Local is lekker: luxurious incarceration?

Only in South Africa will you supposedly be treated to meals made from the “finest” ingredients – costing the same as imported delicacies – while you are being rehabilitated!

The Parliament Portfolio Committee on Correctional Services recently uncovered a massive price-gouging scandal linked to the Department of Correctional Services’ (DCS’) procurement of perishable and non-perishable goods from 115 service providers.

To put things into perspective, here’s a comparison of retail prices and the massive mark-up paid by the DCS.

Although the DCS tried to pass this off as a “capturing error” and an “administrative oversight”, the Portfolio Committee stood firm and dismissed the explanation. This is not the first time DCS suppliers have faced collusion charges over food.

This incident has once again highlighted corruption and collusion between suppliers and the Department’s offices. The DCS has promised “consequences management”, but we have yet to hear if any of this money will ever be recovered.

This isn’t the only incident of gross over-invoicing within government. Between 2021 and 2023, corrupt officials at Eskom signed off on purchase orders for electrical relays (equipment used to keep power stations running) priced at R50,000 each, when the actual market price for these relays was between R180 and R450. This resulted in a direct loss of over R73.6 million to Eskom.

In what is called “split-tendering”, officials intentionally split large purchase orders into smaller amounts to keep the transactions below the R1 million threshold. This allowed them to bypass formal, rigid procurement processes and abuse the more relaxed informal tendering system.

Colluding officials then uploaded fake part numbers to Eskom’s internal inventory systems. In this case, it wasn’t just about overpaying for services, but also about buying useless stock that sits in warehouses while the power grid suffers and we pay more for electricity.

It is always astonishing that when it comes to providing basic services – keeping the lights on, maintaining railway lines or fixing water pipes – we supposedly lack the resources, skills and expertise. Yet our officials seem to possess “genius-level” abilities when it comes to devising complex and sophisticated fraud schemes that bypass audits, manipulate procurement processes, siphon public funds and launder money.

Research by the U4 Anti-corruption resource centre indicates that corruption occurs when motivation and opportunity are present. Motivation refers to the “driving force” of the act – be it private, personal or financial gain – and “opportunity” speaks to the structural conditions that make it possible or enable it.

More money, personal enrichment, greed, temptation, a “because I can” mentality, a sense of entitlement and the belief that there will be no consequences all seem to be powerful motivators. Unfortunately, South Africa appears to provide plenty of opportunities for those willing to take advantage of the system.

Then again, it could just be a case of taking advantage of mismanagement and chaos at our state institutions. The Sunday Times recently broke the story of Nolufefe Ali, who simultaneously held two full-time, state-funded executive roles: as executive for corporate services at Dube TradePort Corporation and executive director for corporate services at the Eastern Cape Parks and Tourism Agency (ECPTA).

Ali seemingly took advantage of the remote hybrid working policy at Dube TradePort and earned income of more than R5.5 million over a period of 18 months from her dual employment. Following her resignation, Dube TradePort initiated legal proceedings to try and recover the unearned salaries, and the ECPTA has placed her on precautionary measures pending investigation.

Unsurprisingly (and not something to be proud of), South Africa ranks 81^st out of 180 countries and territories on the Transparency International Corruption Perceptions Index. We hold a score of 41 out of 100 (where 0 is highly corrupt and 100 is very clean), placing us on a par with countries like Benin, Ghana and Senegal. A score below 50 indicates that a country faces severe, systemic public sector corruption problems.

The index also highlights that despite South Africa having independent, functioning institutions, such as our judiciary, the country has seen no notable improvement in its Corruption Perceptions Index score over the past three years.

To mitigate systemic threats of corruption, we have legislation in place that imposes strict statutory obligations on corporate and public leadership to report corruption. Doing nothing is no longer an option. So, who’s actually on the hook when this happens? The Prevention and Combating of Corrupt Activities Act No. 12 of 2004 (PRECCA) places a legal duty on certain people to report specified offences. Section 34, headed “Duty to report corrupt transactions”, requires any person holding a “position of authority” who knows – or reasonably ought to have known or suspected – that another person committed a qualifying offence involving R100,000 or more to report it to the Directorate for Priority Crime Investigation (DPCI).

The obligation applies in both the public and private sectors. Those covered include directors-general and departmental heads, municipal managers, public officers in the senior management service, company managers, secretaries and directors, members of close corporations, executive managers of financial institutions, partners in partnerships, chief executives and those responsible for the overall management and control of an employer’s business.

It is worth noting that if you hold a “position of authority” as defined in PRECCA and know – or ought reasonably to have known or suspected – that another person has committed a specified corruption offence, theft, fraud, extortion, forgery or uttering of a forged document involving R100,000 or more, you are legally required to report that knowledge or suspicion to a police official in the DPCI (commonly known as the Hawks). The reporting threshold may soon be reduced to R30,000. When making the report, ensure that you obtain an official DPCI reference number as proof of compliance.

Simply alerting HR or an internal audit committee is not good enough and does not legally discharge you from this duty. Furthermore, under Section 34A (Failure to Prevent Corruption), if a third-party contractor, supplier or employee of the entity commits bribery or corruption to secure business for the firm, the company and its leadership become automatically liable. The only defence is for management to demonstrate that “adequate measures” were in place to prevent such conduct.

Under Section 34(2), turning a blind eye is also considered a criminal offence. If found guilty of non-disclosure, executives or officials can face heavy corporate fines, a lifelong criminal record and/or direct prison time.

Registered accountants, auditors and financial professionals are now also legally compelled by the Non-Compliance with Laws and Regulations Framework (NOCLAR) and professional governance codes to bypass standard attorney-client privilege and report statutory non-compliance directly to regulatory and oversight bodies. Gone are the days when wrongdoers can hide behind professional confidentiality!

Between the widening net of Section 34A, the transparency mandates of NOCLAR and the possible lowering of PRECCA reporting thresholds, the message to corporate and public offenders is clear: the legal noose is tightening, and there is no longer anywhere left to hide. 

The survival of our institutional integrity now rests entirely on the hope that this well-meaning legislation is upheld and enforced.