Dear Corruption Watch,
I see that Deutsche Bank is under investigation to see whether it hired the children of Chinese government officials as a way to win contracts. This follows the arrest of the head of investment banking in China at JP Morgan Chase for the same possible violation of the US Foreign Corrupt Practices Act. Does South Africa have laws preventing the hiring of the sons and daughters of the politically connected?
South Africa does have laws that prevent hiring the family members of the politically connected to win work and curry political favour. It probably appears that this is not the case for two reasons.
First, family members of the politically connected have their own lives, qualifications, skills and interests. It would be unfair for the law to ban the hiring of people simply because their family members are politically connected. However, when a person is hired to secure government work and not because he or she is the best for the job, then a line has been crossed and the company that hired them is guilty of corruption.
The Prevention and Combating of Corrupt Activities Act stipulates that if you give someone a gift so that he or she or their family member secures you a favour from the government, you are committing the crime of corruption. Section 12 of the act specifically criminalises giving (or receiving) any gratification to improperly influence the procurement of a contract with a public body or a company.
Giving any “gratification” includes hiring the family member of a government employee, also called nepotism, to induce that employee into helping your business win a government contract. This is great in theory. However, you have probably never heard of any company or individual being prosecuted for hiring politically connected individuals in order to secure government contracts because it is notoriously difficult to prove that someone was hired by a company to secure government work for that company. Judges are aware of these difficulties.
In the case of S v Tshopo, the Supreme Court of Appeal said: “Fraud in the procurement of state tenders is a particularly pervasive form of dishonest practice. It undermines public confidence in the government that awards tenders, apparently without regard for nepotism, and it creates perceptions unfavourable to the services provided pursuant to such tenders. It is proving notably difficult for the authorities to identify and root out such malpractices.
The courts are obliged to render effective assistance lest the game be thought to be not worth the candle.” How can you help in the fight against nepotism? If you are a public employee, you can report it. In terms of the code of conduct for the public service, you are under obligation to report fraud, corruption, nepotism and maladministration to the appropriate authorities — and guilty of misconduct if you fail to do so. If you know or suspect that a contract has been awarded because the company getting the tender employed a politician’s family member, then report this to the police, a journalist or Corruption Watch (0800-023-456).
About 28% of the reports Corruption Watch has received about procurement have detailed nepotism. If your company has tendered for government work and did not get the job, you may always request reasons from the government agency for awarding the contract to someone else. If the reasons are flawed, you may wish to get more information and perhaps even bring a criminal complaint.
• This article was first published in Sunday Times: Business Times