Minister suspends OBP acting CEO over vaccine price collusion claims

The acting chief executive of Onderstepoort Biological Products has been placed on precautionary suspension after allegations that he coordinated price collusion to profit from the country’s foot and mouth disease crisis, the Minister of Agriculture told Parliament’s portfolio committee on agriculture on Tuesday.

The minister said he became aware in late August of allegations from two sources claiming the then acting CEO was coordinating price collusion to extract profits for OBP from the outbreak. He said he shared the documents with the committee chairperson and asked that they not be made public because an investigation is under way.

He said he met President Cyril Ramaphosa to inform him of the situation, then notified the OBP board. After the board considered the letters and the prima facie evidence, it placed the acting CEO on precautionary suspension.

The minister said the board gave the acting CEO five days to provide reasons why the suspension should not become permanent pending the investigation, in terms of labour law and OBP’s own rules. No reasons were received, and the suspension took effect.

The minister told the committee the letters and minutes he provided are not proof of wrongdoing on their own and must be investigated. He said an independent legal firm has been appointed by OBP to conduct the investigation, and that the company secretary has been appointed interim CEO for two weeks while the board looks for a more permanent arrangement pending the outcome.

He said any permanent appointment would come from OBP or ARC ranks to avoid additional cost.

The committee chairperson said members had not received a written report from the minister on the suspension, which limited their ability to participate properly. The minister apologised for documents reaching the committee after 5pm the previous day, and the chairperson asked that the committee be informed of developments directly rather than through media statements.

The suspension came against the backdrop of the country’s largest foot and mouth disease outbreak. The minister said a court matter was settled two months ago, setting the sector on a path to reclaiming World Organisation for Animal Health status. Farmers can now become authorised persons to vaccinate their own animals, and private purchases of vaccines are open.

On vaccine supply, the minister said the Agricultural Research Council manufactures about 20,000 FMD vaccines a month, with a target of 200,000 by April or May next year. The country needs between 2 million and 2.5 million a month. He said he met the ARC board on Monday and reached consensus to allow private companies to manufacture the ARC vaccine at scale while ARC’s own capacity is increased.

OBP does not manufacture the FMD vaccine and does not need to distribute it, the minister said. Imported vaccines previously landed at OR Tambo International Airport and were transported to OBP before going to veterinary offices. He said that requirement has been stopped, and vaccines now reach veterinary practices faster.

The minister said two companies currently supply the country, one from Argentina and one from Turkey. The Turkish vaccine is delivered to any veterinary practice at R45 per vaccine, and the Argentinian vaccine at R46 including distribution and a R1 handling markup by veterinary officers. He said these prices are much lower than what government and provinces paid initially, and that the companies are not the ones under investigation. The allegations came from some of those companies against the OBP CEO, he said.

To date, 11.5 million vaccines have been received from the Turkish supplier and 9 million from the Argentinian supplier, with more than 500,000 from BBI and ARC, giving a total above 21 million. Of that, 1 million is stored by OBP on behalf of government for outbreak response within 24 hours, and the Red Meat Industry Services has imported 2 million under a section 21 approval, distributing 1 million and processing the other million. About 19 million vaccines have been applied.

The minister said all 1,385,000 dairy cattle in the country have received their first vaccination, and cattle in KwaZulu-Natal and the Western Cape have received booster shots. He visited the Eastern Cape last week, where roughly 80% of cattle had received boosters.

The minister said the OBP board was unanimous that OBP should not profit from a product it does not manufacture and does not have to distribute, and that past profits from distributing imported FMD vaccines will be repaid to the department and ring-fenced to buy more vaccines for public use.

Members pressed the minister on several points. One member said sales figures of about R103 million for each of two imported vaccines had raised red flags, and that only 6% of the roughly R206 million shown came from vaccines OBP produces, such as Rift Valley fever and lumpy skin disease. The minister said those were sales figures, not profit, and that he had told the OBP board the figures were window-dressed. He said he has asked OBP for a list of all vaccines it manufactures to assess readiness for other outbreaks.

Another member asked whether OBP can remain viable without profit, and warned that private companies could thrive at the expense of a statutory institution. The minister said the private companies profit because they manufacture the vaccine, and that the country relies on them because local capacity was lost over many years. He said the ARC’s first FMD vaccines in 13 years were produced earlier this year, and that without the private suppliers the country would have been in serious trouble.

A member questioned whether the suspension followed due process and the principle of innocent until proven guilty. The minister said the process followed labour law and OBP rules, that the acting CEO was given five days to provide reasons and did not, and that the investigation will determine the outcome. He said he would not pre-empt its recommendations.

On the section 21 import approval, the minister said OBP holds one and the supplier Dunvex holds one, and that such approvals are not transferable as far as he knows. He said RMIS is applying for its own section 21 approval and has been allowed to order under OBP’s permit, paying directly and arranging distribution at no cost to OBP.

Asked about timelines, the minister said the interim CEO is appointed for two weeks, that the investigation must be thorough but urgent, and that he cannot give a completion date because he is not in charge of it.

The committee also dealt with its programme. It adopted the day’s agenda but postponed a report on oversight undertaken to the Eastern Cape in 2025/2026 after members said the department’s response arrived after 5pm the previous night. The minister asked that the presentation still be heard so members could be briefed, and said the department would return for questioning. Members agreed to proceed with the briefing and revisit the report if not satisfied.

Source: Parliament of South Africa (YouTube), https://www.youtube.com/watch?v=ioFIpeR4EV0