Few policy adjustments that can half corruption in South Africa immediately

2016-09-16 15:26

The dust is well settled on our local election scene and things are beginning to look a lot like last year. There are new variances here and there. Maybe the most noticeable will be the appropriated budget for the bicycle lanes in Jo’burg or maybe a Tshwane mayor in a Hyundai i10. I would like to however, venture an input into the Parliament’s Standing Committee on Public Accounts (Scopa) meeting with the Anti-Corruption Task Team (ACTT) this past week.

When the Hawks boss General Berning Ntlemeza appeared in front of  Scopa to report on the performance of the ACTT, which he co-chairs, he came under fire. We had another spat between legislators and bureaucracy.  Ntlemeza was accused by various people in the Scopa of not taking the fight against corruption serious. Ntlemeza told Scopa that 399 government officials had been arrested and convicted since 2014. The corruption cases had amounted to more than R10-billion. So far, the task team has dealt with 189 cases, but only 68 have been finalised and 77 are still under investigation.

It’s obvious that no country should stand for cases worth R 10 billion, with corruption or the 189 cases as is the case. I do however find it amusing that Scopa can play moral high ground and government card in this debate, when they have a huge policy gap that enables corruption.

The tragedy of the commons

The tragedy of the commons is an economic theory of a situation within a shared-resource system where individual users acting independently according to their own self-interest behave contrary to the common good of all by depleting resources through their collective actions.

Government Procurement is an important measure, by which the government can guide economic development direction, protect and support national (or local) industry and implement macro-economic control. Man and his economic ambitions (Economic Man) capture the characteristics of individuals and enterprises in economic activities. The Economic man has become predictable when it comes to government procurement activities.

In government procurement activity, for suppliers, their behavioural activities include legitimate competition and bribery, rent-seeking and other illegal behaviours. For procurement officials, after they meet the supervision from authorities and the public, they will use the remaining rights to positively exchange currency in order to maximise their own ambitions. So, if left to his own devices it is in the character of an Economic Man to lead to various corrupt activities.

Game theory, to understand the fight against corruption

Imagine that two prisoners, each held in isolation, are given a chance to rat on the other. If only one takes the bait, he gets a reduced prison sentence while the other gets a longer one. But if both take it, neither gets a reduction. In other words, mutual co-operation (saying nothing) provides a higher reward than mutual defection (ratting on your partner), but the best reward comes from defecting while your partner tries to co-operate with you, while the lowest pay-off comes from trying to co-operate with your partner while he stabs you in the back.

The most obvious evolutionarily stable strategy in this game is simple: always defect. If your partner co-operates, you exploit his gullibility, and if he defects, you will still do better than if you had co-operated. So there is no possible strategy that can defeat the principle ‘always act like an untrusting person’.

Our legislative game should matchup with corrupt game players seeking self-enrichment. There is no room to blame without correcting the rules of the game. There is a behavioural equilibrium that makes the choices of other players predictable. It is called the Nash Equilibrium, named after John Forbes Nash Jr., made famous by his bio-epic which starred Russel Crowe, “The Beautiful Mind.”

What has this got to do with Legislation?

There are three collusive behaviours in government procurement in a game theory perspective. Firstly, when suppliers bid for work, we need to reduce their rent-seeking behaviour in government procurement. Rent seeking is seeking to increase one's share of existing wealth without creating new wealth or trying to obtain benefits for oneself through the political arena. To counter, legislations require the strengthening of supervision and punishment simultaneously. The amount that bribers would pay should be offset by fines by suppliers once caught. This is currently not explicit in Prevention and Combating of Corrupt Activities Act, 2004 (Act No. 12 of 2004) and also the general rule applicable under South African law is that ?he who alleges must prove. This is an area where centralised procurement can eliminate or reduce the probability of collusive behaviour

Secondly, there is the procurement officials’ collusion behaviours in government procurement. These are the 189 arrested officials that one would feel are thrown under the bus, albeit their position is self-determined. The following counters are important: Using high wages to stimulate integrity, at the same time, punishment must be severe enough; Approval rights cannot be too concentrated; It is a must to maintain the proper movement of persons within the various sections of government.

Thirdly, there is the suppliers collusion behaviours amongst themselves in government procurement, which has resulted in several sanctions by the Competition Commission. A counter measure is to create an open competitive environment to the greatest extent, and stop set asides and supplier database panels. These two provide easy collusion to a few that has a privilege to make the lists. To maintain an appropriate bid scale, and pay attention to the appropriate confidentiality and security measures. Especially if the supplier punishment includes exclusion in future work for those found guilty before for corruption

Be Inspired SA!

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