A tender game

Businessman giving a bribe.

Effectively addressing corruption in the Local Government tendering process will require commitment and co-operation from both the public and private spheres, as Corruption Watch’s Leanne Govindsamy explains.

Shortly after taking up office last year, Minister of Cooperative Governance and Traditional Affairs (CoGTA), Pravin Gordhan, announced that government plans to seize assets and institute civil suits against municipal officials found guilty of corruption or fraud in order to recoup any money that was lost.

A firm stance to take, but as many would agree, a necessary course of action. Corruption in the public sector is as old as the institutions themselves. Looking at recent reports by monitoring bodies such as Auditor General, it becomes evident that progress is being made in terms of local government cleaning up its act, but that there is still a lot of distance to cover to eventually achieve accountability and transparency.

One area in particular that is often the target of corruption in local government is tenders and the tendering process. But to what extent is corruption rife in South African municipalities and how does it implicate the tendering process?

Initiating the discussion around the topic of how much change we are seeing on a local government level when looking at topics such as taking brides, Head of Legal and Investigations at Corruption Watch, Leanne Govindsamy, admits that it is a difficult question to answer since corruption has always been a feature of governance in South Africa.

“As efforts to expose corruption have risen, a greater number of cases have been recorded and made known to the public. Whether this is due to an increase in corruption or to better exposure and reporting of corruption is unclear. What is clear is that excessive decentralization of public procurement has fueled corruption,” she says.

As Govindsamy points out, similarly, an assessment of whether we are seeing a positive change in behavior at a local government level is difficult to assess since a change in behavior may not be reflected in statistics and even greater convictions of corrupt officials may not be an indicator for behavioral change.

“However the point is not whether corruption levels are better or worse than in previous years and under previous public administrations. The point is rather that corruption is clearly prevalent in local government and it is causing great dissatisfaction and resentment amongst ordinary citizens who want and deserve better. Ubiquitous and increasingly violent ‘service delivery protests’ are evidence of this, as are the large volume of reports that we and other hotlines receive,” Govindsamy says.

President Zuma said earlier in 2014 that centralising the government's tender system will go a long way towards rooting out corruption in South Africa's public service. Govindsamy confirms that both Zuma, as well as former Finance Minister, Pravin Gordhan, have both made mention of the Office of the Chief Procurement Officer and the creation of the Central Tender Board, but says that the public has not yet been provided with details relating to the functions, powers and governance of these entities.

“In principle, a Central Tender Board working in conjunction with the Office of the Chief Procurement Officer is a great concept, one that creates significant opportunity for reducing tender corruption. However, the efficacy of these institutions largely depends of the nature of their powers and functions.

“As Corruption Watch, we welcome the steps being taken by government to address local government corruption but a great deal of work will need to be done to capacitate and empower these institutions in order to realise positive change in this regard,” she says.

There has been a tendency among SMMEs not to bother to tender for local government jobs as they seldom succeed in getting the tenders, with a perception that tenders go to family and friends, or are either attached to bribes. Govindsamy confirms that they have come across such views during the course of their work and in interaction with businesses and professional oversight bodies and says that they are concerned about this trend.

“Corruption Watch strongly believes that dealing with the multi-headed monster that is local government corruption, requires all interested parties to empower themselves in order to fully participate in tendering processes and to challenge corrupt tendering processes where necessary.

“In this regard, and in relation to a specific professional oversight body, Corruption Watch is embarking on a public education programme which is aimed at empowering small business owners by ensuring that they understand their rights and obligations in a tender process and to challenge corrupt tender practices by utilising inexpensive legal and other tools at their disposal,” she says.

According to her, it is also of vital importance that small business owners and other interested parties report instances of corruption to them. She says that although they are unable to investigate every report of corruption, the information they receive is vital to understanding the levels and extent of corruption being experienced at a local government level.

“In this regard, if we receive high volumes of reports of corruption in relation to a specific person or municipality, we are able to use the data to campaign for change and to show how corruption is being experienced by the citizenry. We cannot stress enough, the importance of such information and data for the creation of proper solutions to this problem. It is hoped that these and other solutions may result in the shifting of negative perceptions among small businesses about tendering for work at a local government level,” she says.

When looking at the root causes of corruption in the tendering process, Govindsamy says the two most important general causes of corruption are impunity at the top and weak and compromised law enforcement agencies. She says when public officials and members of the public see politically connected people and institutions getting away with flagrant acts of corruption, it erodes the respect for the rule of law and for public resources that is essential if corruption is to be effectively tackled.

She further highlights the fact that public procurement is a common target for corruption because that is where the big money is. “Public procurement involves massive amounts of money and so the incentive for corruption is concomitantly huge. In the best of circumstances it is difficult to exercise oversight over a procurement exercise as vast and diverse as public procurement which ranges over everything from fighter jets to pencils. In South Africa these oversight problems are significantly exacerbated by the acute fragmentation of public procurement.

“In addition the risk attached to engaging in corruption is very low. Disciplinary procedures are rarely used and when they are they are incompetently managed. Corruption is rarely reported to the police and when it is the police reaction is slow and reluctant,” she says.

In terms of current measures that are being put in place to address corruption in the tendering process, Govindsamy says that these include the Municipal Finance Management Act, as well as a myriad of other supporting legislative and policy measures. According to her these measures aim to ensure transparency in the tendering process by including certain procedural requirements as well as ties of evaluation and adjudication over tenders.

She does however mention that these measures are not properly implemented or overseen and many unlawful tenders are often only revealed by litigation lodged by unsuccessful tenderers or very brave whistle blowers. The downside, she says, is that by the time such unlawful tenders come to light, the object of the tender has been provided or completed, leaving little by way of remedies for unsuccessful tenderers.

“The corrupt tenderers are also not been held accountable and although Treasury is obliged to maintain a national register for tender defaulters, very little is being done to expose and bar such individuals from a tendering process. Even more worrying is the ease with which corrupt individuals hide behind multiple companies involved in corrupt tendering processes all the while benefiting from such corruption. A particularly disturbing phenomenon is that of public officials setting up private businesses who enter into commercial relations with government, often with the very department in which the public official is a senior decision maker.

“This practice has recently been prohibited in terms of the Public Administration Act. This is a major development. However to implement it effectively parallel measures must be introduced that compel all companies bidding for public contracts to reveal their beneficial owners thus limiting the ability to hide behind opaque company and shareholding structures. There are many ways in which corruption pervades tendering processes and more sophisticated methods of detection and investigation are required,” she says.

When asked about how corruption in Local Government affect people on a grassroots level, Govindsamy starts by explaining that corruption is traditionally defined as the abuse of public power and public resources for private gain. She says that it is those who rely on the provision of public services like public education, health, welfare, transport and security services who are most directly impacted by corruption.

“Accordingly the effect of corruption at a grassroots level is immense, its effects incalculable. Basic goods and services are not being delivered or are of such poor quality that they cannot be utilised.

“Corrupt officials, private parties and businesses are literally stealing food and basic goods from the tables of hundreds of thousands of South Africans. The direct economic effects aside, corruption is responsible for a massive erosion of trust in public officials and institutions, including elected representatives and democratic institutions. Corruption is thus a threat to the very system of Government itself,” Govindsamy says.

Tender corruption can and does occur in almost every local government department and for the provision of most services and goods according to her. It is apparent however, that corruption in schools is one of the most prevalent forms of corruption she says. “The procurement of goods for basic goods and services for the education of our children have been significantly marred by corruption.”

So how far are we really from achieving transparency in the local government tendering process? Govindsamy says there is a lot of work that needs to be done in order to ensure that tendering processes are more transparent.

“This requires not only state enforced measures but the involvement and participation of civil society organisations and private individuals. As technological advancements are being made available to more and more South Africans, Corruption Watch believes that the use of technology and social media to report, expose and document corruption is going to be of vital importance in the coming years.

“It is also important that government officials respect the spirit of openness and transparency provided for in the constitution. Instead we find that government routinely refuses to accede to requests for information despite the provisions of the constitution and the Promotion of Access to Information Act compelling those who request information to engage in lengthy and costly litigation,” she says.

When asked about comparing corruption figures among provinces, Govindsamy says that it is difficult to be precise but that a significant proportion of the reports of corruption that they receive implicate officials and institutions in the second (provincial) and third (local government) tiers of government. She also says that a significant number of reports are directed at corruption in small towns.

In terms of success stories with regard to cleaning up the local government tendering process, Govindsamy refers to the Masilonya Local Municipality in the Free State, which co-operated with them in a probe into allegations of corruption at the municipality.

“The municipal manager responded timeously to our requests in terms of the Promotion of Access to Information Act. The municipality provided us with all the information we had requested and was able to justify a deviation from a tender processes. Ultimately we were able to ascertain that a tender granted by the municipality was not irregular. Such co-operation is rare as the resistance we receive from local government significantly hampers and delays our investigations,” she says.

According to Govindsamy the state is in need of more resources in order to fight corruption. More importantly, she says, the institutions which receive such resources musty be able to operate in a free and fair environment, one in which all forms of corruptions are capable of being properly investigated and adjudicated upon in order to mete out and implement appropriate remedies. She says that the savings achieved by more robust anti-corruption measures would significantly exceed the cost of introducing these measures.

Having the right stakeholders on board is another important ingredient in a successful anti-corruption strategy. When asked who the relevant stakeholders are, she says that, “certainly business and civil society organisations are invaluable stakeholders. At Corruption Watch, our largest stakeholder is the general public. In order for us to conduct our work effectively, we require the public to report corruption and to provide us with enough information in order to ensure that we are able to investigate the matter further. Although we can only investigate a tiny fraction of the reports, we are able to use the other reports to form campaigns, pressure government or as invaluable data for tracking and measuring corruption.

“In terms of protecting those who report corruption, the reports which are investigated are conducted in a manner which is agreeable to the reporters and no action is taken without informing and liaising with the affected reporter.”

Govindsamy concludes with some pointers on cleaning up the local government tendering process:

  • Commitment to supply chain management and other tender procedures: It is our view that these procedures, if properly followed and implemented, will go a long way to ensuring the transparency and fairness of tenders.
  • Training of those involved in the procurement of goods and services: The procedures which are required for tendering processes are often complex and time consuming. There must be better training of government officials in order to ensure they have the necessary tools to implement and oversee tendering processes.
  • Incentivising units or structures within local government that are corruption free and who receive clean audits: Some individuals within local government are working hard to maintain a corruption free environment and they deserve to be recognized for their hard work.
  • Policing of tender processes is of vital importance: Municipalities and other local government structures should be hyper vigilant about adherence to tender processes and the occurrence of corrupt activity. It is generally accepted that apparently harmless administrative irregularities are red flags for corruption. Hence when a public body neglects to advertise a tender this is rarely a simple administrative error but it rather intended to benefit a particular supplier. The policing of such conduct by all those involved in such processes is therefore of great importance.
  • Shifting perceptions about corruption: Often, it seems, corruption is seen as part of daily life, one of those things that cannot be eradicated from society. More effort must be put into changing this perception and purging local government of the myth that corruption is business as usual.

 Michael Meiring

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Issue 68