PHARMACEUTICAL company Avapharm (Pty) Ltd has written to the director of public prosecutions (DPP), raising concern that the Anti-Corruption Commission (ACC) is allegedly presenting a one-sided account to the court in its application for arrest warrants against several individuals, including the company’s directors.
The letter dated October 21, purportedly from Avapharm Director Dave Melvin, accuses the ACC of pursuing criminal allegations without granting the company an opportunity to respond or clarify key facts surrounding the procurement and supply of antiretroviral and other essential drugs to government.
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According to the letter, the company’s communication comes after media reports revealed that the DPP’s office had moved an application seeking arrest warrants against several individuals, in relation to alleged irregularities involving the supply of pharmaceuticals to the Central Medical Stores (CMS).
Avapharm in the letter claimed that it had been unfairly prejudiced by the ACC’s actions. The company argued that while an investigation into drug shortages was reportedly conducted by the commission, many of the allegations that have since surfaced were never raised during interviews with Avapharm representatives.
“We have noted with concern that these issues were never raised with those of us who were called for interviews,” reads the letter in part. “We stress that only two of us were interviewed by the ACC on other issues, but not those that are now being pursued in court.”
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Avapharm claimed that on several occasions it had both directly to the DPP’s office and through the minister of justice and constitutional affairs, requested to be allowed to make formal representations on the allegations.
“We have adequate and comprehensive responses to each and every one of them.”
The company maintained that its only recourse now, in the absence of a legal mechanism to stop the issuance of a warrant based on what it called a one-sided version of facts, was to once again appeal directly to the DPP for a fair hearing.
Responding specifically to claims that there was an overpayment or duplication of invoices in the procurement of antiretroviral (ARV) drugs, Avapharm sets out a detailed sequence of events to show that all transactions were properly executed, documented, and verified by the Central Medical Stores.
The company claimed that an initial requisition, No. 1374, dated January 6, 2020, valued at E132 million, was issued by the CMS but cancelled on the same day due to an error in the pricing of certain items.
A corrected requisition, No. 1375, was then issued, and supplies were delivered and acknowledged by the CMS.
Avapharm was adamant that this process was transparent and properly recorded. “The stock was delivered as per requisition No. 1375, and receipt was acknowledged by CMS. There were no shortfalls in respect of this supply,” reads the letter.
On another charge alleging that the company submitted two invoices for the same order, Avapharm argued that this was a misrepresentation of normal procurement practice.
The company claimed that on August, 2021, it received Requisition No. 2243 for E61 191 813.22, under which government was supposed to make an upfront payment. When funds were unavailable, Avapharm alleged that it went ahead to supply the drugs to avoid prejudicing government.
When government later obtained the funds, a new purchase order, EG 22004884, was generated in February, 2022, and Avapharm was instructed to credit the original invoices under the earlier requisition. Payment was then made in March, 2022, based on the updated documentation.
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“There was no duplication of payments. There is no prejudice to the fiscus.”
A similar explanation was given for requisition No. 2042, valued at E7.3 million, issued on June 9, 2021.
The company claimed government again failed to provide an upfront payment, prompting Avapharm to deliver the drugs on trust.
When funds became available, order No. EG 22005317 was issued in February, 2022, and payment followed.
The company claimed the procedure, where initial requisitions were credited and reprocessed once funds are available is a common business practice between CMS and suppliers.
“It is common practice that when CMS issues an order, but funds are unavailable, the supplier delivers the drugs and later credits the original invoices.
“Once funds become available, government issues a new purchase order, and payment is made accordingly,” Avapharm explained.
Avapharm also disputes an ACC claim that it failed to deliver drugs worth E508 092 under requisition No. 1675, dated September 30, 2020.
The company said the allegation was based on a misunderstanding involving a change in pack size for part of the order.
“What Avapharm acknowledged was that there was a pack size change for parts of the order only. The full quantity as per the order was delivered and received by CMS on invoice AVPHINV0021 dated October 5, 2020.”
Acting DPP Lomvula Hlophe when contacted on the letter and its contents, said she had not seen it yet, thus was not in a position to comment.
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