CCT 319/21 Date of hearing: 24 May 2022

CONSTITUTIONAL COURT OF SOUTH AFRICA

Ledla Structural Development (Pty) Ltd and Others v Special Investigating Unit CCT 319/21 Date of hearing: 24 May 2022 ________________________________________________________________________

MEDIA SUMMARY

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The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.

On Tuesday, 24 May 2022 at 10h00, the Constitutional Court will hear an application for leave to appeal against a judgment and order of the Special Tribunal (Tribunal). The Tribunal set aside a contract and issued a final interdict and a forfeiture order in respect of monies held in terms of a preservation order against the applicants, Ledla Structural Development (Pty) Limited (Ledla), other individuals and entities.

On 11 March 2020, Covid-19 was declared a pandemic by the World Health Organisation.

In March 2020, South Africa began to consider the impact of the virus on the country. The various Provincial Departments of Health were tasked with the procurement of personal protection equipment (PPE) to protect against the Covid-19 pandemic. After several meetings, it was reported that there was a shortage of PPE in the Gauteng Province, and a decision was taken to procure stock. Pursuant to this decision, the Chief Financial Officer in the Gauteng Department of Health (Department), Ms Lehloenya, was appointed as the chairperson of the Bid Adjudication Committee, which was tasked with the procurement of PPE. Owing to urgency, there was a deviation from the ordinary procurement process in that there was no competitive bidding.

Regarding this matter, it is alleged that Royal Bhaca (Pty) Limited, whose sole director, Mr Diko, was a close friend of Dr Masuku, a Member of the Executive Council (MEC) for Health in Gauteng, submitted a bid for the supply of masks, disposable bags and sanitisers.

On 25 March 2020, Ms Pino was appointed as Chief Director: Supply Chain and Asset Management, and five days later Ms Pino signed commitment letters. The allegation is that, due to his proximity to the MEC, his company was awarded two procurement

contracts valued at R125 million. When the close relations between Mr Diko and Dr Masuku were publicised, Royal Bhaca was substituted with Ledla.

On 13 April 2020, Ledla submitted a quotation for PPE items amounting to R139 million, which was alleged to have been created by Mr Diko and modified by Ms Lehloenya. The quotation was accepted by Ms Lehloenya on 20 April 2020, and an amended letter of commitment was sent to Mr Diko. On 30 April 2020, Ms Lehloenya sent an email to Mr Diko, terminating the contract with Royal Bhaca and an email to Ledla containing the amended letter of commitment. Ms Lehloenya resigned the following day.

On 3 August 2020, the Department made a deposit of R38,7 million into the bank account of Ledla. Between 3 and 5 August 2020, the funds were disposed of through various transactions and paid to various entities and individuals.

There were complaints or allegations of corruption relating to the PPE procurement process in the country. This led the President to issue a proclamation in terms of the Special Investigating Units and Special Tribunals Act (Act), authorising the respondent, the Special Investigating Unit (SIU), to investigate maladministration, corruption and breaches of procurement procedure relating to Covid-19, and to take remedial action.

The SIU conducted investigations. In so far as the Royal Bhaca/Ledla contract is concerned, it found that Ms Lehloenya was central to the conclusion of the unlawful contract with Ledla and the subsequent payment to R38,7 million to Ledla. Pursuant to its investigations and findings, the SIU approached the Tribunal for urgent relief relating to the contract awarded to Ledla.

In August 2020, the SIU filed an urgent ex parte application for the cancellation of the impugned contract and a preservation order against the various bank accounts to which the R38,7 million had been deposited. The SIU also sought an interdict against the pension funds, which held Ms Lehloenya’s pension and retirement benefits.

The Tribunal granted the interim order and issued a rule nisi. Ledla opposed the grant of the final relief sought on the basis that: the claim can only result in the remedies of confiscation and forfeiture, which are sourced from the Prevention of Organised Crimes Act of the Prevention and Combating of Corrupt Activities Act and can only be pursued by the National Prosecuting Authority; the SIU does not have the necessary locus standi to prosecute the claim and, consequently, the Tribunal does not have jurisdiction over the claim. Ledla also challenged the SIU’s factual allegations.

The Tribunal held that it is a Court of its own kind and held that the evidence before it demonstrated that Ms Pino did not have requisite authority to sign the letters of commitment for the two contracts. It further held that Royal Bhaca and Ledla were connected through the substitution, and that their directors worked with the Department’s officials to inflate the quotations and conclude the contracts. The Tribunal held that the evidence before it implicated Mr Diko and Ms Lehloenya and granted the interdict against Ms Lehloenya’s pension funds and benefits pending the finalisation of the trial. The

Tribunal held that the contracts awarded to Royal Bhaca and Ledla were unlawful and set them aside. The amount of R38,7 million, which was subject to a preservation order, was declared forfeit to the State.

The applicants, Ledla, Ms Rhulani Lehong and Mr Kgadisho Norman Lehong, applied for leave to appeal the Tribunal’s decision. That application was dismissed for lack of prospects of success. The applicants unsuccessfully petitioned the Supreme Court of Appeal. They have now approached the Constitutional Court for leave.

The applicants submit that the Constitutional Court’s jurisdiction is engaged, as the matter concerns the interpretation and application of section 217 of the Constitution, the right to a fair trial and the scope of the Tribunal’s powers to adjudicate judicial reviews and make forfeiture orders. The applicants also submit that is in the interests of justice for the Court to hear this matter, as there are reasonable prospects of success.

The applicants submit that the Tribunal is not a court of law and, consequently, the review proceedings and the forfeiture orders are a nullity, as they were undertaken under a false premise that the Tribunal is a court of law. The applicants further submit that, since the Tribunal is not a court, it does not have the authority to preside over judicial reviews, neither under the principle of legality nor the Promotion of Administrative Justice Act. The applicants contend that the Tribunal erred in ruling that it had the competence to order a forfeiture of assets, as it was not empowered to do so by the SIU Regulations or the Rules of the Special Tribunal. The applicants also submit that the Tribunal erred in its factual findings. Ultimately, the applicants seek that the appeal be upheld, and the orders of the Tribunal be set aside with costs.

The SIU submits that leave to appeal should not be granted as it would not be in the interests of justice to do so, because the applicants do not have a material defence. The SIU also submits that the applicants have raised novel issues and arguments in their written submissions before the Constitutional Court, including their challenge to the status and jurisdiction of the Tribunal, in that they did not raise these arguments in the Tribunal proceedings or in the application filed in the Supreme Court of Appeal. Therefore, the interests of justice do not favour granting leave to appeal.

Regarding the status of the Tribunal, the SIU submits that the Tribunal’s power to adjudicate judicial reviews and to grant forfeiture orders is not dependent on its status as a court, but rather on an accurate interpretation of the powers vested in the Tribunal by the Act and the Regulations. The SIU further submits that the Tribunal is a court by virtue of its functions and composition; and the fact that it does not bear the name “court” has no bearing on its characterisation. The SIU submits that the Tribunal is empowered to adjudicate civil proceedings, which includes judicial review proceedings, in terms of section 8(2) of the Act. The SIU also submits that the Tribunal is empowered by rule 24 of the 2019 Tribunal Rules to make preservation and forfeiture orders. Lastly, the SIU supports the Tribunal’s factual findings and, therefore, the application for leave to appeal should be dismissed with costs.