The recent raids and seizure of documents from the Department of Health’s offices in Bisho by the Joint Anti-corruption Task Team is a significant step in the fight against drug-depot fraud in the province. These raids were conducted after an investigation into R10 million that was allegedly paid to a pharmaceutical company (Resmed) for medicines that were not supplied.

Whist congratulating the efforts of the Scorpions on their investigation, the PSAM calls on the Interim Management Team (IMT) to follow-up these raids by taking steps to improve the state of financial management within the Department of Health. The IMT should also take steps to ensure that proper financial controls are put in place within pharmaceutical depots.

For the past nine financial years the Eastern Cape Auditor-General’s office has pointed to the existence of serious financial management problems within pharmaceutical depots run by the provincial Department of Health.

The Auditor-General has drawn attention to the failure of these depots to submit their financial statements for auditing since 1994. Effectively, this means that neither the department of Health nor depot managers can properly account for transactions involving the purchase of medicines in the province for the past 9 years.

Despite recommendations by the Auditor-General that the department adopt the nationally approved medical accounting system (MEDSAS) and procedure manual (MEDLOG), it had still not ensured proper financial reporting by pharmaceutical depots by 2002.

The PSAM is concerned that the state of financial mismanagement within these depots has led to a situation of extremes where, on the one hand, clinics and hospitals across the province have reportedly run out of supplies while, on the other hand, medicines have been left to expire in the Port Elizabeth depot.

The fact that the provincial Health department has only now recognised these depots as potential ‘red flags’ for the presence of corruption and bribery demonstrates the department’s failure to take the Auditor-General’s recommendations seriously. If these recommendations had been taken seriously the department would have been in a position to implement preventative measures, including an early warning system, that would enable it to identify opportunities for fraud before they occurred.

What is of additional concern to the PSAM is the fact that the total stock of medicines for the province in 2002 amounted to approximately R24 million (according to the Department of Health’s Annual Report). This means that if the reported fraudulent transactions worth R10million (involving Resmed) being investigated by the Scorpions were processed in a single year, this would have had the effect of reducing the stock of pharmaceutical supplies available to clinics and hospitals in the province by a staggering 42 percent.

Released by:

Unathi Millie
Researcher: Case Monitoring
Public Service Accountability Monitor (PSAM)
Rhodes University
Tel: (046) 603 8358
Fax: (046) 622 7215