DID ANNUAL REPORT 2023_24

Annual Report 2023-2024

Refurbishment of a private hospital without compensation for refurbishments done

67. Resources of the department were not utilised economically, as required by section 38(1) (b) of the PFMA. The department refurbished a privately owned hospital between April 2020 and September 2020 as per the lease agreement signed in March 2020 and April 2020. The lease agreement stated that any refurbishments done to the private hospital will be to the benefit of the lessor and no compensation would be paid to the department. By 31 March 2022, R492 855 808 was spent on the refurbishments. 68. The non-compliance is likely to result in a material financial loss for the Gauteng Department of Health amounting to R492 855 808 if not recovered. 69. Gauteng Department of Infrastructure Development implements infrastructure projects on behalf of the Gauteng Department of Health. • An official from the Gauteng Department of Health who also signed the lease agreement resigned from the employment of the department in October 2020. • Six officials from the Gauteng Department of Infrastructure Development and three from the Gauteng Department of Health who participated in the signing of the lease agreement were suspended in the 2021-22 financial year and their disciplinary hearings were finalised in July 2024. • The chairperson directed implicated officials and the employer to provide their closing arguments before end of September 2024. • Approved the updated third-party leasing policy in September 2023 which prohibits refurbishments of properties not owned by the provincial government. 72. The Special Investigating Unit applied to the Special Tribunal of South Africa for the draft settlement agreement between the Special Investigating Unit and owners of the hospital to be made an order of the tribunal. The matter was heard in November 2022 and judgement has not been handed down. The options included in the draft settlement agreement are as follows: • Gauteng provincial government to become registered title owner of the hospital and the residence, including parts of the land upon which these buildings are built on. • Concluding of a long-term written lease agreement for a period of not less than 99 years between the owners of the hospital and Gauteng provincial government at no rental cost, and where the Gauteng provincial government will only be required to pay its pro rata or other fair contribution to the municipal services and other related seNices required for the operation of the hospital. 70 The accounting officer was notified of the material irregularity on 22 July 2022. 71. The actions taken by the accounting officer to resolve the material irregularity were as follows:

73. The material irregularity is resolved.

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DEPARTMENT OF INFRASTRUCTURE DEVELOPMENT