SA public procurement 'vulnerable to waste and corruption'

24 February 2011
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South Africa’s finance minster has admitted taxpayers are not getting value for money from public procurement and believes the government is losing billions of rand in maladministration.

Fighting corruption and fraud in public sector procurement is high on the agenda of the South African government, Pravin Gordhan said during his budget speech to Parliament yesterday.

"Public procurement plays a significant part in the economy and is central to government service delivery. However, citizens and taxpayers do not get full value for money, because this is an area vulnerable to waste and corruption.”

He said there are currently 53 investigations involving procurement “irregularities” in the public sector, relating to contracts worth R3 billion (£260 million). The Department of Justice reported 65 people linked to these investigations have been brought before the courts and more than R250 million (£21.6 million) has been seized by the government. The South African Revenue Service (SARS)  is also investigating nine cases of tender fraud, with a total value of approximately R1.7 billion (£147 million).

The finance minister said in future government departments will be required to establish rigorous demand management procedures, including the submission of advance tender programmes for the next financial year to the relevant treasury authority. There will also be restrictions on making changes to procurement orders to bring South Africa’s procurement system in line with international standards.

Companies bidding for tenders will also be required to disclose the identity of all directors, to determine whether any of the directors are government officials or not obeying rules on tax.

Last year, Gordhan promised to increase monitoring and transparency in the awarding of tenders by government to boost the efficiency of public sector buying. SARS has now increased its oversight by ensuring vendors winning state contracts satisfy their tax obligations. By the end of January, SARS had identified 13,000 vendors who had won government contracts but owed taxes amounting to more than R1 billion (£86.5 million).

He said: "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."

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