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Govt proposes tough measures against tender fraud

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Govt proposes tough measures against tender fraud

by BuaNews Online
27 Oct 2010
BuaNews Online
BuaNews Online

The Minister of Finance Pravin Gordhan has proposed levying penalties of up to double the value of a contract on those who obtain contracts fraudulently as a measure to curb fraud in public procurement.


Presenting his Medium Term Budget Policy Statement in Parliament, Gordhan said the National Treasury had been working with other departments to crack down on fraud and corruption under the leadership of the Inter-ministerial Committee on Anti-Corruption, chaired by the Minister in the Presidency for Performance, Monitoring and Evaluation Collins Chabane.

A total of R25 billion of procurement and tender fraud was being investigated by the government, said Gordhan.

Some of the other measures Gordhan proposed to curb tender fraud include:

* Making public officials who assist in tender fraud liable for the resulting losses incurred by the government.

* Implementing measures to ensure that officials who have breached the buying rules will remain under suspension and continue to draw full benefits while an investigation into them is underway.

* Strengthening tax compliance measures associated with government procurement, including the introduction of a withholding tax on payments made to businesses selling to the government.

* Revising procedures for the issuing of tax clearance certificates, so that the South African Revenue Service (Sars) can more easily check whether a bidder has the required tax compliance or not.

In a bid to increase the detection of fraud, government departments and agencies would be required to provide specific information to the National Treasury on procurement practices.

"Where necessary, the cash disbursements process of government agencies will be temporarily assumed by treasuries thereby ensuring that only valid contracts are honoured and government is charged a fair price," said Gordhan.

He said government was recently awarded preservation orders worth about R200 million, on a lear jet, a golf course, a holiday home and a hotel, following the arrest of prominent business people and senior government officials.

"As a result of these efforts, Honourable Speaker, we are beginning to see a change of attitude on the part of service providers. In a recent case, a firm which was paid R10 million by a department for work that they had not done, voluntarily returned the money to the fiscus," he said.

Gordhan also outlined further measures to reduce the amount of wasteful expenditure in government.

He said R12.4 billion budgeted for capital projects in the last financial year had gone unspent, pointing out that the approach included technical support to those agencies and department that under spend.

The government was also looking at improving administrative capacity to help departments to deliver services more cost effectively and called for a new initiative to ensure that funds for training programmes were spent.

With the proliferation in recent years of quasi-independent agencies, he said the government also planned to scrutinise non-departmental agencies with a special focus on staff establishments, remuneration and governance.

He said IT systems and management consulting services will also be subject to additional scrutiny within the supply chain regulatory framework. - BuaNews

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