By Janine Erasmus
Corruption in the public sector is under constant scrutiny, but there’s no doubt that the private sector is affected too. Where corruption in public procurement takes place for example, it’s likely that a private company will be involved, either as a victim or a perpetrator.
In the latest Global Economic Crime Survey, conducted by PricewaterhouseCoopers and published in February 2014, economic crime was shown to be a serious concern for South African companies, with 69% of respondents saying they have experienced some form of it in the last 24 months, compared to the global average of 37%.
At Corruption Watch’s recent business colloquium discussing corruption, questions and comments flowed thick and fast from the floor to a panel of business leaders – an indication of the keen interest of attendees in the topic.
In this new series, we highlight the ways in which some private companies and organisations are taking up the fight against corruption.
Cleaning up the engineering sector
Consulting Engineers South Africa (Cesa) is a non-profit organisation, a voluntary association of firms of consulting engineers and related suppliers. It’s the South African member association of the International Federation of Consulting Engineers (Fidic), and the seventh-largest such association in the world.
Cesa demands the highest standards of ethical behaviour from its more than 500 member firms, who have been involved in projects ranging from stadiums and roads to water, rail and power construction work. To this end it has drawn up guidelines on business integrity, based on Fidic’s integrity management system, and requires its member firms to comply with the document.
The entry requirements to Cesa state that half of a company’s ownership must be professional engineers or technologists. There is also a quality management system developed by the association and a code of conduct which members must abide by, as this helps to guarantee a client some form of redress.
Corruption is specifically mentioned in the code of conduct, and members are warned that they should “neither offer nor accept reward of any kind which in perception or in effect either seeks to influence the process of selection or compensation of
consulting engineers or allied professionals and/or their clients, or seeks to affect the independent judgement of the consulting
engineers or allied professional”.
They are also obliged to co-operate fully with any inquiry into alleged misconduct on their part, and to report instances of bribery or corruption to Cesa.
To further boost its anti-corruption arsenal, at the beginning of 2013 Cesa set up a legal advisory fund with an initial R1-million kitty, which supports members who are faced with corrupt demands from clients and believe they might lose out on business should they not give in to those demands, to take action against those clients.
The final weapon deployed by Cesa is an anti-corruption hotline, which is available at 079 360 7273 or email@example.com.
Importance of high standards and good work
Cesa’s manager for contractual affairs Wally Mayne, who oversees the ethics programme with his colleague Blessings Banda, spoke to Corruption Watch about the organisation’s anti-corruption activities.
“Our CEO Lefadi Makibinyane has been pushing for a chapter nine body for the sector,” says Mayne, referring to the group of democracy watchdog organisations, including the public protector and auditor-general, established in terms of chapter nine of South Africa’s Constitution. The engineering sector has no formal oversight body and because it’s a critical industry for the country, there are huge consequences if the work it produces is substandard or tainted with corruption.
In the meantime, as an organisation Cesa is willing to speak out against corruption in the engineering sector. But it’s not just interested in talking – the measures that it’s implemented will hold members accountable for their professional behaviour, and punish them if they transgress.
Members who break the rules will suffer consequences ranging from issuing an apology – “Sometimes that’s all the client wants” – to expulsion, a substantial black mark against the member. This is a situation that arises rarely, and Mayne hasn’t experienced it during his time with Cesa – but he has known the organisation to decline to renew a membership.
Challenging corruption in the system
The legal advisory fund was established with the help of a once-off levy from willing members, and it means that when a complaint relating to procurement irregularities comes in, Cesa is able to immediately engage a lawyer to examine the case.
Mayne explains how it came into being: “In 2012 it got to a point where there were many procurement irregularities, and our members were throwing up their hands in despair.
“We were determined to challenge these municipalities and officials who were not following the procurement rules. We thought that court orders, injunctions and so on would stop the corruption and embarrass them.”
He adds that writing “nice letters” to municipal and city managers elicited no reaction from them, and even when the national treasury and the Construction Industry Development Board were copied on communication, there was still no response. “It seemed that no-one was interested in following the procurement rules.”
These rules, Mayne clarifies, pertain to public procurement, since about 60% of Cesa members’ work comes from the state in the form of municipalities, government departments, etc.
“What we are interested in is exposing irregularities at the tender stage, as this will likely affect a lot of our members. That is the route we’re following with procurement irregularities,” says Mayne.“We don’t fight cases where an individual member has a contractual dispute with a client – they have the same access to lawyers that we do, and they will sort it out themselves.”
As Corruption Watch too has noted in the past, these irregularities can often be linked to a wider occurrence of corruption. “The thinking is, I don’t want to award the tender to you, I want to award it to my friend – so I need to somehow disqualify you,” Mayne remarks.
He adds that the ideal outcome is to stop the procurement process before the tender is awarded, because once it’s in place there might be long delays as legal and courtroom systems come into play.
A channel for whistleblowers
Cesa’s hotline is manned and maintained by Banda, and it’s a resource where members can report tender irregularities and other suspicious activities.
“To date our members have not made good use of this facility,” Banda says. “Here and there we get those calls that we can act on, but about 75% of the calls thus far are crank calls.”
Of the ones that are useful, most of the callers are unwilling to reveal their identity, and it’s difficult to follow up efficiently, despite Banda advising callers about their legal rights as whistleblowers and assuring them that their information will be treated confidentially.
“But at least we are getting something,” he says, “and people are recognising the usefulness of the service.”
Cesa has also established a working relationship with Corruption Watch, which has been a “godsend”, Mayne says. “We can refer these cases to an organisation that will treat them properly – investigations are not our field of expertise, and they can take up a lot of our resources.”
And members are welcome to contact Corruption Watch directly if they have any questions or problems.