OVERVIEW: Day 2 of #StateCaptureInquiry: Treasury official wraps up, Jonas to testify next

2018-08-21 16:00

Treasury's procurement chief Willie Mathebula was first to testify at the commission of inquiry into state capture and explained procurement processes in great detail. Former deputy minister of finance Mcebisi Jonas will testify on Friday morning when the inquiry resumes.

For the latest updates, follow News24 reporters: 

 - Jeanette Chabalala: @J_chabalala 

 - Mahlatse Mahlase: @hlatseentle

WATCH LIVE: #StateCaptureInquiry - Day 2

Deputy Chief Justice Raymond Zondo

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Last Updated at 15:12
21 Aug 15:53

The proceedings on day two of the commission of inquiry into state capture are adjourned for the day. 

Proceedings will pick up again on Friday morning at 09:30, when former deputy minister of finance Mcebisi Jonas is expected to testify.

21 Aug 15:51

21 Aug 15:51

Zondo excuses Mathebula and thanks him for his cooperation.

21 Aug 15:50

Mathebula in closing, just before being excused, says: "Something I think we need to look at, in the review of the Treasury regulations, framework, to see whether we can't review that particular process. Because in my own experience I've learned that law can't stop you from... you can change law any time, if you want to, to fit what you need, provided it is consistent of course with the Constitution. So it's something that one can always look at, because I'm just thinking that we have this prescript in the regulations, so as we review, something that we can explore and see how 'practicable' it could be, but it is worth looking at."

21 Aug 15:38

Gauteng provincial government once again reiterates that an open tender system has worked for them.

Mathebula has been asked a number of times, during the inquiry today, about possibly moving over to an open tender system on a national level. 

21 Aug 15:36

Zondo wraps up, says he has no further questions for Mathebula, and now hands over to Gcabashe once again, who says she has three questions for Mathebula. 

21 Aug 15:35

21 Aug 15:34

Zondo, while qualifying his questions by saying "I don't know much about procurement", continues suggesting ways in which "the system of procurement can be protected from corruption". He has already put a number of possible scenarios to Mathebula.

21 Aug 15:29

21 Aug 15:29

21 Aug 15:28

In response to Zondo's question about what was wrong with the tender board, Mathebula explains that the State Tender Board Act was inconsistent with the Constitution, and the slow pace of service delivery was a major problem. They needed decisions to be made faster and the board was phased out in 2008.

21 Aug 15:23

21 Aug 15:22

Mathebula: "The whole bid committee system is premised on cross-functionality. So you bring in all skills, in that committee to be part of that process, it's premised on that process. You have technical people, you've got specific professions, and all of these people sit in a cross-functional team so that there is joint decision making." 

That being said, Mathebula says, they have always encouraged drawing from internal expertise, even if it means drawing internally, "as in government".

Mathebula says insofar as external people are concerned, they have "always been very cautious", but it's something to look at and explore. 

21 Aug 15:09

21 Aug 15:06

21 Aug 15:04

Gauteng MEC of Finance Barbara Creecy responds to some of Mathebula's testimony at the state capture commission of inquiry.

21 Aug 15:00

Mathebula says they rely on reports from the Auditor General to identify where problems are leading to irregularities in the tender process.

21 Aug 14:55

21 Aug 14:48

Mathebula says they are making provision for a procurement ombudsman, providing for a cool-off period to give people the opportunity to raise objections. 

Mathebula could not provide stats of contested tender decisions, compared to tenders issued. 

21 Aug 14:45

21 Aug 14:44

In response to another question by Zondo, Mathebula says SOEs have compliance units that must ensure processes are beyond reproach and above board. He says in reviews of the procurement system, they propose that the mandate of internal audits should be extended to check tender processes before tenders are awarded.

21 Aug 14:39

Mathebula says it depends on a person's experience and skill to pick up whether tender specifications were "cooked". He says he has detected this in a number of instances, where tenders were cooked, and he returned them.

21 Aug 14:36

Accounting officers must read all tenders before putting it out in the public domain because if you miss that part of the process, you have missed the biggest step, says Mathebula. He suggests it should be part of KPAs.

21 Aug 14:33

Mathebula says that right at the beginning of the process, you have officials crafting the specifications of tenders to arrive at a particular outcome. At this point, you can't open the process to the public, unless maybe experts need to be invited. 

Mathebula says all tenders are published, and procurement plans are sent to Treasury in April. Planned tenders are published so that potential bidders can position themselves. The outcomes of bids are also published, and reasons why specific bidders won are provided.

21 Aug 14:28

On the awarding of tenders, especially in instances where unsuccessful bidders cry foul, Mathebula says bidders sometimes argue their tender is the lowest in terms of price and their bid should therefore win, but all they have is a "shovel and wheelbarrow" while someone with expertise costs more money. Price is not the sole criteria of deciding the winning bidder, says Mathebula.

21 Aug 14:26

21 Aug 14:25

Zondo says he believes that corruption is linked to tenders and the commission is looking at the system to identify weaknesses that make it possible for corruption to continue at the current rate.

21 Aug 14:24

21 Aug 14:20

21 Aug 14:19

Zondo asks about tender adjudication, saying it is done behind closed doors. Mathebula agrees that the process is not transparent.

21 Aug 14:18

21 Aug 14:17

21 Aug 14:15

Zondo asks Mathebula if there are any statistics on deviations from procurement processes. Mathebula responds and says the statistics they do have are "for national departments, and not local government".

21 Aug 14:09

21 Aug 14:04

Proceedings have resumed after the lunch adjournment, and Zondo is now asking Mathebula follow-up questions for clarity.

21 Aug 13:02

21 Aug 13:01

Mathebula concludes: "We will continue to serve, and where we identify wrongdoing, that we make sure that the wrongdoing is dealt with. And of course also to make sure that our people who were historically disadvantaged by unfair discrimination, do benefit from the procurement of this country." 

"And I think that we can say that, without any fear, that it has to be done, but of course within law, that's what we are saying."

"There must be transformation... and people must repent at some point in time, and that is where we will leave it for now..." 

Gcabashe interjects: "Not quite, Mr Mathebula, but thank you very  much." 

Gcabashe wraps up and gives Zondo the opportunity to ask any questions to clarify certain things. But Zondo reserves his questions until after the break and adjourns proceedings.

21 Aug 12:53

21 Aug 12:53

21 Aug 12:52

Mathebula speaks of the "human" factor. 

21 Aug 12:51

On the topic of government's annual procurement spend of R800bn, Gcabashe asks if there is a "monitoring process to ensure that this money spent achieves its intended objective"? 

Mathebula says it is a difficult question, "quite difficult"... 

"The whole process also talks to the public finance, the management of the budgets after the tabling of the budget by the Minister of Finance in Parliament, that all of us, all divisions within the National Treasury, are enjoined to make sure that government departments and public entities spend that money correctly. But of course, there is a challenge, because we can't claim that all this money goes to where it is directed to, hence the problem that we are facing in the country." 

21 Aug 12:43

Mathebula brings up the issue of "evergreen contracts". 

21 Aug 12:42

Mathebula mentions the tender board, says even though measures were tightened, the board was not immune to fraud - there were allegations against some of the board members. 

Mathebula says the failure of the system also lies in governance. "Governance is a big issue." 

21 Aug 12:31

Gcabashe asks about enforcement consequences and what happens to transgressors. Mathebula says a number of entities have been appearing before Parliament to answer and that is an ongoing process.

21 Aug 12:29

Mathebula speaks of the "unintended consequences" of deviations. 

"Instead of deviations being an exception from the norm, deviations became the norm. So organs of state, instead of complying with Section 217, saw room to use deviations to circumvent the system. And this is where the challenge is."

"Remember deviations by their very nature, if you say to me, I must deviate from a normal procurement process, you're actually giving me a blank cheque, because then I decide, who do I award the tender to? It's given to me, I can decide, I can give it to anybody. I think that's just the unintended consequence of a very good intention in terms of that instruction." 

21 Aug 12:23

21 Aug 12:23

Mathebula says some institutions sometimes conflate emergencies and what they consider "urgent" matters. Says Treasury issued a notice in 2011 with revised terms for deviations.

21 Aug 12:17

Gcabashe: "Deviations form a substantial part of your statement... please address the question of deviations as fully as you can, and deal with the exceptional circumstances, but in doing that, deal with the deviations from those exceptional circumstances as well."

Mathebula cites "emergencies" as one of the reasons for deviation, mentions "life-threatening situations", fires and cybercrime as possible emergencies that would allow for deviations.

21 Aug 12:10

21 Aug 12:10

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