When newly appointed prosecutions boss Shamila Batohi took office in February she spoke at length about what she believed was at the heart of SA’s rampant corruption and criminality: the “cancer of impunity”.
Her metaphor was apt — the perfect way to describe how, when there are no consequences for lawlessness, it becomes emboldened to spread within SA’s public and private sectors until there is no immunity left and the country’s economy and institutions are terminally ill.
In the past few weeks and months, President Cyril Ramaphosa signed into law a number of crucial pieces of legislation that appear to be aimed at fighting back against that widespread cancer.
Since the beginning of April, the auditor-general has had the power to initiate action against government officials responsible for “any fraud, theft, breach of a fiduciary duty or noncompliance with or contravention of the law that could result in a material loss, the misuse or loss of a material public resource or substantial harm to a public sector institution or the public”. Put simply, officials shown to be responsible for the misuse of public funds can now be forced to pay back that money out of their own pockets.
This is a potentially game-changing development. For years both the auditor-general and the Special Investigating Unit (SIU) have repeatedly highlighted how often they urge government departments to take action against officials implicated in irregular and wasteful expenditure but have never had the power to compel such action. In the absence of such teeth these watchdogs were reduced to constantly raising the alarm about possible looting or incompetence with no real ability to stop it from happening.
For years both the auditor-general and the Specialised Investigating Unit have repeatedly highlighted how often they urge the government departments to take action against officials implicated in irregular and wasteful expenditure
Ramaphosa has also announced the appointment of an SIU tribunal to fast-track through civil claims the finalisation of cases in which the SIU seeks to recover money spent on dodgy contracts in court. The SIU has identified cases in which it believes billions of rand can and should be recovered, but these matters often languish for years in legal limbo. With a dedicated tribunal with the status of a high court, now focused solely on resolving these cases, there is a far greater chance that they will be finalised quicker — and money lost to questionable contracts recovered.
Finally, the Political Party Funding Bill came into effect at the beginning of April. This means that political parties are now legally compelled to publicly disclose their private funding. The evidence that has emerged in the state capture inquiry about the alleged link between facility management company Bosasa’s funding of the ANC and it being unlawfully granted huge state tenders has powerfully illustrated the need for such disclosure.
All these are welcome legal developments, which have given oversight bodies far-reaching new powers to tackle the abuse and misuse of state funds in a deeply unequal country with a struggling economy. But there appears to be a glaring hole in this newly formed matrix of accountability, one that has existed for more than a decade. It concerns the lack of consequence for the companies found to have acted unlawfully or unethically during tender processes.
While all these new laws and bodies give the state new powers to take action against errant officials and recover money spent on irregular contracts, why is the government seemingly so reluctant to blacklist companies accused of involvement in tender irregularities or corruption? The Treasury’s list of tender defaulters, which requires a criminal conviction to justify a company being placed on it, has no names on it.
On the Treasury’s database of restricted suppliers, which is available on its website and dates back to 2010, there are 218 names, most of which appear to be small businesses. The big names that have dominated the testimony of the state capture inquiry, such as Trillian and Bosasa, are not listed.
According to Geo Quinot, a professor with Stellenbosch University’s department of public law, a criminal conviction is not required to justify such blacklisting. Under the Preferential Procurement Policy Framework Act 5 of 2000, he says a tenderer can be blacklisted if found to have “submitted false information regarding its [broad-based BEE] status level of contributor, local production and content, or any other matter required in terms of the preferential procurement regulations which will affect or has affected the evaluation of a tender, or where a tenderer has failed to declare any subcontracting arrangements”.
This means proof of fronting can and should immediately result in the blacklisting of the company involved. Quinot says under the Public Finance Management Act 1 of 1999 grounds for debarment or blacklisting are “simply stated as abuse in the supply chain management system”, which is extremely broad. The reasons given for the blacklisting of restricted suppliers are predominantly given as “poor performance” and “nonperformance” — but “fraud” and “collusive bidding” are also listed.
So why, given manifest evidence of fraud and poor performance by companies tendering for state work, are there so few names on the blacklist? “This is the key question, and I don’t have any answers,” Quinot says. “There are also a number of examples of where, despite the fact that a court has found that a tender contract was invalid due to impropriety on the part of the contractor, no subsequent debarment followed.”
The Treasury maintains it is the responsibility of the government department accounting officers to ensure companies implicated in tender irregularities are blacklisted. Responding to questions from Business Day, a spokesperson said “the list is dependent on the accounting officers taking a decision to restrict and communicate such a decision to the National Treasury to review and conclude”.
The spokesperson continued: “Accounting officers are responsible for ensuring that they do not award contracts to suppliers who are restricted from doing business with the state. The office of the chief procurement officer monitors government procurement and identifies malpractices that result in procurement irregularities.”
The response arguably explains why the supplier blacklist may be doomed to remain relatively short and ineffective. If the Treasury relies on departments embroiled in tender irregularities — and possible corruption — to provide it with information to justify blacklisting suppliers, there is manifestly an interest for officials implicated in such activities not to do so.
As Quinot also argues, blacklisting “can only be truly effective if it has the effect of excluding bad suppliers from the entire government market”.
“To say that it is the responsibility of individual accounting officers to debar, while technically true, does not really help in achieving the systemic objective of the debarment mechanism. There is a distinct need for a central, overarching entity to co-ordinate this effort and ensure that a supplier that is shown to be bad in one context is restricted throughout the system,” he says. But “nobody seems to be taking responsibility for the systems level”.
The cancer of impunity will continue to thrive in SA if parts of the government it infects are not subjected to thorough and painstaking evaluation by an authority intent on keeping the entire body of this corruption-ravaged government alive. We have little to no immune system left. If we have the medicine we need to avoid reinfection, why are we not taking it?
• Maughan is a Tiso Blackstar Group contributor.
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