Airports, water boards, harbours and power utilities all play a vital role in South Africa’s economy, but what happens when staff at these state-owned enterprises (SOEs) rig multibillion-rand tenders or dish out jobs to their ill-suited friends and family? In this feature, we examine the dozens of tip-offs we’ve received about this kind of corruption to give you insight into the trends that we are picking up.
Corruption Watch received 49 reports from the public about corruption in SOEs between January 2012 and April 2013, accounting for over 3% of all corruption complaints received during this period.
Many of these involved vast amounts of money and flagged weaknesses in procurement and employment processes. Considering that our parastatals are vital for the functioning of the country and provision of basic services, corruption that erodes the ability and integrity of these institutions is worrying.
Complaints implicated 12 out of the 132 SOEs in the country, most notably in the energy (28.6%), transport (24.5%) and health (10.2%) sectors.
Many of the country’s SOEs have headquarters in metropolitan areas to make service delivery more convenient, and the origins of the reports from the public reflect this. Gauteng leads as the province with the greatest number of SOE-related complaints, with Western Cape and Eastern Cape coming in at joint second. No cases have come from North West, Northern Cape or Mpumalanga.
The type of corruption cited most frequently is procurement-related corruption (46.9%) followed by corruption related to employment (30.6%), which includes nepotism or staff soliciting bribes from job-seekers. Incidents of abuse of power have also been recorded.
Here the hotspots are procurement processes and supply-chain management, and the nature of complaints includes manipulating tender applications to favour certain preferred suppliers. An example of this is:
“I was told confidentially by an internal source at *name of SOE withheld*, that a Tender was received by Fax one day after the closing date, and consequently added to the tender list. The Tender was for a *description of contract withheld*. The recipient of this faxed tender was *individual’s name withheld* from *name of company withheld*. This tender was then recommended by *individual’s name withheld* to be appointed. I understand from my source that he escaped any kind of censure because his uncle is his superior and protects him”
Other allegations by the public claim nepotism in staff appointments, technicians soliciting bribes in return for the installation of electricity meters and individuals mismanaging pension funds.
Transport SOEs seem to be plagued by bribery, with complaints about job-seekers being asked to cough up bribes of between R3 500 and R5 000 to secure work there. Tender irregularities and favouring certain suppliers have also been highlighted in reports from the public, as well as nepotistic staff appointments, as one reporter notes:
“Would appreciate it, if the the would be an investigation done,please look in to the hiring of certain fortunate individuals in *name of SOE withheld* were employed? *Name of individual withheld*, wife of *name of individual withheld* got employed? There was no advertisement, just a formal notice (rumors) in corridors that the "wife" will be working in *name of SOE withheld* as a communications manager- she used to work as a PA for the Regional Manager *name of individual withheld*. *Name of individual withheld* (well connected, government officials-top management ,she works very hard in clocking solitaire games and buying various land sites, yet she sits the whole day and gets paid, every month very strange how she came in, didn't have a time sheet for 3months yet head office *name of SOE withheld* still paid her!!”
Cases implicating a certain SOE in the health industry mainly came from Gauteng. The predominant type of corruption cited was in procurement, detailing contracts being awarded without being advertised, and which did not go through the required processes. One complaint from a whistleblower indicates that a senior official at the entity had been involved in a fraudulent transaction, and that a forensic audit had been done, but that there had been no consequences:
“I am a senior manager and have reported to our board about fraudulent activities and they have not responded. I have information that implicates one of our executives in a fraudulent transaction. Previously this executive was to be charged according to the recommendation of the forensic report but nothing was done.”