The scale of procurement corruption in South Africa is staggering. Whilst we have made progress in rebuilding institutions like the South African Revenue Service and removing ourselves from the Financial Action Task Force grey list, the reality is that corruption in public procurement remains deeply entrenched, sophisticated, and extraordinarily damaging to our economy and society. There is even speculation that Covid exacerbated the problem by exposing weaknesses in the State and emboldening other fraudsters to broaden the looting.
We must act because corruption poses an existential threat to our democracy, our development trajectory, and the livelihoods of millions of working-class South Africans, society, businesses and the entire economy who depend on functional public services.
Behind every Rand stolen from public procurement is a hospital not working, a school overcrowded, a road not maintained, a community left without clean water, critical vacancies that cannot be filled, jobs that are lost, and our people robbed of hope. Workers and the poor pay the ultimate price for procurement corruption.
During the development of the Public Procurement Act at Nedlac and Parliament, Cosatu argued that we needed better and stronger tools to tackle corruption. Whilst we won many critical tools in the Act, including some to push back against corruption, we did not win anything to decisively land hammer blows on this threat to our body politic.
Yet vested and corrupt interests are not sitting idle. They are ruthlessly defending their pillaging schemes and patronage networks with dangerous weapons such as violence, assassinations and intimidation to win contracts and terrorise investigators and whistle-blowers. They abuse legal processes to delay justice; they infiltrate political and social formations to shape power in their favour. Against this onslaught, our current legislative tools offer us sticks and knives. We need bazookas.
This is why during our engagements on the Public Procurement Act at Nedlac, Cosatu proposed to ban politically exposed persons and their immediate family members from government procurement, and to legislate a whistleblower incentive to reward those with inside knowledge of procurement corruption who come forward, provide evidence and help expose and collapse the systemic abuse of public money.
Unfortunately, our proposals were not supported and we did not secure these provisions in the final Act. But we remain convinced they are essential if we are to turn the tide in the war against corruption.
The whistleblower incentive concept, originating from the Public Affairs Research Institute (PARI), is straightforward. Whistle-blowers who voluntarily come forward with original information that leads to successful recovery of stolen public funds through litigation should receive a defined percentage of the monies recovered – a bounty.
The incentive would only be paid from monies actually recovered, meaning it would not prejudice but ultimately contribute to the fiscus. It would be based on non-arbitrary, rule-based measures. Evidence raised through civil actions could be passed to the National Prosecuting Authority for criminal prosecutions, thereby reducing the costs of gathering evidence and facilitating better consequence management.
Many people who possess information about corrupt procurement deals are deterred from coming forward because the personal costs are simply too high. Whistle-blowing in South Africa can be career-destroying, financially ruinous, and life-threatening. A financial incentive may help offset these very real barriers.
Such an incentive would strengthen our fight against corruption on four critical fronts.
First, it would bring to light new intelligence, insight and evidence relating to corrupt transactions that would otherwise remain hidden. This is invaluable.
Second, it would encourage more people to step forward despite the high barriers and dire consequences.
Third, it could disrupt and destabilise cabals controlling procurement corruption, shattering unholy allegiances, much like the Competition Commission’s successful corporate leniency policy has broken up cartels since 2005.
Fourth, it could spread the task of combating corruption across a broader set of resources and competencies by unlocking civil litigation capacity to complement criminal prosecutions.
It is not an untested idea. Whistle-blowing incentives are used successfully in countries around the world, including the United States, Canada, Uganda, Ghana, Indonesia, Ukraine, Ecuador, the Republic of Korea and Slovakia. In the United States, the federal government’s whistleblower programme generates an average of around $3 billion per year in recoveries – representing 70% of all recoveries in public procurement.
Given South Africa’s higher rates of corruption, the potential impact here could be far greater. It would be a game changer in the war against corruption.
Whilst we don’t have such an incentive in our procurement law, South Africa does have domestic precedent for using financial incentives to shape civic behaviour in other spaces – such as the Companies Act, Marine Living Resources Act, National Forestry Act and National Environmental Management Act which all contain provisions for whistle-blower compensation or rewards.
The South African Police Service offers financial rewards daily for information leading to successful prosecutions. Though differently conceived, SA Revenue Service provides extensive tax incentives to drive behaviour deemed to be in the public interest, and even National Treasury is exploring a Work-Seekers Grant, which is effectively a financial incentive to drive defined behavioural outcomes.
Why not introduce an incentive to target unwanted procurement-linked corrupt behaviour?
Such an incentive should be located specifically in the Public Procurement Act, not in general whistle-blower legislation like the Protected Disclosures Act. We need to a tool specifically targeted to this high-value, high-risk sphere of the economy, and tailored to its needs.
We need every tool at our disposal, including those that may seem unconventional or bold. The working class, who bear the heaviest burden of corruption, deserve nothing less than our full commitment to deploying extraordinary measures against this extraordinary threat.
We urge the ANC led government and Parliament to revisit the question of whistleblower incentives. It could be addressed in the planned 24-month review of the Procurement Act, or in regulations to be developed by National Treasury.
If done, it would be a decisive shift in the war against corruption and help ensure public funds are protected.
Cosatu General Secretary Solly Phetoe
*** The views expressed here do not necessarily represent those of Independent Media or .
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