South Africa\u2019s National Treasury has discovered about 12,000 dead people in its register of companies that do business with the state.<\/p>\n
This is among the outcomes of a clean-up of the information system that the Treasury\u2019s procurement office undertook as the government battles to rein in spending, said Schalk Human, the unit\u2019s acting head.<\/p>\n
It has also identified about 14,000 state employees who are listed as directors of companies that have been awarded state contracts in violation of regulations.<\/p>\n
\u201cWe will report on them even if we drag those 14,000 to court by their hair and lock them up,\u201d Human said in an interview this month in Pretoria, the capital.<\/p>\n
Fighting graft and achieving savings have become even more necessary since two ratings companies downgraded the debt of Africa\u2019s most-industrialized nation to junk. Fraud and inflated prices from suppliers consume as much as 40 percent of the state\u2019s 600 billion-rand ($46 billion) budget for goods and services, Human\u2019s predecessor, Kenneth Brown, said last year.<\/p>\n
Some people set up companies with fake documents or the identities of dead citizens and use these entities to tender for a project at higher prices, making their legitimate businesses seem as if they\u2019re pitching for the same work at cheaper rates, Human said.<\/p>\n
\u201cIt looks like there is competition, yet it\u2019s the same guy,\u201d he said.<\/p>\n
Flawed Payments<\/strong><\/p>\n Human\u2019s office, with about 100 staff, was created four years ago to contain spending and cut graft as part of plans to curb escalating debt.<\/p>\n While the procurement office fulfills an important constitutional role to protect public money, it\u2019s not insulated from political interference, according to Ralph Mathekga, an analyst at the Mapungubwe Institute for Strategic Reflection, a Johannesburg-based research group.<\/p>\n \u201cThe information is there but the question is whether there is political will to act decisively to relieve the civil servants doing business with the state of their employment,\u201d he said.<\/p>\n The unit\u2019s investigations into some government projects have pitted it against some of the country\u2019s most-powerful politicians. Last year, it criticized state-owned power utility Eskom Holdings SOC Ltd. for resisting efforts to review its coal-supply contracts with Tegeta Exploration & Resources Ltd., a company that\u2019s part-owned by the Gupta family, who are friends with President Jacob Zuma. Some of them are in business with his son, Duduzane.<\/p>\n Last year, Eskom paid Tegeta 659 million rand for coal before receiving it, which the power producer says it did to ensure supply. This was flawed and should be converted into an interest-bearing loan, the procurement office said in a draft report that was leaked to Johannesburg\u2019s Business Day newspaper. Eskom has challenged the recommendation, but the Treasury stands by its findings, said Human.<\/p>\n Nuclear Plants<\/strong><\/p>\n \u201cCompetitive procurement processes were not followed, the contract management is weak, you are paying for substandard goods, and the issue of prepayment is unheard of,\u201d Human said. The report has yet to be officially released.<\/p>\n The unit will take a central role in overseeing procurement rules for the government\u2019s planned program to build new nuclear plants. Zuma has championed the building of as many as eight nuclear reactors from 2023, a plan that opposition parties say could be mired in corruption and which may cost as much as 1 trillion rand.<\/p>\n \u201cWe are not going to frustrate the process but we want honest, clean, transparent processes,\u201d Human said. \u201cIf we don\u2019t have the assurance that our cabinet has approved that, then we can\u2019t subscribe to such a nuclear plan.\u201d<\/p>\n
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