been made in violation of several governance regulations and supply chain guidelines ;

Second, that the applicant, in adopting the view that he should remain utterly uninvolved in the governance of the emergency procurement undertaken in respect of personal protective equipment by his department, regardless of the crisis precipitated by the covid pandemic and regardless of the risk of improprieties taking place under such fraught circumstances, displayed a serious lack of judgment about his role.

Held: the review application be dismissed with costs, including costs of two counsel.

 

THE ORDER

The application is dismissed with costs, including the costs of two counsel.

JUDGMENT

This judgment has been handed down by being uploaded to Caselines and the date of delivery and publication is deemed to be date of the upload.

 

The Court (Sutherland ADJP, Raulinga et Siwendu JJ)

 

INTRODUCTION

[1]        This matter is about an application to review a report of the first respondent, the Special Investigating Unit (SIU). It gave a report to the second respondent, the Premier of Gauteng, in the form of two letters dated 17 September and 1 October 2020.[1]  The report concerned investigations by the SIU into the alleged commission of irregularities and of corruption in the Gauteng Department of Health (GDoH). These allegations related to the procurement of personal protective equipment (PPE) with which to supply the entire provincial government to be used address the covid pandemic. The report stated that, as at the time of submission, the investigations were ongoing into these issues.[2] However, the report, which was de facto a first report, addressed in the interim, the conduct of the applicant, Dr Bandile Masuku (Dr Masuku). Dr Masuku was, at the relevant time, the Member of the Executive Council (MEC) for Health and thus the political head of the GDoH. The report was critical of Dr Masuku, expressing the view that the evidence gathered in the investigation, thus far, pointed towards him have been in dereliction of his duties as MEC.

 

[2]        The SIU is a statutory entity established by the Special Investigating Units and Special Tribunals Act 74 of 1996 (The SIU Act). The President, by proclamation, mandates the SIU, ad hoc, to investigate specific issues in state institutions.[3] It is required to report to the President. Whenever a SIU operates within a provincial sphere of government, the Premier of that province must be involved in the engagement of the SIU, and a report is due to the Premier too. In that context, the SIU report to the Premier recommended ‘administrative action’ against Dr Masuku, on the grounds that he was derelict in his official duties as MEC. The SIU did not form the opinion that Dr Masuku was, either civilly liable to the State or criminally culpable, unlike other persons against whom the SIU took action in the Special Tribunal.[4]

 

[3]        The premier, thereafter on 9 October 2020, removed Dr Masuku from the office of MEC.[5] It is accepted by the parties in this matter that the Premier was entitled to appoint and remove MECs as he saw fit, pursuant to a prerogative he enjoyed. It is unnecessary for that perspective to be pronounced upon in this judgment, and importantly, nothing in this judgment should be construed as addressing the propriety of the decision by the Premier, albeit reference thereto is sometimes necessary. Understandably, Dr Masuku was aggrieved. As a result, he launched this review application against the SIU.

 

[4]        The review application was not brought under the rubric of the Promotion of Administrative Justice Act 3 of 2000 (PAJA).  It was common cause that the report had no legal or external effect as required by the definition of “administrative action” in PAJA.[6] The matter has been approached by the court on that premise.

 

[5]        Instead, Dr Masuku relied on the principle of legality as the basis for his review application. The test for such a review is whether the impugned decision is rational, a factual enquiry.[7]

 

[6]        In Minister of Defence v Motau 2014 (5) SA 69 (CC) at [69] it was reiterated that as regards the test for rationality:

 

“For an exercise of public power to meet this standard, it must be rationally related to the purpose for which the power was given.   It is also well established that the test for rationality is objective and is distinct from that of reasonableness.” 

 

[7]        Furthermore, in DPP v Freedom under Law 2014 (4) SA 298 (SCA). Brand JA held as regards the test of rationality under the principle of legality:

‘[28] The legality principle has by now become well established in our law as an alternative pathway to judicial review where PAJA finds no application. Its underlying constitutional foundation appears, for example, from the following dictum by Ngcobo J in Affordable Medicines Trust and Others v Minister of Health and Others  2006 (3) SA 247 (CC)  (2005 (6) BCLR 529; [2005] ZACC 3) para 49:

'The exercise of public power must therefore comply with the Constitution, which is the supreme law, and the doctrine of legality, which is part of that law. The doctrine of legality, which is an incident of the rule of law, is one of the constitutional controls through which the exercise of public power is regulated by the Constitution.'

[29] As demonstrated by the numerous cases since decided on the basis of the legality principle, the principle acts as a safety net to give the court some degree of control over action that does not qualify as administrative under PAJA, but nonetheless involves the exercise of public power. Currently it provides a more limited basis of review than PAJA. Why I say 'currently' is because it is accepted that '(l)egality is an evolving concept in our jurisprudence, whose full creative potential will be developed in a context-driven and incremental manner' (see Minister of Health and Another NO v New Clicks South Africa (Pty) Ltd and Others (Treatment Action Campaign and Another as Amici Curiae) 2006 (2) SA 311 (CC) (2006 (1) BCLR 1; [2005] ZACC 14) para 614; Cora Hoexter op cit at 124 and the cases there cited). But for present purposes it can be accepted with confidence that it includes review on grounds of irrationality and on the basis that the decision-maker did not act in accordance with the empowering statute (see Democratic Alliance and Others v Acting National Director of Public Prosecutions and Others 2012 (3) SA 486 (SCA) paras 28 – 30).” (Emphasis added)

 

[8]        This review application presupposes that the report of the SIU to the Premier is indeed reviewable. It can only be reviewable if it constitutes an exercise of public power. The SIU put in dispute that its report is reviewable, laying emphasis on the fact that there was no finality to it. Moreover, it was stressed that the report does not impose a sanction on Dr Masuku. On this premise, it was argued that the report, itself, could not be reviewable, and by implication disputed that it can be construed as an example of an exercise of public power.[8]

 

[9]        The upshot of the stances adopted by the parties means that there are two core questions for decision before this court:

 

9.1   Is the report of the SIU to the Premier reviewable?

 

9.2     If so, is the criticism of Dr Masuku and a recommendation to take “administrative action” against him in the report of the SIU to the Premier, rationally connected with purpose for which the SIU was empowered to enquire into the various allegation of irregularities, including corruption, in the GDoH?

 

THE STATUS AND FUNCTION OF THE SIU

[10]      The preamble to the SIU Act states that the purpose of the statute is:

“To provide for the establishment of Special Investigating Units for the purpose of investigating serious malpractices or maladministration in connection with the administration of State institutions, State assets and public money as well as any conduct which may seriously harm the interests of the public and of instituting and conducting civil proceedings in any court of law or a Special Tribunal in its own name or on behalf of State institutions… ”

 

[11]      Section 2 of the SIU Act empowers the President to establish a SIU ‘…whenever he …deems it necessary’ to address a range of issues listed in section 2(2).

“The President may exercise the powers under subsection (1) on the grounds of any alleged-

(a)   serious maladministration in connection with the affairs of any State institution;

                                     (b)   improper or unlawful conduct by employees of any State institution;

                                     (c) unlawful appropriation or expenditure of public money or property;

(d)   unlawful, irregular or unapproved acquisitive act, transaction, measure or practice having a bearing upon State property;

(e)   intentional or negligent loss of public money or damage to public property;

(f)   offence referred to in Part 1 to 4, or section 17, 20 or 21 (in so far as it relates to the aforementioned offences) of Chapter 2 of the Prevention and Combating of Corrupt Activities Act, 2004, and which offences was[sic] committed in connection with the affairs of any State institution; or

(g) unlawful or improper conduct by any person which has caused or may cause serious harm to the interests of the public or any category thereof.”

 

[12]      Upon being satisfied that the establishment of an SIU is appropriate, the President thereupon issues a proclamation which: “….must set out the terms of reference of the [SIU] and such particulars regarding the establishment of the [SIU]…as the President may deem necessary”. Accordingly, the SIU is given a clear mandate in the terms of reference which axiomatically informs it activities.

 

[13]      Importantly, for this matter, whenever the issue which justified the establishment of the SIU ‘…falls within the exclusive competence of a province, the President shall, in terms of section 2 (a) of the SIU Act, exercise such powers only after consultation with or at the request of the premier of the province concerned.’  Axiomatically, in such examples, the Premier no less than the President must receive a report.[9]

 

[14]      The terms of reference by the President to the SIU in this matter, identified the subject matter as the procurement of goods in relation to the state of disaster and any acts of improper or unlawful conduct by any persons. In paragraph 2 it stated:

 

“Any improper or unlawful conduct by the officials or employees of the state institutions …in relation to the allegations [of irregular or unlawful conduct] including the causes of such improper or unlawful conduct ….”

 

[15]      The critical functions of a SIU are the subject matter of section 4:

“Functions of Special Investigating Unit

(1)    The functions of a Special Investigating Unit are, within the framework of its terms of reference as set out in the proclamation referred to in section 2 (1)-

                         (a)   to investigate all allegations regarding the matter concerned;

             (b)   to collect evidence regarding acts or omissions which are relevant to its investigation;

(c)   to institute and conduct civil proceedings in a Special Tribunal or any court of law for-

(i)   any relief to which the State institution concerned is entitled, including the recovery of any damages or losses and the prevention of potential damages or losses which may be suffered by such a State institution;

                                 (ii)   any relief relevant to any investigation; or

                                 (iii)   any relief relevant to the interests of a Special Investigating Unit;

(d)   to refer evidence regarding or which points to the commission of an offence to the relevant prosecuting authority;

(e)   to perform such functions which are not in conflict with the provisions of this Act, as the President may, from time to time, request;

(f)   from time to time as directed by the President to report on the progress made in the investigation and matters brought before the Special Tribunal concerned or any court of law;

(g)   upon the conclusion of the investigation, to submit a final report to the President; and

(h)   to at least twice a year submit a report to Parliament on the investigations by and the activities, composition and expenditure of such Unit.”

 

[16]      From these provisions several important characteristics of the SIU and its work are made clear. The function of the SIU is to investigate matters, not to make a determination about matters. This is a significant point of distinction. In this regard, the function of the SIU is materially distinct from other statutory entities such as the Public Protector[10] and of Commissions of Enquiry[11].  This distinction has, for example, been expressed by the Competition Tribunal in relation to the work of the Competition Commission, it being another example of a statutory investigative entity,  in Norvartis SA (Pty) Ltd v Main Street 2 (Pty) Ltd [2001-2002] CPLR 470 (CT) at [55], relying on a decision by the SCA in Chairman, Board on Tariffs and Trade v Brenco Inc & Others 2001 (10) JTLR 324 (SCA); [2001] ZASCA 67, a decision dealing with import customs investigations.[12] These decisions drew on English Authority.[13] The Public Protector can make certain recommendations that bind the State entity or state official to take specified action.[14]A Commission of Enquiry, although not making recommendations that are binding, nevertheless adjudicates on evidence presented to it and makes a determination about the facts.[15] The SIU’s reports and recommendations bind no one, and like the Competition commission, which must lay its views before the Competition Tribunal, the SIU must lay its views before the Special Tribunal or a Court.

 

[17] Accordingly, because the SIU is a statutory entity, it operates strictly within the provisions of the SIU Act.[16] It exercises statutory powers in order to investigate and report. When the SIU believes it has discovered a crime it must refer the evidence ‘which points to the commission of an offence to the relevant prosecuting authority’. If it believes it has discovered evidence which supports a civil claim it may institute a claim in the special Tribunal or in a Court of Law. In short, the SIU’s opinion about any issue is not determinative nor final in any way

 

[18]      These distinctions are not relevant to whether the decisions of the entities are reviewable or not. Both the Public Protector’s decisions and a Commission of Enquiry’s decisions are reviewable. The character of the decision does however define what type of decision a review audits for rationality. An investigator, by definition, has no final say over a matter investigated.

 

IS A SIU REPORT REVIEWABLE?

[19]      Is the report of the SIU, in the light of these considerations, an exercise of public power which ipso facto would render it susceptible to review? This question provokes the anterior question – what exactly is a public power? The answer to this question is a slippery eel. Professor Cora Hoexter has addressed the problem of conceptualising the idea of a public power.[17]  She makes the unassailable point, on abundant authority, that it is the function not the functionary that matters. She remarks that the diagnosis by the courts of what is a public power: “...takes place on a case-by-case basis”, rather than in terms of a coherent principled development. Among the key factors enumerated by her that have been taken into account by the courts which are especially pertinent to this case, are (1) the source of the power exercised and (2) the impact of the exercise of the power on the public.

 

[20]      This perspective resonates with the remarks of Brand JA in DPP v Freedom under Law, cited above, about the indeterminate scope of the application of the principle of legality and the prospects of future expansive development. In my view, it can be reasoned from this premise that the motive force of policy considerations is the chief determinant of what acts or decisions are appropriate to subject to review under the principle of legality.

 

[21]      The “source” of the SIU’s power to investigate and to report is, plainly, statutory.  What of its “impact on the public”? True enough, the report of the SIU imposed no sanction. Yet, it cannot cogently be said that the report had no influence or impact on persons caught up in the investigations or that a report could never be causally connected with a harm suffered by a person affected by the report.

 

[22]      Dr Masuku is undoubtedly adversely affected. It is accepted by both parties that the Premier based his decision to remove Dr Masuku as MEC on the contents of the report. Moreover, apart from the ignominy of the removal, Dr Masuku’s reputation as a public officer bearer has been dented. Whether, in the long run, his political career will suffer remains to be seen, but in the short run, his political career clearly has been truncated.

 

[23]      Were a distinction between an impact on the “public” and an impact on an implicated person be thought to be legitimate, which I doubt, it would seem, in my view, that the “public” have a legitimate interest in the unmasking of incompetent public servants. Therefore, the public interest would be served by the agency that performs the unmasking doing so rationally and not capriciously.  In this regard the remarks of Heher JA in SA Predator Breeders Association & others v Minister of Environmental Affairs and Tourism [2011] 2 All SA 529 (SCA) at [28] are apposite:

“…Rationality, as a necessary element of lawful conduct by a functionary, serves two purposes: to avoid capricious or arbitrary action by ensuring that there is a rational relationship between the scheme which is adopted and the achievement of a legitimate government purpose or that a decision is rationally related to the purpose for which the power was given, and to ensure the action of the functionary bears a rational connection to the facts and information available to him and on which he purports to base such action. As noted in the Pharmaceutical case (supra) at paragraph 90 “a decision that is objectively irrational is likely to be made only rarely but, if this does occur a court has the power to intervene and set aside the irrational decision”.

 

[24]      Can it therefore be said that a statutory body, responsible for investigating and presenting a report that can be damagingly critical of an individual, should not be accountable for such action, and not be susceptible to an audit for rationality in respect of the criticisms it advanced, merely because the outcome of the investigation is not final and is intended to be of use only for another entity or person, who is an actual decision-maker, and whose ultimate decision, in turn, is one freely taken, regardless of the contents of the report ? [18] In my view, the public interest is not well served by such unaccountablity.

 

[25]      In SIU v Nadasen 2002 (1) SA 605 (SCA) at [5], Harms JA observed that an SIU is ‘similar to a commission of enquiry’. That observation was, however, not intended to mean they were clones, nor that there were not material differences. The controversy in that case was whether the SIU had jurisdiction to investigate the affairs of the Durban Municipality. Because the President had not consulted with the provincial premier, a jurisdictional requirement, the Court held the SIU to have acted ultra vires in the matter. As part of the considerations relevant to taking a strict view of the jurisdictional competence of a SIU, it was stated:

“[5] A unit such as the appellant [the SIU] is similar to a commission of inquiry. It is as well to be reminded, in the words of Corbett JA in  S v Naudé  1975 (1) SA 681 (A) at 704B - E, of the invasive nature of commissions, how they can easily make important inroads upon basic rights of individuals and that it is important that an exercise of powers by a non-judicial tribunal should be strictly in accordance with the statutory or other authority whereby they are created. The introductory part of s 4(1) of the Act emphasises the point. This accords with the approach of the Constitutional Court (South African Association of Personal Injury Lawyers v Heath and Others (supra at para [52])). Appellant's reliance upon a 'liberal' construction (meaning in the context of the argument 'executive-minded') is therefore misplaced. A Tribunal under the Act, like a commission, has to stay within the boundaries set by the Act and its founding proclamation; it has no inherent jurisdiction and, since it trespasses on the field of the ordinary courts of the land, its jurisdiction should be interpreted strictly (cf Fey NO and Whiteford NO v Serfontein and Another 1993 (2) SA 605 (A) at 613F - J).”

(underlining supplied)

 

[26]      These remarks alluded to the effect of a commission of enquiry’s determinative function, which can be contrasted with the purely investigative role of the SIU, a dimension already dealt with above. But the true significance of the remark is the effect that the work of the entity can have; ie its invasive character and the implications for the basic rights of persons caught up in the investigations.  If investigative conduct has an invasive effect, then the caution about keeping such an entity within bounds is apt.

 

[27]      The ‘absence of finality’ dimension was recently addressed directly in Rhino Oil and Gas Exploration South Africa (Pty) Ltd v Normandien Farms (Pty) Ltd 2019 (6) SA 400 (SCA). In that matter, R was intent on acquiring mining licence. Prior to being able to do so, several steps had to be taken, among which was that a report on the environmental impact had to be submitted to the Minister. It was common cause that the process leading up to the submission of the report was flawed. The SCA, on the facts, held that the challenge was premature because the effect of the acts that occurred, including the receipt of the impugned report, did not cause any prejudice to N and therefore the dispute was not ripe to be reviewed.  Plasket JA had this to say on the applicable law:

“[30] In terms of the common law, an applicant for judicial review, even if he or she establishes an irregularity, is not entitled to have the offending action set aside on review unless he or she is prejudiced by it. That was made clear by this court many years ago in Jockey Club of South Africa and Others v Feldman, and has been followed in numerous cases since. In Rajah & Rajah (Pty) Ltd and Others v Ventersdorp Municipality and Others Holmes JA explained the basis of the rule when he said:

'Now I think it is clear that the Court will not interfere on review with the decision of a quasi-judicial tribunal where there has been an irregularity, if satisfied that the complaining party has suffered no prejudice. . . . In principle it seems to me that the Court should likewise not interfere in the present case at the instance of the Council, whatever the precise nature of the present proceedings, since it is clear that there has been no prejudice to the public interest which the Council represents. The underlying principle is that the Court is disinterested in academic situations.' 

[31] That Normandien suffered no prejudice as a result of the alleged misdirections it complains of is admitted by it. In answer to a statement in Rhino's supplementary answering affidavit that Rhino had no intention of entering onto Normandien's land and, if it wished to, it would require further authorisation, Normandien said:

'(a) The Second Respondent states that it has no intention to enter upon or physically interfere with the Applicant's farms at this stage.

(b)   It is apparent that the main intention of the Second Respondent is to ultimately do so as there is no undertaking that it will never do so, even if the non-invasive procedure provides results. 

(c)   It is therefore with respect not the present situation which has instilled a fear in the Applicant, but what the end result would be, which the Second Respondent is clearly intent upon doing.' [Emphasis added.]

[32] The situation is clear: Normandien's rights have not been adversely affected by the process so far, and it can point to no prejudice on its part at this stage.

[33] As a general rule, a challenge to the validity of an exercise of public power that is not final in effect is premature. An application to review the action will not be ripe and cannot succeed on that account. Hoexter explains the concept thus: 

'The idea behind the requirement of ripeness is that a complainant should not go to court before the offending action or decision is final, or at least ripe for adjudication. It is the opposite of the doctrine of mootness, which prevents a court from deciding an issue when it is too late. The doctrine of ripeness holds that there is no point in wasting the courts' time with half-formed decisions whose shape may yet change, or indeed decisions that have not yet been made.'

There is a close connection between prejudice and ripeness. Baxter states that 'the appropriate criterion by which the ripeness of the action in question is to be measured is whether prejudice has already resulted or is inevitable, irrespective of whether the action is complete or not'. 

[34] Normandien has approached the court before any decision, according to it, has even been taken, and before it had suffered any prejudice on account of the actions complained of. It launched a pre-emptive strike against Rhino. It may perhaps have been best advised to 'husband its powder' in anticipation of the battle that may (or may not) lie ahead.” (Emphasis added)

 

[28]      The circumstances that led to the result in Rhino can be contrasted with the circumstances in this case. There can be no doubt that the SIU report has had prejudicial consequences for Dr Masuku, as evidenced by his loss of office, unlike the position in which N found itself in Rhino. But the example of Dr Masuku goes beyond his personal mishap; it is a significant illustration that should a report of a statutory body, (even when no decision-making authority can be compelled to adopt it,) express criticism of a person implicated in its realm of activity, material harm can flow therefrom. It is therefore wholly appropriate, as a matter of principle and of policy, that accountability for its actions should be recognised and, thus, the ripeness of the report to be reviewed under the expanding scope of the principle of legality is demonstrated.

 

[29]      In the circumstances experienced by Dr Masuku, whose grievance is a shattered reputation, perhaps it could sensibly be asked whether he should be left to exercise a private law remedy for defamation rather than be entitled to utilise a public law remedy in the form of a review. Whether the SIU could plausibly be protected from a defamation action by pleading that it is the essence of its very function to make accusations is not a question that this judgment needs to answer. An example of a defamation claim against the SIU for charging a person before the Special Tribunal is Stafford v SIU 1999 (2) SA 130 (ECD). Mrs Strafford was brought before the special tribunal by an SIU known as the Heath Commission. She was aggrieved at the decision to charge her. She sued for defamation. Notably, she did not seek a review. The case was decided on other grounds irrelevant to the present debate. However, that decision assumed that the action for defamation against a SIU was a valid cause of action. This case is an illustration that a decision by the SIU to charge a person is probably actionable. Whether or not an accusation by the SIU is actionable was not addressed. In Dr Masuku’s case, the SIU took no steps against him, yet accused him of dereliction of duty.

 

[30]      In my view, policy considerations are pertinent to answer the question about what form of remedy is appropriate. The criticism of Dr Masuku is about his role as an MEC; ie, a role performed by him in public life in the governing of the province. This factor decisively tips any balance in the direction of a public law remedy. Accordingly, on that premise the conduct of the SIU should be held accountable by way of review. The report of the SIU, albeit “non-final”, is an exercise of public power for which it can be held accountable on the test for rationality.

 

IS THE REPORT RATIONAL?

What did the investigation unearth? The role of the officials

[31]      The existence of a company called Royal Bhaca Projects (Pty) Ltd (Royal Bhaca) became headline news on 19 July 2020 when media reports published the fact that the company had been awarded lucrative contacts by the GDoH. The director of Royal Bhaca was Mr Thandisizwe Diko. Mr Diko’s wife was the then spokesperson for the President. Moreover, Dr Masuku and his wife were intimate friends of Mr and Mrs Diko. The revelation of these convergences fed intense curiosity, having regard to scale of corruption that chronically plagues public procurement. There were those who suggested that the whiff of corruption could be sensed here too.

 

[32]      The perpetration of grotesque irregularities in the procurement of PPE by Royal Bhaca and by another company associated with Mr Diko, Ledla Structural Developments (Pty) Ltd (Ledla) is common cause. The SIU investigation addressed these two companies’ dealings with GDoH officials.  Two officials in particular were at the centre of the investigation. One was Ms Kabelo Lehloenya, the chief Finance officer, who resigned on 1 June 2020. The other was Ms Thandiwe Pino, the head of Supply Chain Management, who had taken up the job only few days before the state of disaster was declared. The SIU investigation was triggered, not by any media revelation, but the momentum caused by protests initiated by Ms Pino.

 

[33]      On 26 March 2020, the state of disaster was declared in respect of the covid pandemic. Four days later, Mr Diko on behalf of Royal Bhaca, ostensibly unsolicited, quoted to supply the GDoH with equipment for R47m. Its appointment as a service provider to provide PPE and the letter of commitment for the specific transaction were issued the same day. Ms Pino signed the letter. On 1 April Royal Bhaca quoted again to supply goods for R78.5m. Again, the letter of commitment was instantly signed by Ms Pino.

 

[34]      Ms Pino had no authority to sign letters of commitment for such amounts. Royal Bhaca had no prior involvement whatsoever in the supply of PPE.  Moreover, at that time, it was not registered on the Central Supplier Database (CSD) to supply PPE, a precondition to contracting with the state.  It was not tax compliant. It had not succeeded in having its bank details verified. It was also not a VAT registered vendor. Its registered address was Mr Diko’s residence. It transpired that its sole functional operating modality was getting a contract to supply, then armed with a letter of commitment, thereupon buying the goods from a manufacturer or distributor, then supplying the material at a mark-up and getting paid; in short, a conduit which added no value.

 

[35]      Moreover, it transpired that several treasury notes – instructions governing the Covid PPE procurement - were ignored. The prices quoted exceeded the limits prescribed in the notes. There was no competitive bidding. No deviations from standard procedure were authorised. The prescribed method to evaluate quotations was ignored. Prescribed reports to the Treasury were not submitted. The breakdown in conventional good governance checks and controls was extensive.

 

[36]      Ms Pino says that she stumbled onto the connection between Mr Diko and Royal Bhaca by chance. She says that she recognised the glaringly obvious implications having regard to the, apparently well known, networks of connections with Dr Masuku, and Mrs Diko as the Presidential spokesperson. She took it up with Ms Lehloenya, her superior. Ms Pino told the SIU that she had said to Ms Lehloenya that Royal Bhaca “had to go away” to avoid a scandal. According to Ms Pino, Ms Lehloenya said in reply: “The MEC wants his people”. Ms Lehloenya, in related proceeding before the Special Tribunal denied this remark, but nevertheless explained her conduct as having been dictated by the MEC and the Premier. Whether or not the remarks of either person are true is irrelevant to this case because the criticism complained of in the SIU report, does not rely on these remarks necessarily being true. The sensationalism evoked by these remarks has tended to cloud what the true gravamen of the criticism of Dr Masuku was as set out in the report.

 

[37]      On 6 April, Ms Pino emailed her concerns about procurement improprieties to Professor Lukhele, the Head of Department (HOD) of the GDoH, listing the irregularities she was aware of and alleging that Ms Lehloenya was making the deals with the suppliers entirely on her own, a breach of the Treasury Rules and a breach of the Supply Chain Management (SCM) regulations of the GDoH. Among the other specific irregularities alleged were that the suppliers were not on the CSD, deviations from the peremptory procedures were done ex post facto and the Treasury notes were being ignored. This was a formidable list of breakdowns in the governance of the procurement function.

 

[38]      Dr Masuku was told of all of this by Prof Lukule and Dr Masuku’s special adviser, Dr Ngcwabe, on 7 April. It was treated by them as a “fall out” between Ms Pino and Ms Lehloenya. Why this luke-warm perspective was adopted is not explained. Whether the dismissiveness was influenced by a pejorative gendered view that it was a mere spat between women remains an open question. They decided to call in the provincial internal auditors to have a look. Predictably, a hostile relationship with Ms Lehloenya ensued and Ms Pino was, on 10 April, removed from the Covid procurement team. This was another flag that went unnoticed and unappreciated. The letter inviting the auditors was sent on 17 April – ten days after the issue had been raised with Dr Masuku. This delay too, is unexplained.

 

[39]      On 20 April Ledla was appointed as a supplier by Ms Lehloenya. Significantly, this occurred almost straight after the auditors were called in but before the audit per se could begin. However, the preliminary dealings between GDoH and Ledla began earlier, on 9 April, when it was registered on the CSD.  However, that registration did not include the supply of PPE, an elementary disqualification to trade with the GDoH in such goods. On 13 April Ledla quoted to supply PPE goods for R139m. Among the goods was a quote for the supply of 1m bio-hazard care bag liners at R7.00 each, an item that deserves notoriety because they were purchased for 0.95 c per bag, a stupendous mark-up, doubtless in poll position in the Greed Stakes.  Despite the fact that, at least formally, the directors of Ledla are Mr and Mrs Lehong, this quote had initially been created by Mr Diko. Ms Lehloenya had modified it on 13 April, and it was resent on 20 April. The inference of cosiness is evident.

 

[40]      On 30 April Ms Lehloenya cancelled the letters of commitment to Royal Bhaca. In the SIU investigation when a search was conducted on 28 July, the invoices submitted by Royal Bhaca could be not found in the data base; a most curious circumstance. On 14 May Ms Lehloenya gave an instruction that all the goods supplied by Royal Bhaca be redesignated as “donations”. The SIU interpretated these steps as an attempt to cover up the involvement of Royal Bhaca.

 

[41]      The estimate of the SIU is that in respect of irregular expenditure that was attributable to prices being paid in excess of the Treasury prescribed limits, some R30m was disbursed.

 

[42]      The SIU expressed the opinion that the evidence gathered suggested that Ms Lehloenya and Ms Pino had arbitrarily concluded contracts in flagrant violation of a raft of laws and regulations. These officials and the suppliers are the subjects of a referral to the Special Tribunal in which proceedings are at present ongoing to recover the disbursements made.

 

The role of Dr Masuku

[43]      Thus far the conduct of the officials of the GDoH and of the suppliers have been addressed. I turn now to the evidence gathered that involves Dr Masuku personally.

 

[44]      Several interviews were conducted by the SIU’s investigator. Statements were obtained from inter alia, Ms Pino and Mr Diko. Ms Lehloenya had resigned and as is evidenced in related proceedings against her in the special tribunal, she offers her own exculpations and was not interviewed for the purpose of the SIU report of 17 September and 1 October, now under review.

 

[45]      The central issue traversed in the interview with Dr Masuku was how this scandal could take place on his watch without his knowledge and, moreover, when he got wind of irregularities, did he do what was expected of him in his role as MEC. His steadfast stance throughout was twofold: not only did he know nothing whatsoever about the irregularities but that it was proper that he be totally hands-off in relation to anything that had to do with procurement. The view he took was that the officials of the GDoH were solely responsible for procurement matters and any malfeasance that resulted. He had no role in securing good governance over their area of responsibility. For this perspective he pointed to the various statutory and regulatory instruments which impose duties on the accounting officer, ie the HOD, Prof Lukhule, and the absence of reference to the political head in such instruments. He expressed shock that Mr Diko’s company had won these contracts and he had not at once been informed.

 

[46]      Dr Masuku’s ignorance of the irregularities was brought into doubt by an email sent to him by Ms Lehloenya on 1 April 2020. It stated that “as requested” by him she was sending him the list of suppliers. The list included Royal Bhaca and for good measure identified Mr Diko. The contents of the list, therefore, boldly stated the very facts that were, on Dr Masuku’s own view, shocking to him. Dr Masuku denied knowledge of the email. In a statement composed to record the substance of the interview he confirmed that was the position. He stated that he discovered that Royal Bhaca or Mr Diko had been given contracts by GDoH only in mid-May when prompted to check whether one, Hamilton Ndlovu, who was a momentary celebrity as a result of the purchase of a fleet of luxury cars from the proceeds of a contract with the National Health Laboratory Service, had also been given contracts by GDoH.  He was shocked to learn that Mr Diko had received a contract. His view was that he ought to have been told by the officials. Dr Masuku does nowhere offer to explain why he did not respond in similar fashion on 7 April when Ms Pino’s allegations were communicated to him.

 

[47]      The interview with Dr Masuku had been conducted on 14 August. The statement was prepared in draft and sent to Dr Masuku. He signed on 20 September and returned it. The first letter of the SIU reporting to the premier was dated 18 September.  Thus, from the first time Dr Masuku was confronted with the email until the SIU reported, 35 days had elapsed. The significance of this is that in the review application Dr Masuku now offers an elaborate explanation of how the email came to be sent to him which, so he argues, demonstrates the innocence of the communication. He now says that he belatedly remembered the mail but never opened it. It was sent at midnight by Ms Lehloenya. The email bore a relation to an offer by Patrice Motsepe or his Foundation to put up funds to buy PPE and for that purpose wanted to know who the suppliers were. In following up on this offer he solicited a list of suppliers from Ms Lehloenya. Nevertheless, he says did not bother to read the email. It is unnecessary to go into that explanation because it contributes absolutely nothing of value to the relevant enquiry into whether the SIU acted rationally. Dr Masuku had a full opportunity to furnish the new version to the SIU in the 35 days mentioned, yet he chose not to do so. Axiomatically, no irrationality can attach to not giving attention to information which was withheld from the SIU.

 

The Criticism of Dr Masuku

[48]      The report reads as a commentary on the evidence gathered. The opinions of the SIU on what the evidence suggests are wide ranging. However, it is unnecessary to pick away at the minutiae; the following summary suffices.

 

[49]      In addition to the facts specific to the two companies and Mr Diko’s involvement as described which was the heart of the investigation, the SIU took note of some general circumstances in the administration of the GDoH too and Dr Masuku’s relationship thereto as political head.

 

[50]      The SIU points to the record of poor management, vacancies in senior posts, and the resultant challenge that was faced by the allegedly administratively enfeebled GDoH when it was designated the centralised procurement agent for the whole provincial government. These circumstances, so it opined, made it questionable for GDoH to accept the burden of being the centralised agent of PPE procurement. The SIU asks the question whether Dr Masuku cynically supported the designation as centralised procurement agent for “nefarious’ purposes to promote the opportunity to enrich his friends and himself. No actual conclusions are drawn. Allied to these observations, the SIU drew attention to the compact concluded between Dr Masuku and the Premier upon taking office. The compact included several key performance indicators (KPIs) which included a need to address and remedy well-known shortcomings in the SCM that had lingered for some years. In the opinion of the SIU Dr Masuku had not lived up to his commitments, which crucially included addressing the vacancies at senior level and related management systems issues.

 

[51]      Dr Masuku is criticised for his weak response to the whistle being blown by Ms Pino on 7 April. Although the auditors were called in - over a week later, a leisurely pace indeed – Ms Lehloenya was left in place to continue perpetrating irregularities including an attempted cover-up to try to erase Royal Bhaca’s presence and promote Ledla as an alternative supplier.  No awareness on the part of Dr Masuku of a need to take immediate action was apparent, despite Covid procurement being a manifest area of sensitivity.

 

[52]      The SIU expressed scepticism of Dr Masuku’s professed ignorance based on the email he plainly solicited from Lehloenya. The scepticism was justified. Nevertheless, his claim of ignorance was taken at face value for the purpose of the recommendation.

 

[53]      The text of the report, as a whole, is substantially padded. It was, for example, not essential to cite every possible piece of legislation imaginable that prescribes good governance for organs of state. Some linkages between the MEC’s role and the statutory and regulatory provisions are strained, but really do not go beyond hyperbole. The posing of an unanswered question about why Dr Masuku supported a decision of the executive council to centralise procurement in the GDoH and speculating that it might have been for as nefarious purpose was unsubstantiated upon a holistic appreciation of the information gathered. Indeed, in the decision to designate a centralised procurement agent for PPE for the province, the obvious candidate was the Department that usually sourced such goods. The monthly reports that a political head is obliged to read and actions he would be expected to take, pursuant to sections 39, 40 and 63, of the Public Finance Management Act 1 of 1999 (PFMA), for example, would not have provided him in time, with useful information, assuming the reports could contain anything useful, to stop the malfeasance, and thus the allusion thereto was superfluous.

                                            

[54]      However, in the result, what is important is to audit the “recommendation” in paragraph 20 of the SIU report of 1 October 2020, with what, if anything, supports it:

“After consideration of what we stated above the SIU recommends to the Premier that there are sufficient grounds to take administrative action against the MEC for purposes determining his suitability to hold office as the responsible MEC for Health …. Thus the SIU recommends, based on the SIU’s view, based on the evidence gathered, that the MEC failed to execute his function in compliance with … the Constitution, especially sections 133, 135, and 136 …with his general oversight responsibilities in respect of the affairs of the GDoH which contributed thereto that the GDoH failed to comply with the prescripts of sections 33, 195 and 217 of the Constitution and his obligations as the executive authority of the GDoH in terms of section 63 of the PFMA”

 

[55]      A fair reading, in plain language, of the conclusions, is that what the GDoH did was a violation of mandatory good governance and Dr Masuku neglected to properly oversee its operations; had he done so, he could have prevented the irregularities with proper systems put in place to alert him of what was actually happening.  Dr Masuku was plainly not totally unresponsive to the news of irregularities; he did endorse the internal audit on 7 April. What he is criticised for is that this decision was, in context, weak and he should have been properly alert and taken direct action himself, but because he did not, the malfeasance was allowed to continue. He is not accused of corruption or nepotism, although scepticism is expressed at times about his explanations. Is the conclusion irrational having regard to the facts known?

 

 

 

 

 

 

The Grounds of complaint advanced by Dr Masuku

“Procedural” complaints

[56]      The major procedural complaint is that Dr Masuku was not afforded an opportunity to challenge the “findings” or to comment on the evidence gathered.[19] This complaint is ill founded.

 

[57]      The SIU interviewed Dr Masuku in which he had the fullest opportunity to share all he knew. Moreover, he was confronted with the e-mail of 1 April which prima facie showed he knew on that date that Royal Bhaca had been contracted.  He had the benefit of audi alterem partem.

 

[58]      The notion that he be given a copy of the report before its release is a misconception of the SIU’s function. As addressed earlier, it is an investigative entity which does not itself make determinations.  Similar complaints were made in the case of Maxwell v Department of Trade and Industry [1974] 2 ALL ER 122 (CA) a matter concerning an investigation in terms of the Companies Act; ie an investigation under statutory authority, into malfeasance in the governance of the Pergamon Press Ltd. The complaints were dismissed as being inappropriate in the context of an investigative process.  Lord Denning, at p127, said:

 

“First and foremost, when a matter is referred to an inspector for investigation and report, it is a very special kind of inquiry. It must not be confused with other inquiries which we have had to consider. Remember what it is not. It is not a trial of anyone, nor anything like it. There is no accused person. There is no prosecutor. There is no charge. It is not like a disciplinary proceeding before a professional body. Nor is it like an application to expel a man from a trade union or a club, or anything of that kind. It is not even like a committee which considers whether there is a prima facie case against a person. It is simply an investigation, without anyone being accused.

Second, there is no one to present a case to the inspector. There is no 'counsel for the commission'. The inspector has to do it all himself. He has himself to seek out the relevant documents and to gather the witnesses. He has himself to study the documents, to examine the witnesses and to have their evidence recorded. He has himself to direct the witnesses to the relevant matters. He has himself to cross-examine them to test their accuracy or their veracity. No one else is there to cross-examine them. Even if a witness says things prejudicial to someone else, that other does not hear it and is not there to cross-examine him.

Third, the investigation is in private. This is necessary because witnesses may say something defamatory of someone else; and it would be quite wrong for it to be published without the party affected being able to challenge it. The only persons present are the inspectors and their staff, the shorthand writer, the witness and his lawyers, if he desires them.

Fourth, the inspectors have to make their report. They should state their findings on the evidence and their opinions on the matters referred to them. If their report is to be of value, they should make it with courage and frankness, keeping nothing back. The public interest demands it. It may on occasion be necessary for them to condemn or criticise a man. Before doing so, they must act fairly by him. But what does fairness demand? That is the question.

Forbes J thought that, in order to do what was fair, after hearing the evidence and studying the documents, the inspectors ought to come to a conclusion (which was necessarily tentative) and put the substance of that conclusion to the witness. He was led to that view by the observation of Sachs LJ in Re Pergamon Press Ltd ([1970] 3 All ER at 544, [1971] Ch at 405). I do not think that is right. Just think what it means. After hearing all the evidence the inspectors have to sit down and come to tentative conclusions. If these are such as to be critical of any of the witnesses, they have to reopen the inquiry, recall those witnesses, and put to them the criticisms which they are disposed to make. What will be the response of those witnesses? They will at once want to refute the tentative conclusions by calling other witnesses, or by asking for further investigations. In short, the inquiry will develop into a series of minor trials in which a witness will be accused of misconduct and seek to answer it. That would hold up the inquiry indefinitely. I do not think it is necessary. It is sufficient for the inspectors to put the points to the witnesses as and when they come in the first place. After hearing the evidence, the inspectors have to come to their conclusions. These need not be tentative in the least. They can be final and definite, ready for their report.”

 

[59]      The second complaint is that certain people were not interviewed.  The point of this contention was to suggest that the SIU did not apply its mind to all the evidence. The potential evidence of Ms Lehloenya, Dr Ngcwabe, and of Prof Lukhele, are mentioned as notable. However, the complaint is empty of substance. Even if it be assumed that all three persons were readily available to the SIU prior to this report, Dr Masuku does not state what valuable information they have to contribute.  Paradoxically, the statement of Ms Lehloenya given in the proceedings against her, are adverse to Dr Masuku, because she there alleges her conduct was dictated by Dr Masuku and by the Premier, a claim which may or may not be true and about which this judgment need not express a view.

 

[60]      Third, it was alleged that the attempt by the SIU to obtain further information after the reports were filed on 1 October evidenced irrationality because it had already made its “findings”. This perspective is misdirected. The reports make plain that the investigations as a whole were not yet complete, and the corruption leg is still being pursued, an aspect which does not form the basis for the criticism of Dr Masuku in this report.  Curiously, Dr Masuku refused to cooperate with that aspect of the matter.

 

 

Did the SIU act ultra vires?

[61]      The submission is advanced that the SIU cannot compel another organ of state to do anything. This is perfectly correct. However, the SIU never purported to do so by expressing its recommendations in its report.

 

[62]      Anterior to that submission is the idea that the SIU has no power to make “recommendations concerning remedial action”. Section 4 of the SIU makes no mention of “recommendations”. If the term “recommendation” is understood as a term of art to identify the expression of public power; eg, as exercised by the Public Protector, plainly the SIU lacks such a power. However, it is inescapable that an investigator must form an opinion about the material gathered. The very act of enquiring, interviewing and searching is driven by a perception of a perceived pattern of conduct, however tentatively held, which is tested by the investigation. When furnishing a report, an express obligation on the SIU, it is obvious that the material must be ordered and rendered coherent to substantiate an opinion on what has been discovered or not discovered. In my view, the recommendations of the SIU must be understood in this sense: a legitimate comment on whether any official had been culpable of improper activity.

 

[63]      The Premier was, therefore, not instructed to do anything. An opinion was expressed that there was a case to meet on the grounds of neglect of duty. The Premier had no obligation in law to give that opinion any weight, nor is there any basis in the evidence to hint that the Premier thought he was bound by the recommendation, nor indeed whether the Premier drew his own conclusions from the raw facts discovered or gave weight to the recommendations. Moreover, whether the removal of a political office-bearer is an instance of “administrative action” is a question not necessary to address in this judgment.

 

Is the SIU’s opinion that Dr Masuku was derelict in his duties as MEC irrational in relation to the facts?

[64]      The nature of the SIU’s functions and the character of its reports have already been addressed. Many of the complaints by Dr Masuku are at cross purposes with these considerations; in the main the complaints confuse a deliberative decision with an investigative one. The SIU’s opinion does not vouch for the truth of the allegations made by witnesses. It does vouch for the hard objective evidence gathered which is backed up by documentation.

 

[65]      True enough, the SIU traversed several aspects of an MEC’s role and the obligations of an organ of state to operate strictly in accordance with various laws regulations and treasury instructions. However, the heart of the case in support of the opinion held by the SIU comes down to two aspects.

 

65.1    The first aspect is that Dr Masuku was neglectful in his duties, as illustrated by his failure to attend to his emails, despite being in a critical leadership position. This conduct justifies an adverse inference about his lack of professionalism and lack of care in discharging his functions. His conduct shows a lack of judgment and of diligence.  His version as given to the SIU was faithfully reproduced. What he is criticised for is not for lying; his ignorance was taken at face value, despite the scepticism it fully deserved, but for neglect. The version given that he did not read an email sent to him which he had requested is a foundation for the opinion of his neglect of his role. Indeed, what professional person could excuse not attending to his emails? Prima facie, Dr Masuku’s own version is a confession of unprofessionalism and dereliction of his duties. Axiomatically, had he bothered to attend to his emails, and done so on 1 or 2 April, he would have been shocked at Royal Bhaca getting a contract then and not only in mid-May some 6 weeks later. He could have stopped the debacle there and then.

 

65.2    The second aspect is that, as the political head of the GDoH, which had taken on the front-line role of centralised PPE procurement agent for the entire provincial government, in the face of the greatest public health risk in a century, and being the co-chair of the command council of the province, and, necessarily, being aware of the perils of irregularities if appropriate controls were not in place to regulate the fraught and vulnerable process of emergency procurement, he was so deaf and blind to these risks that he took no steps at all to lead and protect his department from stumbling into the predictable chasm.

 

[66]      Dr Masuku’s rebuttal is simply to protest that he was entitled to remain wholly detached. even in a pandemic. When news of improprieties was brought to his attention, he was content to fob off the investigation to the internal auditors and take no steps to inform himself at all to assess the status quo and intervene urgently.  

 

[67]      In my view, the SIU was not at all irrational in forming its opinion. The SIU saw no crime having been committed by Dr Masuku. The SIU saw no basis for civil action against Dr Masuku. Indeed, it decided there was no action it could or should take. The SIU faithfully reported what it had learned to the Premier and to the President.  It deemed Dr Masuku’s conduct to be wanting. To form such an opinion is plainly within its scope of functions. No irrationality can exist in the SIU being disappointed by Dr Masuku’s discharge of his role. The fact that Dr Masuku held a different view about his accountability is unimportant. The SIU has no obligation to defer to Dr Masuku’s perspective, which he voiced fully and was part of the matrix of facts investigated.

 

The Order

The application is dismissed with costs, including the costs of two counsel.

 

 

SUTHERLAND ADJP

 

 

RAULINGA J

 

 

SIWENDU J

 

Date of hearing:                      21 January 2021

Date of judgment:                   12 April 2021

 

For the Applicant:

Adv W R Mokhare SC,

With him, Advs M Majozi, C Lithole and V Rikhotso,

Instructed by Motalane Incorporated.

 

For the First Respondent:

Adv Vincent Maleka SC,

With him Adv Nicole Mayet,

Instructed by the State Attorney, Pretoria.

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