R400bn lost to flawed tenders

CORRUPTION: R800BN PROCUREMENT SPEND COMPROMISED

Treasury chief says state could have been captured through regulatory limitations.

In his submission to the Commission of Inquiry into State Capture, National Treasury’s acting chief procurement officer Willie Mathebula said government’s yearly procurement spend stands at a hefty R800 billion.

Mathebula suggests, however, that an estimated 50% of the this procurement spend doesn’t follow proper regulatory processes – intentionally. As much as half of the total spend, or R400 billion, is possibly lost to corruption and the flouting of regulations by government officials.

“The size of government procurement does give rise [to] abuse of the system,” Mathebula said when advocate Leah Gcabashe, who led his testimony, asked him about the extent of corruption and irregularities.

“We can ascribe more than 50% of [procurement] infractions to intentions to abuse the system or the different interpretation of rules.”

R400 billion is nearly half of the R1.3 trillion that the SA Revenue Services has to raise in tax revenue for the 2017-18 financial year. It’s also substantially higher than the R100 billion that Public Enterprises Minister Pravin Gordhan has estimated South Africa has lost through state-capture corruption.

Mathebula is a veteran Treasury staffer, having spent more than 15 years at the institution in various roles related to managing government’s procurement.

He was the first witness to be called by the commission, which is mandated to look at corruption and fraud at various state organs in which high-profile politicians, including former president Jacob Zuma, have been directly or indirectly implicated.

Mathebula’s testimony was intended to give context to the legal and regulatory processes around government procurement.

Former deputy finance minister Mcebisi Jonas and former ANC MP Vytjie Mentor have implicated the Gupta family in state capture.

Both were allegedly offered ministerial posts by the Guptas.

Although Mathebula didn’t give examples of compromised departments or state-owned entities, he described how the state could have been captured through regulatory shortcomings. Every system has loopholes, and in SA’s case, he said, it is the systems themselves that allow departments to deviate from rules when awarding tenders. They allow for tender bid evaluation processes that aren’t open to the public, and they don’t allow for interrogation of decisions to accept or reject bids.

Deputy Chief Justice Raymond Zondo raised concerns about the latter. “My observation is that a lot of corruption is connected with tenders. The issue of transparency [in the bid evaluation process] is important.”

Mathebula said although National Treasury recommends sanctions for transgressors, the institution doesn’t have statistics on whether its recommendations are implemented.

Treasury is also weighing up the merits of a process to audit the work of bid evaluation committees before they make a final decision to award a tender.

A lot of corruption is connected with tenders