Investigation reveals extent of corruption in SA?s public sector

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The embezzlement of public funds have skyrocketed and that efforts to stem the growth have been ineffective.

This is according to Peter Allwright, Senior Forensics Manager at ENS (Edward Nathan Sonnenbergs), who says the perceived high levels of public sector corruption and fraud in South Africa are often confirmed during the forensic investigation of public institutions.

He refers to the 2012 Corruption Perception Index - which measures perceived levels of public sector corruption and ranks countries on a scale from 0 (highly corrupt) to 100 (very clean).

"While no country received a perfect score, two-thirds of countries scored below 50, indicating a serious corruption problem. South Africa scored 43 showing that it operates in a substantially corrupt environment,' he says.

Allwright says ENS conducted a forensic investigation into the construction of 23,000 pit latrines and two water treatment plants at a public institution which uncovered findings consistent with widespread corruption, bribery, kickbacks and the embezzlement of public funds.

The investigation found that the public institution was in complete disarray with endemic maladministration and ineptitude.

"The investigation found that 67% of contracts totalling R132 million were incorrectly awarded to service providers. The most concerning aspect of the investigation was that these irregular and illicit practices took place in a highly regulated and controlled environment,' he says.

The investigation by the law firm assessed 239 proposals over a two-month period and found that the construction contracts were largely awarded on criteria that did not form part of the tender specifications.

"It emerged that the public institution arbitrarily applied other criteria during the evaluation and adjudication of proposals to select preferred service providers.

Furthermore, the assessment of proposals found that service providers were inconsistently assessed between construction contracts and that in some construction contracts proposals were arbitrarily excluded while on others the same proposals were accepted,' he says.

According to Allwright, the detailed assessment of these inconsistencies found that in most of the instances the exclusions were unwarranted and pointed to deliberate interference or manipulation.

Allwright says the investigation also uncovered the fact that contracts were awarded for reasons that fell outside the preference point scoring of the Preferential Procurement Policy Framework Act.

"No reasonable or justifiable grounds were provided to award to contracts to lower scoring service providers, indicating that the bid evaluation committee acted outside its authority.' Widespread deviation from the supply chain management policy, without reasonable or justifiable grounds, was also revealed.

"Compulsory bidding forms were excluded from the tender specifications which made the evaluation and adjudication of proposals impossible. This led to members of the evaluation and adjudication committees making their own assessment of the documentation in the proposals so that scores could be allocated to key criteria. However, most scores allocated to the key criteria were erroneous - further exacerbating the inconsistent assessment of proposals,' he says.

Furthermore, according to Allwright, it was found that major construction contracts were awarded to service providers that significantly exceeded their construction competencies and that the necessary safeguard measures with the regulation authority were ignored.

This meant that major construction contracts were awarded to companies that did not have the requisite knowledge or skill for the complexity of construction.

"The inspection of several hundred pit latrines found that the construction was inferior and that structures had started to collapse after several weeks,' says Allwright. According to Allwright, the investigation was hampered for several months through incidents of abuse and maladministration that obstructed and frustrated the investigation.

He says the incidents of obstruction were often led by officials that wanted the investigation stopped so that the extent of the practices was kept hidden.

He says this investigation mirrored typical investigations in public institutions that expose the extent of public sector corruption, bribery of public officials, kickbacks in public procurement and the embezzlement of public funds.

"The Register for Tender Defaulters only lists two convictions for corruption relating to contracts during eight years of operation. The Database of Restricted Suppliers lists 346 convictions, with 43% of the transgressions for public officials performing external remunerative work without permission.'

"The transgressions show the high number of public officials involved with illicit work often conducted at the expense of their public sector roles. Strong action needs to be taken soon to stop the widespread growth of fraud and corruption,' concludes Allwright.

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