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More municipalities than ever are dishing out tenders to companies in which their mayors, councillors, officials and families have stakes – and are not declaring them.
Despite laws forbidding public servants from doing business with the state, and others threatening harsh action against civil servants who don’t declare their financial interests, the Auditor-General’s report on the state of local government books found that 290 municipalities awarded tenders to insiders in 2013/14, up from 278 the year before.
Another glaring indictment on the management of tenders was that the Auditor-General was unable to test whether there were any irregularities in tenders, together worth R1.3 billion, awarded by 73 municipalities and entities, because “the documentation either did not exist or could not be retrieved as a result of poor document management”.
Of the 7 374 tenders, valued at R42.6 billion, that were tested for supply chain management irregularities, R781 million in tenders was awarded to companies belonging to close family members of employees and councillors who did not declare their interests beforehand.
The report also found:
. At least 4 043 tenders, worth R3.7 billion, were awarded, without any declarations, by 221 municipalities and their entities to companies where state officials had an interest (an increase from R445 million in 2012/13);
. Twelve councillors and two mayors from a number of unspecified municipalities did not declare their interests in tenders, valued at a combined R31 million;
. The Eastern Cape had the highest number of municipalities – 15 – whose councillors, employees and other officials did not declare their financial interests prior to the awarding of tenders; and
. Suppliers did not declare the interests of state officials in 2 446 tenders, valued at R2.9 billion, at 193 municipalities and entities.
Auditor-General Kimi Makwetu said the report was an indictment of the poor management of tenders in local government.
The report blamed 99% of the total R11.3 billion in irregular expenditure on “noncompliance” with tender rules.
“It is of concern that this practice is increasing, as we have been reporting on this matter for a number of years and recommending that auditees implement proactive processes and insist on declarations,” the report found.
“The failure by suppliers to declare the interest of employees, councillors and other state officials constitutes a fraudulent act and should be investigated and dealt with in accordance with legislation.”
Cooperative Governance and Traditional Affairs Minister Pravin Gordhan, who was present when the report was released, also flagged the lack of punishment for wrongdoers as a major concern. He called for disciplinary action against negligent and bad councillors, and said government would approach political parties to remove errant leaders.
