24 February 2011
Fighting corruption and fraud in the public service remains high on the government’s agenda, Finance Minister Pravin Gordhan told Parliament on Wednesday, warning that South Africa would not tolerate losing billions of rands in maladministration.
“Public procurement plays a significant part in the economy and is central to government service delivery,” Gordhan said during his Budget speech in Cape Town. “However, citizens and taxpayers do not get full value for money, because this is an area vulnerable to waste and corruption. This compromises the integrity of governance and frustrates the pace of service delivery.”
There are currently 53 investigations involving procurement irregularities in the public service, pertaining to contracts worth R3-billion. The Department of Justice recently reported that 65 people linked to some of these investigations had been arrested and brought before the courts. More than R250-million had been seized by the state.
The South African Revenue Service (Sars) is also investigating another nine cases of tender fraud, with a total value of approximately R1.7-billion.
Gordhan warned that government departments would be required to establish rigorous demand management procedures, including submission of advance tender programmes for the next financial year to the relevant treasury authority.
Limits would be prescribed for variation orders, to restrict significant changes to procurement orders and to bring government systems in line with international standards.
Tenders for state contracts
Last year, Gordhan mentioned increasing monitoring capacity and transparency in the awarding of tenders by the government as one of the five actions to increase efficiency of state procurement.
Companies bidding for tenders will be required to disclose the identity of all directors, to determine whether any of the directors are government officials or tax non-compliant.
Sars has also increased its analytical capacity with the aim of ensuring that vendors winning state contracts satisfy their tax obligations fully. As at the end of January 2011, Sars had identified some 13 000 vendors who had won state contracts and who owed taxes amounting to over R1-billion.
“We have a shared responsibility to prevent corruption, and we call on all citizens to blow the whistle on corruption and to report any procurement irregularities to the relevant authorities,” Gordhan said.