EVALUATION, RECOMMENDATIONS AND CONCLUSION
5.2 Evaluation
5.2.2 Corruption in the procurement sector in the eThekwini Municipality
According to Bolton (2006), public procurement in South Africa has been given constitutional status and is seen as a means of addressing past discriminatory policies and practices. However this study reveals that public procurement has been unsuccessful in addressing the discriminatory practices of the apartheid regime, due to a certain élite group of formerly disadvantaged people being able to manipulate and benefit from the current procurement system. This is in line with the findings of Hilliard & Wissink (2001), CASAC (2011a) and Zondi (2012) who noted that since 1994, a small minority of previously disadvantaged individuals who are politically well-connected have become exceedingly rich through benefiting from state tenders, while the majority are still largely disadvantaged. In South Africa, the SCM is an important tool for managing public procurement, yet this study reveals that the SCM has faced numerous challenges which has allowed for loopholes to be created and corruption to flourish. Similarly, Ambe and Badenhorst-Weiss (2012) contend that despite the use of SCM as a strategic tool, the public procurement sector faces challenges that have made it vulnerable to corruption.
In Durban, the first challenge encountered in the SCM was that some councillors and officials conducted business with the eThekwini Municipality. Van Vuuren (2014) contends that the problem
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is the looting of state coffers, where millions of Rands are being awarded in tenders to municipal officials and their families. Despite SCM regulation 44 prohibiting tender awards to persons in the service of the state, numerous contracts were awarded in the eThekwini Municipality and this contravened the MFMA and SCM legislation. The awarding of contracts to persons employed by the state and councillors has increased over the years, and has nullified the fair and transparent tender process in the Municipality. Ten councillors and one hundred and sixty-nine officials were identified as having business interests in the Municipality. The most prominent case involved the current Chief Whip, Stanley Zamokwakhe Xulu, who had collectively earned R12 386 855.19 from the eThekwini Municipality. However, when he was found guilty of corruption, he only received a R195 002.22 fine.
The study revealed that councillors were under the impression that they were allowed to trade with the City as long as they disclosed their businesses interests. However, the study showed that there were inconsistencies in the proper completion of disclosure forms by councillors; forms being incomplete and inaccurate information being captured. Furthermore, required signatures from Deputy City Managers or the City Manager were missing on disclosure forms. Additionally, there was neglect and failure of officials to identify councillors who were shareholders of companies doing business with the Municipality.
The study revealed that action should have been instituted by the Council in terms of paragraphs 13 and 14 of Schedule 1, Code of Conduct for Councillors of the Municipal Systems Act, No 32 of 2000, against all implicated councillors for contravening paragraph 6 of this Act. In this regard, the actions taken against errant councillors and officials were minor and viewed as a „slap on the wrist‟ in comparison to the acts committed. Many received fines, final written warnings, or resigned, and only six guilty officials were dismissed. Similarly, Bauer (2000) contends that in South Africa the system functions in such a way that people who are accused continue in their posts, move to another department or slide into retirement.
The second challenge encountered in the SCM is incompetency of councillors and officials and a limited knowledge of legislation. These findings concur with studies conducted by Kalombo (2005);
Sheoraj (2007); Ambe & Badenhorst-Weiss (2012) and Managa (2012). Councillors and Officials indicated that a lack knowledge of the provisions of the MFMA and Codes of Conduct and other relevant legislation had caused them to unintentionally commit corrupt acts in the Municipality. Lack of education and training was a major challenge for councillors and officials and inevitably impeded their capability to function at their full capacity in a complex local government system. Similarly, McCarthy (2006) contends that there is a lack of capacity and knowledge among officials to handle procurement processes that has led to bad governance. However Migiro and Ambe (2008) argue that many councillors and officials have attended a number of training workshops on SCM, but they still lack the appropriate knowledge for proper implementation of the regulations.
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The third challenge encountered in the SCM in the eThekwini Municipality is unauthorised, irregular and wasteful expenditure. According to the AG Report (2013/2014) the irregular expenditure in the eThekwini Municipality was R334, 8 Million. The study revealed that the unauthorised, irregular and wasteful expenditure was attributed to the failure of the political and bureaucratic leadership to enforce the necessary supply management regulations. There is no oversight or accountability within the Municipality over money spent, resulting in legislation being flouted and money being misused.
This was exhibited through the case of duplicate payments and irregular, upfront payment to Dimension Data.
This study showed that an unfair procurement process is one of the contributing factors to corruption in the SCM. Lack of advertising, not obtaining three price quotations, not listing accredited prospective providers, inadequate administration of providers, competitive bids not being invited and inadequate public invitations to tender were all evident in the eThekwini Municipality. This is similar to the findings of Matthee (2006) and Van Zyl (2006) who assert that practices relating to non- compliance with the SCM allow for uncompetitive processes for both quotations and bids, lack of appropriate bid committees; use of unqualified suppliers and passing over of bids for expediency.
The study showed that inadequate SCM controls, monitoring and the neglect of oversight have allowed for the tender process to be manipulated for private gain in the Municipality. This is supported by Stemele (2009) who argues that there is lack of proper monitoring and evaluation.
Similarly, Ambe & Badenhorst-Weiss (2012) assert that inadequate monitoring and evaluation are linked to the absence of a control environment and that government entities are unable to implement SCM as required by the policy. In this manner, deviations or non-compliance with SCM policy remain undetected.
Another huge challenge to the SCM is the manipulation of legislation for private gain in the form of Section 36. According to Rangata (2008), Section 36 contracts are used as an easy way to bypass normal tender procedures and support the desired contractors. However although Section 36 was promulgated for emergency situations only (Supply Chain Management Policy, 2005), this study revealed that Section 36 contracts were common in the eThekwini Municipality, and that this Section was used as a means to subvert the normal tender procedures. This is in line with the findings of Reddy & Wallis (2011); Schulz-Herzenberg et al., (2012) and Mhlongo (2014). This study attributed such abuses to various reasons such as cronyism, self-enrichment and poor planning. Inadequate and inefficient contract management was also a challenge in the SCM and usually formed the basis for Section 36 contract renewals. Similarly, Ambe & Badenhorst-Weiss (2012) stated that poor planning and budgeting have affected the implementation of SCM. Luyt (2008) argues that there is a need to monitor the delivery of services to ensure that resources are efficiently and effectively procured.