Officials caught with snouts deep in the trough
South Africa’s civil servants have scored more than half-a-billion rand in government tenders, which were irregularly awarded to their spouses and relatives.
An investigation by auditor-general Terence Nombembe into government officials who moonlight as business executives, found that more than 2000 were involved in tender-rigging and corruption worth more than R610-million.
He has recommended disciplinary action and a tightening of government procurement systems.
The civil servants awarded tenders to companies owned by themselves, their spouses or their relatives.
The report was presented to parliament in April this year but was never formally discussed because parliament was winding up its business ahead of the general election.
It paints a bleak picture of an administration in shambles where corruption, misspending and flagrant abuse of public money is the order of the day.
The auditor-general found that between 2005 and 2007 government officials in eight of the nine provinces cashed in on tenders worth R540-million. KwaZulu-Natal is still being audited.
The remainder of the R610-million was fleeced by officials in national government.
The auditor-general’s findings included:
- Government officials in Limpopo got the lion’s share of the deals, with more than R260-million worth of tenders shared by 900 officials;
- In Mpumalanga, a total of 573 employees shared contracts worth R115-million;
- About 70 senior officials — and their spouses — in national government departments between them owned 72 companies which scooped tenders worth more than R70-million. One of the officials won a tender worth R20-million from the Department of Foreign Affairs;
- Senior officials involved in administering tenders manipulated tender processes to award lucrative contracts to colleagues and relatives; and
- The majority of government officials who benefited from state tenders had not asked for permission to do paid work outside their public service employment, and did not declare it.
Derek Luyt, head of media and advocacy at the Public Service Accountability Monitor, an independent organisation that monitors the misuse of public funds, said he believed the report was “the tip of the iceberg of corrupt employee-private entity relationships”.
“What we have here is not simply poor management, but a telling failure of political oversight. If senior managers and heads of department don’t take corrective action, especially when the need for it is so clearly demonstrated. .. then the responsibility lies with MECs and ministers to ensure corrective action,” he said.
According to the public service code of conduct, a government employee is guilty of misconduct if he or she does paid work without permission from a head of department.
Senior managers are required to disclose all their financial interests and assets.
The auditor-general report found that civil servants “made misrepresentations by not declaring in the tender documentation that employees were related to companies that were tendering”.
Tenders were split to remain below the R30000 threshold to avoid inviting competitive bids.
In one such case at the Department of Social Development, a company owned by a senior official in the department rendered similar services on 24 different occasions, with a quotation being obtained each time. The total amount of the 24 transactions was R649000.
According to the auditor-general, in many cases government departments “deviated from the supply chain management process without necessary approval and awarded tenders or quotations to employee-related entities”.
This, the report said, “could be an indication of preferential treatment of such employee-related entities or of fraudulent activities in the awarding of tenders or contracts”.
Nombembe’s report found government departments did not always obtain three quotes for transactions with a value between R10000 and R30000 in line with regulations when awarding contracts to public servants or their spouses.
There were also cases where contracts were awarded to government employees who “had not scored the highest points during the evaluation process, without providing reasonable and justifiable grounds for doing so”.
Several cases in which officials exposed themselves to conflicts of interest were also discovered.
In one such case, a senior official in the Department of Communications — who also chaired the department’s tender committee — presided over the award of a R500000 tender to an information technology company in which his wife had an interest. He failed to declare the conflict of interest.
In another case, a senior manager in the Department of Arts and Culture issued a R287000 grant to stage a music festival. The money went to a close corporation in which he held 50%.
The manager in question signed an agreement with the close corporation as a representative of the department.
The auditor-general reported that the chief industrial technician at the Department of Water Affairs and Forestry approved payment of R171000 to a company owned by a spouse. Tax invoices from the company to the department were made out for the attention of “the chief industrial technician”.
In another instance, a company owned by a senior official in the Department of Education won a tender worth R30-million through a subsidiary in which he held shares. The auditor-general found the official had sought to deceive the department by only declaring his interest in the holding company and not in the subsidiary.
The report cited several cases in which about R2-million went to companies owned by civil servants who did business with national departments while not registered for VAT. Some companies linked to public servants charged VAT while not registered to do so.
Nombembe recommended that disciplinary action be taken against employees who benefited from state tenders.
He said it should be compulsory for civil servants and their spouses to make declarations of interest if a company in which they have an interest submits a quotation to a government department.
“When departments prepare lists of prospective suppliers, they should request companies to disclose whether any of their directors and shareholders are employed in government. This includes disclosure of spouses and close relatives,” the report said.
The auditor-general noted that there had been “inconsistencies” in the way some government departments dealt with crooked public servants.
In some instances, the report said, departments had charged employees with misconduct and discharged them or issued warnings.
But other departments had indicated that disciplinary steps “could not be taken as employees were not aware that they should have obtained approval to perform other remunerative work.
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