We defeated the entropy.
20 August 2014 06:41 (South Africa)
Opinionista Ivo Vegter

Tenders: Not open to employees or their families

  • Ivo Vegter
The rules for tenders to supply products or services to government can be detailed, and even intimidating to the uninitiated, yet too often these rules fail to prevent corruption. They can learn something from the private sector.

It’s always nice to read a newspaper article and find yourself cheering. Last week, I had the pleasure of being groupie-for-a-day of Richard Levin, the director-general of the Public Service Commission (PSC).

The reason? He told Parliament that the cost to the country of corruption and misconduct on the part of civil servants could exceed R1-billion in this financial year, 10 times higher than it was only three years ago. He proposed prohibiting public servants or their families from doing business with the state, or at least making disclosure rules much more stringent.

It is rather astonishing that such blatant self-dealing is permitted in the first place. After all, public service salaries are not too shabby. In many regions, they’re the best jobs available, complete with generous fringe benefits such as car and housing subsidies, medical aid and pensions. There is no inherent reason why public servants need to augment their incomes by doing private work. If the people pay them for a full day’s work, the people ought to be able to expect exactly that. It grates to see your local public employee drive a BMW when your road isn’t tarred and you can’t afford – or don’t have – running water and electricity.

As it stands, those who tender for government contracts are required to disclose conflicts of interests, but that’s where it ends. And even that flimsy requirement is often not complied with or enforced, Levin told the briefing. 

To put some numbers on the government largesse spent on the private interests of civil servants, Business Day reported that the PSC found 17% of senior managers in the Department of Public Works have outside interests and an astonishing 90% do in the Eastern Cape Education Department. Of course, correlation is not causation, but the Eastern Cape’s dismal educational performance may not be entirely coincidental.

Perhaps the state can take a leaf from the private sector. Government tenders should include a simple clause, much like competitions in the private sector do. I’ll quote one verbatim: “3. The competition is not open to – 3.1 directors, members, partners, agents, employees or consultants of (the company) or any supplier of goods or services in connection with a competition; and 3.2 the spouse, life partner, business partner or associate, or the natural or adopted parent, child, or sibling, of any of the persons specified in 3.1 above.”

This is not a complicated rule, and its inherent justice is clearly understood by everyone (except the occasional employee or family member).

Violations ought to be policed, both by routine auditing that will pick up the most obvious graft, and by investigating complaints about cases that are harder to spot, such as tenders that are awarded to siblings and business associates of someone involved in its issue or adjudication.

I can think of three clear reasons for prohibiting civil servants from doing business with the state. First, it gives them a motive to suspend their professional judgment to act in the best interest of the citizens they are appointed to serve, by preferring their own or their relative’s firm over a better competitor. Second, it creates the impression among losing bidders for a government tender that they lost out to favouritism or nepotism. And third, it creates the perception among the wider public that government expenditure is merely a corrupt affair to provide lucrative jobs for buddies, rather than a good-faith attempt at service delivery.

All three harm the development of the country, both economically and socially. The third is especially dangerous, and it is rich for politicians to stand up and castigate the private sector for income inequality when they themselves skim thick layers of cream off the public fiscus.

The media labours under similarly strict rules. While details differ somewhat from one publication to the next, many prohibit shareholding in companies that are covered, disallow accepting gifts over a nominal value, and require disclosure of any interests, memberships, directorships or sponsorships that might be seen to influence the way a journalist covers a subject in an article. In the case of major publications, these rules are surprisingly strict. To most journalists, the principles they espouse for elected officials and civil servants are principles to which they hold themselves. Without such clear rules, their coverage will lose the all-important perception of independence.

The opposition Democratic Alliance seized upon the PSC report to observe that it has already promulgated “anti-graft” legislation in the Western Cape to prohibit civil servants from awarding contracts to companies in which they or their families have interests. It twists the knife by claiming it has failed to do so nationally, thanks to obstructionism from the ANC. It hopes that this PSC report, as well as a Constitutional Court ruling against the Portfolio Committee on Private Member’s Legislative Proposals, will make it easier to resubmit similar bills in Parliament in future.

Sadly, it may not ever go further than a recommendation or a bill tabled by the official opposition. A similar law should long have existed for the management of gifts in the public sector, after a 2008 report by the self-same PSC identified it as a problematic issue. At the time, it found that 65% of national and provincial government departments did not even have a gift policies and gift registers, let alone rules that go beyond merely requiring disclosure. 

The same reasons can be advanced for banning any gifts beyond the token niceties of meeting people and working together. It would remove the motive for unjustly preferring some bidders over others, would undermine allegations of a lack of objectivity in adjudicating administrative decisions or tenders and improve the faith the public have in the integrity of their government.

At the time, Ben Mthembu, the chairman of the PSC, said: “One recommendation which the PSC made in the report is that consideration should be given to strengthening the current legal regime to such an extent that the unauthorised offering and accepting of gifts, benefits or any other form of gratification be prohibited with a concomitant criminal sanction. The PSC also recommends in the report that the criminal prohibition should not only be in respect of persons or entities who contract with government, but must be wide enough to include any person who ‘deals’ with government.”

He acknowledged that there are complex cultural issues around gift-giving that might be taken into account, but said legislating for them would be impractical, since exceptions are “difficult to define, very difficult to police and virtually impossible to prove or disprove”.

In short, accepting significant gifts without good cause ought to be a crime, if you’re a public servant.

That might be the PSC’s view, but as far as I could establish, very little has been achieved on this front to date. What rules and recommendations there are seem to be widely ignored, and if an editorial in the now-defunct Delivery magazine for local government is to be believed, government watchdogs like the Standing Committee on Public Accounts (SCOPA) appear powerless to call public servants to account. The same may well happen to the PSC’s latest recommendations.

This needs to change. A clear enunciation of principles by the PSC, with clear and simple rules that implement those principles – much like they already exist in the better sort of private sector company – could go a long way towards arresting the government’s spiralling descent into cronyism, corruption and outright kleptocracy. At least it could establish a moral benchmark against which civil servants can measure themselves, and the public can measure their civil servants.

So, three cheers for Ben Mthembu, Richard Levin, and their colleagues at the Public Service Commission. South Africa needs more public servants like you. DM

  • Ivo Vegter
IvoVegterBW

Ivo Vegter is a columnist and the author of Extreme Environment, a book on environmental exaggeration and how it harms emerging economies. He approaches issues from the perspective of individual liberty and free markets. He grew up in the deep south of Johannesburg, and learnt his politics reading the Weekly Mail and Vrye Weekblad at Wits University during the early years of the country's transition to democracy. He recently left the city for the lower cost of living of Knysna, where he continues to write about everything under the sun. He is always right.

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