South Africa’s mixed messages on procurement corruption

Despite new revelations of mega-public sector corruption, delays in adopting the Public Procurement Bill persist.

South Africa desperately needs laws to stop procurement corruption. Recent revelations by Daily Maverick/Scorpio of the R150 million Digital Vibes scandal involving contracts related to the government’s fight against COVID-19 underscore this.

On 1 September, South Africa’s Special Investigating Unit (SIU) told Parliament that government expenditure related to COVID-19 from April 2020 to June 2021 totalled R138.8 billion, of which R14.8 billion was being investigated for procurement irregularities. This did not include the Digital Vibes saga. And that hefty sum reported by the SIU is just the tip of South Africa’s procurement corruption iceberg.

So when the Public Procurement Bill was tabled in Parliament in February 2020, it was received with optimism. While it is a long overdue step, the bill’s year-and-a-half delay doesn’t inspire confidence that those responsible for procurement are in a hurry to see it passed.

The first major procurement scandal in democratic South Africa was the 1999 Arms Deal that saw R30 billion of defence equipment purchased. Since then, a litany of graft cases has cost the economy many billions in taxpayers’ money. Testifying at the Zondo Commission, National Treasury’s acting chief procurement officer Willie Mathebula noted that in 2017 more than 50% of the annual R800 billion procurement budget was lost due to intentional abuse of the system.

The bill’s year-and-a-half delay doesn’t inspire confidence that government is in a hurry to see it passed

When it was tabled, many government and civil society stakeholders pointed out several problems with the new Public Procurement Bill. These no doubt account for the ongoing delays in finalising the draft.

Article 9 of the United Nations Convention Against Corruption (UNCAC) emphasises that to prevent corruption, procurement systems should be based on transparency, competition and objective criteria. Laws should be passed in line with the convention.

Transparency is the most important element as it enables integrity throughout the process. Open tendering and information on procedures for evaluation, award, review or bid challenges are vital. Accountability must underline all decisions taken in procurement.

UNCAC highlights the importance of free, accurate and accessible information. This may not be possible when national security is at stake, as in the case of defence procurement. Governments should nonetheless distribute information timeously on each step and enable civil society and especially the media to ensure accountability.

Although South Africa’s bill is in line with UNCAC and includes some elements of transparency, it is vague on the accessibility of procurement information and public involvement. Article 9 (d) refers broadly to a new post of public procurement regulator, which will ‘develop and implement measures to ensure transparency in the procurement process and promote public involvement in the procurement policies of institutions.’

In 2017, 50% of the R800 billion procurement budget was lost due to intentional abuse of the system

Civil society submissions on the draft highlighted concerns that must be resolved before its adoption. These include addressing several confidentiality clauses and updating terminological loopholes that officials could exploit. The lack of provisions for dealing with transgressions and providing the capacity to set up a regulatory framework are also problems.

Since the 30 June 2020 deadline for public comments, the bill has undergone several reviews and discussions in Parliament. Many concerns raised by members echoed those of civil society organisations. And while legislation cannot reasonably be expected to cover all challenges presented, the comments must be considered before signing the bill into law.

When passed, the new legislation alone cannot be expected to solve South Africa’s procurement challenges. The country already has numerous policies and laws on procurement in municipalities and provinces, and National Treasury regulations – yet billions of rand are still lost. Without a functional criminal justice system or a culture of government officials holding their colleagues to account, the problem will persist.

A key reason is the failure to follow procurement systems. The SIU suggests that certain ‘influential’ provincial government officials don’t trust national government’s procurement processes. They’re seen as creating unfair monopolies in the public sector that exclude local and provincial black empowerment companies and small businesses. It seems more likely that these officials want to control the process for personal and political reasons rather than to ensure ‘fair’ opportunities.

The bill is in line with UNCAC but is vague on the accessibility of information and public involvement

Another reason is the failure of government departments and law enforcement to adequately investigate irregularities and prosecute cases where evidence of criminality exists. As the SIU further notes: ‘Some staff in the State institutions appear to have been held responsible for the irregularities relating to the PPE procurement instead of Senior Management or Executive Authorities.’

Laws and procedures can only stop corruption if they’re adhered to or when the failure to do so leads to consequences for those responsible. This raises the critical question of how to create a culture of ethics, integrity and accountability in the public service. Sending a message to errant senior managers or government ministers either through prosecution or dismissal, as dictated by public sector legislation, is critical.

The SIU says departments routinely ignore its recommendations to take disciplinary action against officials implicated in financial irregularities. And very few who are disciplined are dismissed. One option may be to make it an offence if a department doesn’t act on SIU recommendations without good cause.

Regarding ethics and integrity, public officials need to understand the policies and laws governing their work. This would help prevent them from being made scapegoats or bypassing procurement processes based on directives from their superiors.

The Public Procurement Bill is a long overdue step in the right direction. But government and civil society’s concerns – notably the need for transparency and the lack of capacity to establish key features mentioned in the bill – may mean that South Africans have to wait even longer to see it enacted.

Richard Chelin, Senior Researcher, ENACT organised crime programme, ISS Pretoria

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Photo: Amelia Broodryk/ISS

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