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Lack of NPA action encourages procurement from dubious...

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Lack of NPA action encourages procurement from dubious suppliers already implicated in corruption

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Wayne Duvenage is a businessman and entrepreneur turned civil activist. Following former positions as CEO of AVIS and President of SA Vehicle Renting and Leasing Association, Duvenage has headed the Organisation Undoing Tax Abuse since its inception in 2012.

Given the government’s repeated commitments to clean governance in its administration and state-owned entities, one might assume companies engaged in corruption would be excluded from bidding for licences and tenders. Sadly, when it comes to due diligence requirements, this is where the rubber fails to hit the tarmac.

A clear case in point is that of Airports Company South Africa (ACSA) and its current tender process for the lucrative business of ground handling, where licences to operate and tenders from airlines are highly sought after.

Swissport is a global airline ground handling operator and one of three companies currently permitted to provide its services at ACSA airports. According to strong evidence provided at the Zondo Commission into State Capture, Swissport paid around R30-million whilst lubricating the procurement process, in order to secure a R1,5-billion five-year SAA contract.

The kickbacks paid and the risk of grossly abusing the system was probably considered a small price to pay for the rewards that loomed at the time. Judging by the current lack of accountability, it remains a risk worth taking again, as the state and its airports management company continue to find it difficult to use their powers, or to apply good anti-corruption governance and processes.

ACSA’s licences for these operators have fixed terms and in late November 2021, the state-owned airport operator launched its latest licensing tender for the next five years of ground handling service operators, with bids closing on 18 February 2022.

A section within ACSA’s bid document calls for bidders to declare their past supply chain management practices. It does so by asking them four questions:

  • “Is the bidder (or any of its directors) listed on National Treasury’s Database of Restricted Suppliers as companies or persons prohibited from doing business with the public sector?”

  • “Is the bidder (or any of its directors) listed on the Register for Tender Defaulters in terms of section 29 of the Prevention and Combating of Corrupt Activities Act (No 12 of 2004)?”

  • “Was the bidder (or any of its directors) convicted by a court of law (including a court outside the Republic of South Africa) for fraud or corruption during the past five years?”

  • “Was any contract between the bidder and any organ of state terminated during the past five years on account of failure to perform on or comply with the contract?”

At face value, these are the right questions to be asked.  In practice, they are nothing more than meaningless box-ticking exercises.

The first two questions are regarded as nonsensical, thanks to whoever at National Treasury is responsible for managing its databases and registers. The Register for Tender Defaulters is empty, while the Database of Restricted Suppliers appears only to contain entries for a number of small fish who are guilty of false tax declarations, fudging their VAT returns, or a few other misdemeanours.

Conspicuously absent are a number of high-profile companies like KPMG, SAP, Bain, McKinsey, Regimens, Trillian and others that are associated with State Capture and corruption. Some might argue that some of these companies have repented, self-corrected and paid back the money. However, the public has no access to information that spells out: the extent of the atrocities; what internal corrective action has taken place by these implicated companies/individuals; how much has been returned to the state; or the reasons provided to “allow” ongoing trade with these implicated companies.

Swissport (who promoted, transferred or gave cushy packages to almost all its exposed former South African executives), is certainly not on the list. Neither are its empowerment partners JM Aviation (South Africa) as well as Zano Spark, which according to evidence presented at the Zondo Commission, was the entity set up by former SAA director, Yakhe Kwinana, to launder money from Swissport.

Those companies and the implicated individuals will no doubt cry foul, claiming that they have never been charged or found guilty of any crime. While this is true – thanks to the National Prosecuting Authority’s failure to prosecute many companies and individuals that have been up to no good – in this case with Swissport, clear evidence has been gathered by the Special Investigating Unit (SIU) and other sources and was placed before and tested by the Zondo Commission.

Suggestions of new policies and processes.

Of concern is the recent report that the NPA is developing a policy for the non-trial settlements from companies complicit in State Capture instead of prosecutions which are considered to be time-consuming and do not offer any guarantee of success. This may be a useful approach for recouping money that was stolen, but it fails to hold anyone accountable or offer any incentive for businesses and government to clean up their acts.

Should a policy of this nature be developed, it will certainly need to be cognisant of civil society’s call for accountability and should not allow those found wanting to be wrapped on the knuckles, the biscuits returned to the cookie jar, and a continuation of business as usual. That would be a recipe for ongoing corruption.

Any new policy or approach in dealing with corrupt and irregular procurements, should ensure that transparency of the transgressions and the necessary corrective actions are available for all to see. In addition, work will need to be done on the central supplier’s database (in desperate need of being vetted), along with a meaningful connection to the “Register of Tender Defaulters”. Included in the process must be their suspension from future tenders and State procurement, until the completion of a criminal investigation or non-trial settlement (new policy) process, is undertaken, including acceptable internal corrective action and undeserving gains returned to the State, before they can “re-enter the game”.

If 2022 doesn’t give rise to meaningful implementation of accountability or effective alternative policies to tackle this plight, our country will see corruption continue to abound, with South African taxpayers witnessing the likes of Swissport and others to be rewarded with fresh licences to carry on doing it business with the state, in the same ways they did before. DM

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  • You make very valid points Wayne. I suspect that the empty register is deliberate as it is not difficult to populate and maintain such a register, but where else will the ANC get the money to pay its cadres?
    As for the small fish in the database of restricted suppliers, this is usual. If we look at the prosecutions that have taken place, these are mostly also small fish. Why? I think we all know the answer but that makes it even harder to swallow.
    But anyway, in my experience when SOE’s and others blacklist a company, they begin trading the next day under a different name. Problem solved!
    But keep up the good work at OUTA.

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