Public enterprises minister Pravin Gordhan has described how third party procurement processes in government departments have led to the state paying more than double for items that could have been sourced much cheaper.<\/p>\n
Gordhan was testifying before the Zondo commission into state capture about his experiences of corruption in government, and the uncovering of the Gupta influence on the state.<\/p>\n
He said that individual acts of corruption are well known, but pointed to a bigger picture.<\/p>\n
According to Gordhan, tender inflation is one of the biggest causes of waste at state institutions, where items that are easily and cheaply available at suppliers are supplied by third parties at massively inflated costs.<\/p>\n
As an example the minister said that a bottle of water that could be procured directly for R3 or R4 a bottle would ultimately be sold to government for R30 or R40. A R10,000 laptop would be sold to the State Information Technology Agency for R20,000, he said, in another example.<\/p>\n
There were many examples like this, Gordhan said.<\/p>\n
“The constant question is \u2014 who benefits from each of these events? Who benefits, where does the money go, who designs these processes and for whose benefit at the end of the day?”<\/p>\n
Gordhan’s testimony on dodgy procurement practices echoes prior statements he has made around South African Airways in particular, where he said that bad decisions made by management had led to the sorry state of affairs at the airline.<\/p>\n
There, Gordhan noted that using third party procurement to source plane parts had led to the group paying double than if the parts were sourced directly.<\/p>\n
“We still have a situation today where key parts of an aircraft were, for example, bought at a 50 to 100% premium through middle people rather than buying directly from the original equipment manufacturer,” Gordhan said.<\/p>\n
SAA is just one of the many state-owned companies that are in financial straits due to mismanagement and corruption.<\/p>\n
If government lets any of these entities collapse, it could create a domino effect of debt recalls which could cripple the South African economy<\/a><\/strong>, president Cyril Ramaphosa has warned.<\/p>\n According to Gordhan, the troubles at SAA was the first sign that Treasury was a key target for state capture, highlighted by the abrupt dismissal of former finance minister Nhlanhla Nene who was blocking procurement deals at the airline at the time.<\/p>\n The minister said that there was a particular interest in Nene’s replacement, Des van Rooyen, in SAA’s deals that reflected that.<\/p>\n This was later confirmed when confidential documents relating to SAA’s procurement deals were leaked to “outside” parties, Gordhan said.<\/p>\n
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