Treasury must give final sign-off before corrupt municipalities can procure Covid-19 goods
10 July 2020
The Democratic Alliance (DA) calls on National Treasury to urgently implement additional measures to stem the tide of corruption that followed the emergency procurement exemption for municipalities and government departments.
While there is no doubt that it had good intentions with the issued Municipal Finance Management Act (MFMA) Circular No.102 and the PFMA Instruction Note No. 05 of 2020/21 which laid out procedures for the emergency procurement of Covid-19 related goods by municipalities and government departments, following the declaration of the State of Disaster, Treasury failed the country by not foreseeing the ensuing, inevitable corruption and putting precautionary measures in place.
Treasury needs to ultimately ensure that the money meant for Covid-19 relief measures reaches its intended targets by implementing an accountability system where municipalities and government departments that have been implicated in Covid-19 corruption have to get final approval from Treasury before any procurements can be made.
The guidelines Treasury released, allowed accounting officials to "deviate from inviting competitive bids" and to "procure the required goods or services by other means, such as price quotations or negotiations".
This exemption from following proper procurement procedures has clearly been exploited by some municipalities and provincial government departments for corruption during the Covid-19 emergency.
It is beyond any doubt that Treasury's pure intentions to temporarily suspend onerous normal supply chain management regulations to deal with the Covid-19 emergency have been hijacked by self-serving corrupt elements embedded in municipalities.
This is why Finance Minister Tito Mboweni should implement immediate accountability measures for implicated municipalities and departments with immediate effect to stop pilferage of public resources that has reached crisis proportions in identified municipalities and provincial government departments:
The Naledi Local Municipality in North West spend R1 265 for each of the 20 FFP1 dust masks that it purchased, a total cost of R23 500. These masks normally retail at around R189.75 for a box of twenty, a cost of R9,49 per unit.
The Eastern Cape Department of Education (DoE) spent approximately five times the normal price for substandard personal protective equipment (PPE), amounting to millions, while there are still schools that have not received the required PPE.
The KwaZulu-Natal Department of Social Development (DSD) has reportedly spent R22 million on 48 000 blankets. That is about R460 per blanket. This, while its Education Department spent just over R422 million paying inflated prices for poor-quality PPE and related material for Grades 7 and 12 learners returning to schools. The thermometers purchased for R2 500 each, could not be used as they had no batteries. It also spent R28 000 was on a 5 000L static tank which should cost no more than around R5 500.
The OR Tambo District Municipality Speaker received invoices to the amount of R 4.8 million from Phathilizwi Training Institute for door-to-door activities telling people about the virus during level 4 lockdown. The Municipal Manager was suspended just five days after he refused to pay the invoices and requested further information on the methodology of the work done.
The Chris Hani District Municipality paid R175 000 for PPE form IC Bane Trading which is allegedly owned by a politically connected businesswoman.
An investigation was launched into claims that overpriced mielie meal included in food parcels distributed in Butterworth in the Eastern Cape were infested with maggots.
The Premier of the Eastern Cape had to remove Mioca Guesthouse in Cala from the list of quarantine facilities after it was exposed that it is owned by the daughter of EC MEC for Transport, Weziwe Tikana-Gxothiwe. An investigation was also launched into the Transport Department for procuring hand sanitiser at inflated prices.
The Dr Beyers Naude Municipality is believed to have diverted grant funding meant for drought relief in the area, to pay for Covid-19 interventions. The AG’s report shows that the municipality could only account for R5-million of the R30-million received.
The OR Tambo Municipality Acting Municipal Manager has also laid criminal charges against the now suspended Municipal Manager for fraud, theft and corruption related to financial mismanagement of R168 million, which is linked to water and sanitation programmes meant to assist communities with Covid-19 interventions.
These are only a few examples, as much of the looting is still to be uncovered. However, those municipalities and department that have been exposed should not be allowed unencumbered access to money that will ultimately only line the pockets of corrupt officials.
The DA has previously called on the Minister to create a Special Inspector-General in Treasury to prevent and probe corruption related to Covid-19 relief, recovery and stimulus funding.
Despite having a list of goods and suppliers that Treasury had pre-negotiated with to keep prices down, certain provisions of the circular and notice give dishonest officials at municipalities and departments wide berth to exploit the emergency procurement waiver and engage in unscrupulous supply chain abuse.
Issued by Haniff Hoosen, DA Shadow Minister of Cooperative Governance and Traditional Affairs, 10 July 2020
