Treasury plans to police procurement

Finance Minister Pravin Gordhan announced steps on Wednesday to fight corruption in the procurement pipeline, notably a review of all government's property leases. “The minister of public works and I have agreed to undertake a joint review of the validity and cost effectiveness of all government property leases,” he said in delivering his 2012/13 Budget in the National Assembly. Pressed for a timeline for the review of 3 000 contracts, Gordhan would say only that it would take roughly a year. His announcement comes in the wake of last year's police headquarters lease scandal and the national government's intervention in Limpopo, Gauteng and Free State.

Gordhan said one of the lessons learned from placing several provincial departments under administration was the need to clean up tender systems. “We need stricter oversight of supply chain management processes.” He told a media briefing on the budget that the Treasury would play a key role in policing the tender process and preventing “nefarious” abuses by what he insisted was a minority of civil servants. “The Treasury is going to be a key part of making sure that there is both expeditious facilitation of these processes of procurement on the one hand, but on the other hand to keep an eagle's eye on making sure that we get the right value for money.”

Gordhan said his department would draft a price referencing system to make it easier to detect tenders that exceeded acceptable levels. There were instances, he said, where contractors had factored bribes into the prices charged to the state. The Treasury would also appoint a chief procurement officer to monitor tender processes across all levels of government. Following President Jacob Zuma's pledge in his state of the nation address that there would be strict vetting of all procurement officers, Gordhan said there would be a review of the skills requirement for people in those positions.

Finally, the tax clearance system would be strengthened to bar fraudsters from doing business with the state. The former head of the Special Investigating Unit, Willie Hofmeyr, estimated last year that corruption cost the state up to R20 billion a year. Public Works Minister Thulas Nxesi said that as the review of government leases progressed, he would take landlords holding unlawful contracts to court to reclaim rent the state had paid them. Nxesi replaced Gwen Mahlangu-Nkabinde, who was sacked in the police headquarters scandal.

He said coming to office “against a backdrop of lease scandals” had alerted him to widespread problems surrounding leases, including a lack of capacity in his department. “This also raised the real possibility of fraud and corruption on a grand scale.” Nxesi said he had no choice but to turn to the Treasury to provide public works with procurement training and oversight. “I have conceded that the department lacks the capacity to turn around the problem with the leases,” he said. “Treasury does have capacity to assist and indeed we have been working closely with the Treasury technical assistance unit.”