Covid-19 tender corruption a 'horror story' – Cosatu

  • SA's procurement system is "fundamentally flawed" and has created holes for suppliers to defraud the state, says Cosatu.
  • Cosatu wants the procurement of PPE to be centralised, with oversight by Treasury, to make it easy to pick up mistakes. 
  • In recent weeks there have been reports of politically-connected persons benefiting from Covid-19 tenders.

The country's procurement system is "fundamentally flawed" and has created room for suppliers to "defraud" the state during the Covid-19 pandemic, according to ANC's alliance partner, the Congress of South African Trade Unions (Cosatu).

Cosatu's parliamentary coordinator Matthew Parks on Wednesday, issued the federation's report on personal protective equipment (PPE) procurement, ahead of Finance Minister Tito Mboweni and Treasury's address to parliament on the same matter, due this afternoon.

In recent weeks allegations of politically-connected PPE tenders being awarded have surfaced. President Cyril Ramaphosa's spokesperson Khusela Diko and her husband as well as ANC secretary-general Ace Magashule's sons are among those who have allegedly benefited from Covid-19 tenders.

"The story of Covid PPE procurement is a horror story of the State wasting precious and scarce finances on corruption and unnecessary middlemen during the worst economic crisis of our lifetimes," Cosatu's report read. "Unfortunately, the problems we identify in this report are not unique to lockdown. But they are much more pronounced currently during lockdown."

Parks explained that the problems have arisen due to the shortcomings of the procurement system – it is not designed to mitigate fraud and abuse. "By virtue of its size and scope, its decentralised nature and the lack of transparency, there are simply too many holes in the system that allow too many places for shadows to hide." Parks added that in its current form, the system does not allow "real monitoring and enforcement".

Cosatu wants PPE procurement to be centralised, under the National Treasury, which will then coordinate procurement and related supply chains. "This is not because we love National Treasury or think they would not make any mistakes. It is because by limiting procurement to one entity, it would be easier to spot mistakes and try to quickly correct them," the report read.

The Southern African Clothing and Textile Workers Union, a Cosatu affiliate, has been tracking tender processes, and have found only a few departments advertise. "It showed us early on that most contracting was probably not happening through open tender processes," said Cosatu.

Provincial treasuries, health and education departments were written to, to enquire about their tender processes – departments in KwaZulu-Natal, Gauteng and thee Eastern Cape were not immediately forthcoming with information. The unwillingness of departments to share information has been a barrier for monitoring of tenders awarded, Cosatu pointed out.

Warning sign

Suppliers have also been silent on requests for information, according to Cosatu. "Where we have found contact information, many suppliers practice radio silence and have ignored our requests for details on the origins of their products. We interpret this as a warning sign," it said.

Cosatu has also claimed that middlemen have been marking up PPE between 100% and 300% or are supplying poor quality products. "If suppliers cannot be quickly identified or traced by the market or key interest groups, it makes it easier to de-fraud the system."

Among Cosatu's recommendations to improve the system are:

  • Centralising procurment under Treasury.
  • Contracts to be ring-fenced for local compliant manufacturers.
  • Government should pass regulation compelling state entities and departments to electronically publish details of PPE contracts awarded.
  • All political exposed persons should be banned from doing business with the State
  • National Treasury to finalise the Procurement Bill within a month so that it can be passed by parliament by April next year.
  • Investigations and prosecutions for tender corruption must follow.
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