30 March 2016
Is the South African government doing all they can to ensure a corruption free South Africa and avoid unnecessary wastage of public funds? Are business leaders doing their part in combatting procurement fraud and ensuring a fair and competitive procurement process?
Ina van der Merwe, Director and CEO of background screening market leader, Managed Integrity Evaluation (MIE) notes that, although Finance Minister Pravin Gordhan noted that government seeks to stop corruption, waste and the continued bailout of state-owned entities (SOEs), in his 2016 Budget Speech, public sector cases of corruption and tender fraud continuously make national headlines.
“An example is the corruption within municipalities – it was recently found that 65 Municipal officials at Tshwane Municipality had interest in 66 companies doing R185 million worth of business with the department,” she says.
According to Transparency International’s recent Corruption Perceptions Index, South Africa is ranked at 67 out of 168 countries. South Africa scored 44 on a scale where public sector corruption is viewed as 0 (highly corrupt) to 100 (very clean).
With this backdrop, van der Merwe highlights that the need for transparency in associations with suppliers and vendors – whether it be in the public or private sector – has become more crucial than ever before, with a strong need to regain the trust of the public.
With a focus on transparency, fair competition and compliance, the recently implemented open tender system in Gauteng aims to improve procurement processes and restore public confidence on tenders and the continuous fight against corruption.
Van der Merwe says, “In conjunction with increased transparency, there are additional solutions businesses can adopt to combat procurement fraud. An example of such a solution is the use of technology to assist in identifying potentially corrupt relationships between vendors and employees.”
With MIE leading in the development of such technology in South Africa, van der Merwe highlights that in order to root out corrupt supply-chain activity, it is imperative for businesses and government departments to take the necessary steps to carefully manage and screen their tender processes.
By using specialised technology, van der Merwe highlights that the below procurement fraud scenarios can be identified:
- Conflicts of interest between employees and vendors
- Collusion between vendors
- Vendors defrauding the company
- Employees defrauding the company
- Tender collusion and irregularities
- Quid-pro-quo corruption
- Vendor kick-backs and bribery
- Financial mismanagement
- Price fixing and defective pricing