The Gauteng health department spent tens of millions of rands on consultants —including the controversial McKinsey & Company firm — even as it said it could no longer afford to pay for patient care at Life Esidimeni facilities, Gauteng finance MEC Barbara Creecy has revealed.
For almost three years, a trio of now-former Gauteng health officials have told the same story.
Former MEC Qedani Mahlangu, department head Barney Selebano and mental health director Makgabo Manamela have all said that the tight budgets and growing auditor-general concerns about the Life Esidimeni contract forced them to cancel the department’s decades-old agreement with the private healthcare provider. The division of private hospital group Life Healthcare cared for almost 1700 state patients, many of whom were placed with deadly NGOs after the contract ended.
The triad may have spent years weaving this yarn but it took Barbara Creecy only six hours to unravel it.
In the most explosive testimony before the arbitration yet, Creecy alleged that there was no financial rationale for closing Life Esidimeni. She said couldn't find any record that the auditor-general ever registered any major worries about the contract. But, as the department moved to cancel the Life Esidimeni contract to supposedly save R250-million rand, it continued to rack up bills for private consultants totalling more than R90-million.
At the same time, it garnered R483-million in irregular expenditure in the 2015/16 financial year alone – almost twice the amount the department claimed it would save as a result of closing Life Esidimeni in mid-2016, show annual reports.
Listen: Qedani Mahlangu in her own words
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The former Gauteng health MEC says it wasn't her job to visit organisations prior to transferring state patients into their care.
Big consultants, big money
Creecy admitted that the 2015/16 financial year was tough for the province after the national treasury cut Gauteng’s budget. Departments were being asked to tighten spending but to protect “core” services such as health and education. National and provincial treasuries had told departments to cut costs in four areas, including government events and use of consultants. Consultants, said the treasuries, could only be employed if departments could prove through gap analyses that they were necessary.
But this didn’t stop the Gauteng health department, said Creecy. The body paid R30-million to a consulting firm for 12 weeks of work at Chris Hani Baragwanath Hospital. And the controversial global consultancy group, McKinsey & Company, was paid R485 000 for a two-day workshop.
The Companies and Intellectual Property Commission is currently investigating McKinsey's alleged ties to Gupta-controlled companies, according to Reuters news agency.
Meanwhile, Ngcebetsha Madlanga Attorneys was paid 59-million to audit medico-legal cases against the department.
The firm was also paid to respond to critics of the Life Esidimeni move, including the South African Depression and Anxiety Group (Sadag). In response to a Sadag letter regarding patient deaths at NGOs in 2016, the lawyers accused the non-profit of being disingenuous.
Mahlangu later personally appointed Ngcebetsha Madlanga Attorneys to represent her during the arbitration process, according to statements made by state advocate Tebogo Hutamo at the start of hearings. She has since changed lawyers.
Where did Life Esidimeni money go?
Like Premier David Makhura who testified after her, Creecy said Mahlangu and Selebano may have misled senior officials at the provincial budget commission in November 2014. At that meeting, the MEC and her head of department (Selebano) said Life Esidimeni patients would be gradually relocated mainly to state hospitals, as opposed to NGOs. They was supposedly to save money.
But the pair were warned against taking any decisions that would negatively impact patient care, Creecy explained.
“We said if you want to transfer patients from Life Esidimeni to state institutions you can do that, but you cannot diminish the quality of service,” she maintained.
Ultimately, the move would prove far more expensive than continuing with Life Esidimeni care.
After lobbying from the National Health Education and Allied Workers Union (Nehawu) and in an attempt to save jobs, the Gauteng health department was forced to absorb as many Life Esidimeni staff members as possible. This resulted in an unplanned R50-million increase in staff costs for the department.
Almost R50-million was also dolled out to the NGOs that took in Life Esidimeni patients – many of which were unlicensed, Creecy revealed.
At least 20 patients died at the Precious Angels NGO, which had been paid R1.61-million by the department. Even this payment was only after after significant delays that led to food shortages at the organisation.
Krugersdorp’s Mosego Home for the elderly received a whopping R13-million. Patients at the old-age home were fed “rotten bread, meals of cabbage and porridge and only one meal a day”, found a health ombud investigation.
Ultimately, the axing of Life Esidimeni’s contract did not reduce overall spending on mental health in the province, said Creecy. After reviewing more than three years of auditor general instructions to the Gauteng health department, Creecy could not find any documentation to support Mahlangu and Selebano’s assertions that the oversight body had wanted them to cancel the Life Esidimeni agreement.
The biggest question remains to be answered
The Gauteng health department is no stranger to financial mismanagement. The department only recently ended a three-year stint under the administration of the provincial treasury, which had taken control of the department’s finances in the 2013/14 financial year.
It has amassed R6.1-billion in irregular expenditure since 2010, Creecy said. Almost a quarter of that amount is being investigated by the South African Police Service.
The department is now under the watch of a provincial cabinet sub-committee.
Creecy’s testimony on Tuesday at least gave the families of Life Esidimeni patients some answers. But it also painted a frightening picture of the kind of mismanagement that let the tragedy unfold in the first place, said s advocate Adila Hassim. She is acting for the public interest law organisation Section27 and represents more than 70 patient families.
“For this not to happen again, it means that this mess has to be cleaned up and that the people responsible must be gotten rid of in terms of the law,” she told the hearings.
For Qedani Mahlangu, a woman who spent the first several minutes of her testimony rattling off her higher degrees in economics and governance, this portrait of dysfunction is likely to strike at the very heart of her reputation.
Creecy ended her testimony by addressing Life Esidimeni families with more emotion than most who had appeared before them.
“I understand that your primary task is to grieve your loved ones and to come to terms in whatever way that you can with the tragedy that has befallen you," she said. "What I pray is that one day you will forgive us for whatever part we may have played.”
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