Corruption and tender fraud need to be dealt with urgently

It would be shocking at any time to hear that nothing has been done to stop the extensive nepotism and moonlighting by public servants that the auditor-general reported more than a year ago. But it comes as a particular shock when the recession has slashed government revenue collections ­ at a time, in other words, when we can least afford to see public money simply wasted.

Parliament heard this week that little or no action had been taken by provincial or national government departments against more than 2000 senior public servants who awarded government contracts to themselves or to members of their families over the 12 months to July last year.

These contracts were collectively worth as much as R600m and auditor-general Terence Nombembe reported on this corruption in August last year. But most of the officials from the provinces and national departments that Nombembe cited admitted this week that they had not disciplined the public servants involved, nor introduced measures to prevent this kind of corrupt procurement.

Parliament also heard that no action had been taken against about 2300 public servants who were found to be moonlighting without permission. The Department of Public Service and Administration took legal opinion on this as far back as 2003, but had done nothing since then to close the loopholes that allowed public servants to do paid work outside their service duties.

Parliament seems at least to be trying to hold officials and accounting officers to account for the mess. But the issue must be pursued a lot more aggressively, in Cape Town and in all provincial legislatures. The combination of corruption and tender fraud with public servants’ lack of commitment and general inefficiency is costing the state billions of rand that should be going to pay for school textbooks or drugs for sick people or roads to keep the economy moving.

In theory, the public sector is such a large buyer of goods and services that it should get the best deals from suppliers. In practice, we know that is not the case, that the public sector frequently gets ripped off. On one estimate, the government pays anything from 10%-30% more for the goods and services it procures than private sector companies do.

Nombembe found R600m of allegedly corrupt procurement over one year: that is probably just the tip of the iceberg. And it’s not just that the state may not get the best price because contracts are going to cronies: it’s probably not getting the best service either if we assume these crony companies are not necessarily the best ones to do the job.

So public money is wasted both ways ­ in higher costs and in lower efficiency. It is wasted to some extent too when public servants are so busy moonlighting that they don’t do their day jobs properly, if at all. And it doesn’t necessarily help if they have permission from their managers: public sector doctors and other professionals are underpaid relative to their private sector peers but most officials these days are pretty well paid. They should be 100% focused on doing their jobs properly, and if we are paying them not to do so, it is public money squandered.

And it is money we can ill afford. Finance Minister Pravin Gordhan reported to Parliament just recently that if present trends continued, revenue collections could be R50bn-R60bn below budget for the current year.

That implies a deficit of 6% or more. SA can’t sustain that for long without running up huge debt costs that future generations will be stuck with ­ and that will limit government’s ability to spend more on health, education, jobs and other priorities.

As Deputy Finance Minister Nhlanhla Nene emphasised in Parliament recently, it is crucial that the government gets value for money in its spending. And that means competitive tender procedures ­ not dishing out government contracts to enrich friends and family.

With acknowledgements to The Weekender.