Earlier this month I caught wind of a rumour that chief procurement officer Kenneth Brown was on his way out of his powerful post, which of late is gaining respect as a potent weapon in the fight against tender corruption in the public sector.
After spending almost 20 years at the National Treasury in various roles before he was appointed to his current role in February 2013, the veteran technocrat was said to be retiring at the end of June.
I approached the Treasury to seek confirmation of his departure, but it became clear that the leadership of the department was anxious about word of his rumoured exit going public.
The anxiety stemmed from the timing of his departure, which would have coincided with the ongoing investigation by Brown’s team of tenders valued at more than R10 million across the public sector. The probe has already led to the cancellation of a few irregularly awarded state contracts – a move that has ruffled the feathers of politically connected bidders.
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Another source of the Treasury’s apprehensiveness is related to the unceremonious axing in December of former finance minister Nhlanhla Nene, whose removal would have been followed by a purge of the Treasury’s high-ranking officials, including Brown, who are fiercely opposed to the mooted R1 trillion nuclear energy procurement contract, reportedly backed by President Jacob Zuma, who fired Nene.
The purge has not materialised but the departure of a man of Brown’s stature would have weakened the Treasury’s resolve to clean up state procurement.
When I initially approached the Treasury, it appeared to be reluctant to respond to my questions about Brown’s departure, but later settled for the standard “no comment” instead of an outright rebuttal. I published an article on the GetBiz website (www.getbiz.co.za), which was also carried by Business Report, reporting on Brown leaving the Treasury, where he had led the Office of the Chief Procurement Officer (OCPO) since February 2013.
Statement
A day later the Treasury responded with a carefully crafted, four-paragraph statement denying that Brown was leaving the department. Many mainstream publications ran with the denial with little or no analysis. However, a closer inspection of the statement’s fourth paragraph is very telling and gives a glimpse of the Treasury’s fear had Brown left.
The paragraph reads as follows: “Indeed, Mr Brown has been approached various times by the private sector but has decided to stay at the Treasury to manage the initiatives the OCPO is involved in.
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“Maintaining the stability of the OCPO is paramount as the unit is central to government’s plan of realising efficiencies in spending and curbing corruption.”
The paragraph contains four elements that confirm Brown was leaving, but was probably persuaded to stay as his departure would have destabilised the OCPO at a time it was fighting corruption and getting a backlash from corrupt businesspeople and government officials.
I will attempt to decode or interpret the fourth paragraph.
“Indeed” – yes, Brown was leaving.
“Decided to stay” – he is no longer going after we convinced him to stay.
“Maintain stability” – his departure would have caused instability in the OCPO.
“Curbing corruption” – and compromised the Treasury’s efforts to fight corruption and prevent wasteful spending.
Brown was presented to the public in 2013 as the state’s foremost buyer, who would negotiate contracts and introduce modern procurement methods to generate savings in the R500 billion that the government spends annually buying goods and services. But it soon emerged that he was more than a bargain hunter, he was an effective corruption fighter and the worst nightmare of suppliers robbing the state blind.
Had OCPO been around in the run-up to the construction of the 2010 World Cup stadiums and related infrastructure, the collusion by big construction companies to rig tenders and earn profit margins 17.5 percent on projects worth R47bn would have been detected and prevented.
Corruption
The current probe of tenders above R10m by OCPO is primarily targeting state-owned enterprises (SOEs), such as the Passenger Rail Agency of SA (Prasa), Eskom, Transnet, SABC and SAA. It also covers coal contracts at electricity supplier Eskom, which spends roughly R200bn a year buying coal from mines to fire its power stations.
Brown and his team at OCPO are making inroads in rolling back tender corruption. Brown has already dispatched seasoned procurement professional Mbulelo Gingcana to tighten supply chain management processes at Prasa, where procurement processes had broken down and maladministration, financial mismanagement and tender irregularities took root.
This month his office instructed the Department of Correctional Services to cancel an “irregular” IT tender worth R378m awarded to an ANC benefactor. At SAA a deal involving the acquisition of 10 new A330-3000 Airbus planes was stopped in its tracks following suspicion that it would enrich the airline’s chairperson Dudu Myeni and people close to her.
And most recently Brown’s boss, Finance Minister Pravin Gordhan, declared illegal a transaction involving state-owned weapons maker Denel, the Gupta family and the president’s son Duduzane Zuma because the deal was not approved by him and his cabinet colleague Lynne Brown. The Guptas and Duduzane established a joint venture with Denel known as Denel Asia, which was set up to sell Denel weapons to Asian customers.
These deals are small compared with the giant R1trln nuclear tender on the horizon, and likely to cause serious political fallout. Brown and three of his colleagues, director-general Lungisa Fuzile and deputies Ismail Momoniat and Andrew Donaldson, were allegedly earmarked for removal by the Gupta family, which is close to Zuma, for opposing the nuclear tender on the grounds that it was unaffordable. They, with the support of Nene, had held up the tender in the pre-procurement phase.
The Department of Energy has moved the tender into the procurement phase and there are reports that it is close to issuing a request for proposals for the fleet of six nuclear power plants.
This has set the Treasury and the department on a collision course. Will the bargain hunters at the Treasury, led by Brown, prevail over this tender or will the political might of Zuma and his backers hold off the Treasury’s resistance and force through the tender? Time will tell.
**Andile Ntingi is the chief executive and co-founder of GetBiz, an e-procurement and tender notification service. The views expressed here do not necessarily reflect those of Independent Media.
BUSINESS REPORT