Johannesburg - South Africa’s National Treasury has
discovered about 12 000 dead people in its register of companies that do
business with the state.
This is among the outcomes of a clean-up of the
information system that the Treasury’s procurement office undertook as the
government battles to rein in spending, said Schalk Human, the unit’s acting
head. It has also identified about 14 000 state employees who are listed as
directors of companies that have been awarded state contracts in violation of
regulations.
“We will report on them even if we drag those 14 000 to
court by their hair and lock them up,” Human said in an interview this month in
Pretoria, the capital.
Fighting graft and achieving savings have become even
more necessary since two ratings companies downgraded the debt of Africa’s
most-industrialised nation to junk. Fraud and inflated prices from suppliers
consume as much as 40 percent of the state’s R600 billion budget for goods and
services, Human’s predecessor, Kenneth Brown, said last year.
Some people set up companies with fake documents or the
identities of dead citizens and use these entities to tender for a project at
higher prices, making their legitimate businesses seem as if they’re pitching
for the same work at cheaper rates, Human said.
“It looks like there is competition, yet it’s the same
guy,” he said.
Flawed payments
Human’s office, with about 100 staff, was created four years
ago to contain spending and cut graft as part of plans to curb escalating debt.
While the procurement office fulfils an important
constitutional role to protect public money, it’s not insulated from political
interference, according to Ralph Mathekga, an analyst at the Mapungubwe
Institute for Strategic Reflection, a Johannesburg-based research group.
“The information is there but the question is whether
there is political will to act decisively to relieve the civil servants doing
business with the state of their employment,” he said.
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The unit’s investigations into some government projects
have pitted it against some of the country’s most-powerful politicians. Last
year, it criticized state-owned power utility Eskom Holdings for resisting
efforts to review its coal-supply contracts with Tegeta Exploration &
Resources, a company that’s part-owned by the Gupta family, who are friends
with President Jacob Zuma. Some of them are in business with his son, Duduzane.
Last year, Eskom paid Tegeta R659 million for coal before
receiving it, which the power producer says it did to ensure supply. This was
flawed and should be converted into an interest-bearing loan, the procurement
office said in a draft report that was leaked to Johannesburg’s Business Day
newspaper. Eskom has challenged the recommendation, but the Treasury stands by
its findings, said Human.
Nuclear plants
“Competitive procurement processes were not followed, the
contract management is weak, you are paying for substandard goods, and the
issue of prepayment is unheard of,” Human said. The report has yet to be
officially released.
The unit will take a central role in overseeing
procurement rules for the government’s planned program to build new nuclear
plants. Zuma has championed the building of as many as eight nuclear
reactors from 2023, a plan that opposition parties say could be mired in
corruption and which may cost as much as R1 trillion.
“We are not going to frustrate the process but we want
honest, clean, transparent processes,” Human said. “If we don’t have the
assurance that our cabinet has approved that, then we can’t subscribe to such a
nuclear plan.”