Corruption Watch today appeared in the Constitutional Court, as a friend of the court, in the case of Allpay Consolidated Investment Holdings (Allpay) and Others v The South Africa Social Security Agency (SASSA) and Others.
At the heart of the case is the award of a R10-billion tender by SASSA to a private company, Cash Paymaster Services (CPS) for the distribution of social grants. Allpay was one of the losing bidders – the company sought to review and set aside the tender in the lower courts, but was unsuccessful and consequently took the matter to the Constitutional Court.
Corruption Watch has joined the litigation as a friend of the court because of its interest in public procurement. Between January 2012 and September 2013, the civil society organisation received more than 300 complaints from the public alleging corruption and irregularities in public procurement processes.
As a result, this has been one of Corruption Watch’s focus areas for 2013. Some 18.5% of tip-offs received by the organisation between January 2012 and September 2013 were about corruption in procurement processes, with the following metros flagged:
- The City of Cape Town
- The City of Tshwane
- The City of Johannesburg
- Buffalo City
- Nelson Mandela Bay
Where sectors are mentioned by members of the public who report to Corruption Watch, schools and construction come up as the worst affected. Other affected sectors include : healthcare, tertiary education, housing, service delivery and basic education.
In terms of trends related to procurement corruption, two broad categories stand out in the complaints Corruption Watch receives, namely: where bribes or other direct financial gratification is present, and where reporters detail irregularities where the corruption is inferred.
Tip-offs mention different kinds of procurement-related bribery: in certain instances officials authorised to allocate contracts – or who play an integral role in the selection of contractors – receive fixed amounts or incentives. In other instances, officials are paid a percentage of the total tender – in these cases the tender is often artificially inflated to accommodate the bribes that are to be paid.
However, the majority of procurement-related complaints indicate that there are huge irregularities in the procurement process and corruption is inferred in the severity of the irregularities.
Some of the main trends include : suppliers being allocated when the relevant committee has indicated a preference for an alternative supplier; advertisements for tenders not being circulated or the dates altered to accommodate certain suppliers who submitted after the official closing date; and appointment of suppliers whose scores do not reflect that they are the best applicants. These activities are often linked to a pre-existing relationship between procurement staff and suppliers.
In the course of its investigations into complaints of corruption in public procurement, Corruption Watch has found that deviations from public procurement rules are strong indicators of corruption and that evidence of corruption in public procurement processes is often only revealed at a late stage.
Submissions in court
In the Allpay case, Corruption Watch made submissions in the Constitutional Court regarding the Supreme Court of Appeal’s (SCA) approach to "inconsequential irregularities". These, according to the SCA judgment, are irregularities that despite their existence, do not affect the final outcome of the tender award.
Corruption Watch submitted that the SCA’s approach on this is problematic as it undermines the role that procedural requirements play in ensuring that all bidders in a public tender process are given equal treatment.
Corruption Watch submitted that irregularities should be viewed as avoidable and that strict adherence to procedures is necessary in order to minimise corruption in public procurement.
Corruption Watch made submissions too on the SCA’s approach to offering evidence of corruption in court. Corruption Watch voiced its concerns at the SCA’s refusal to admit evidence of corruption, and its apprehension that this refusal of the SCA will make it more difficult in future for parties to submit evidence of corruption and intention to deceive.
Corruption Watch submitted that courts should not stand by as observers in cases involving procurement corruption. Rather, all steps should be taken to allow evidence of corruption to be fully exposed in court proceedings.
Finally, Corruption Watch made submissions regarding SASSA’s failure to properly investigate allegations of corruption in the tender.
Corruption Watch submitted that the Treasury Regulations required SASSA to investigate all allegations of impropriety that came to light. Corruption Watch submitted that regardless of the outcome of the appeal, the Constitutional Court should make it clear that SASSA was and remains under a duty to investigate impropriety in the tender process.
SASSA opposed Corruption Watch’s application to intervene as a friend of the court.
Click here to download and read a copy of Corruption Watch's Heads of Argument.