The auditor general has recommended that legal action and other disciplinary measures be taken against senior officials at the state-controlled Companies and Intellectual Property Registration Office (Cipro) for their careless implementation of government procurement policies.
The lax management style of these officials has led to tenders worth millions of rands being awarded illegally. Among other things, Auditor General Shauket Fakie conducted a probe into how six procurements worth R11,5-million were granted without the approval of the institution’s chief executive officer or its director general.
There were also numerous incidents in which only one quotation was considered in the procurement of goods and services. “In 36 cases totalling R15,4-million, only one quotation was considered and in two cases, totalling R808 830, only two quotations were considered.”
The auditor general also found that at least two board members of Cipro had undeclared interests in service providers contracted by the institution. It found that only three service providers were invited to tender for the storage of Cipro’s filling system, a tender that was worth R21,877-million over three years.
In addition to gross transgressions of procurement policies and regulations the auditor general found that Cipro did not even have a supply chain management policy in place for the procurement of goods and services. As a result, government contracts were issued to private companies without consideration of their black economic empowerment status. Cipro officials also generally failed to obtain the prescribed number of quotations when appointing service providers.
“It was established that no departmental service provider database existed and that quotations were requested without consulting any list of approved or prospective service providers,” the auditor general observed.
The report said in eight cases the institution procured information technology-related goods and services worth R10,587-million without consultation or approval of the State Information Technology Agency, as required by law.
In its submissions to the auditor general the management of Cipro said: “A new SCM [supply chain management] policy in line with the legal framework has been developed and is in the process of being implemented.
“In future, a full competitive process will be followed in line with SCM policy for the procurement of all goods and services from prospective service providers.”
Themba Godi, chairperson of the Standing Committee on Public Accounts (Scopa), said Scopa has called on the management of Cipro and the director general of the department of trade and industry to appear before it next Wednesday.
“We are very concerned about what the auditor general has found, especially considering that some of the findings are reinforced by the annual financial audit report. We take very seriously any mismanagement of public funds, whatever the amount, and we are going to send a clear message that state entities are not milking cows for people who have no interest in proper management of public funds,” said Godi.
Department of trade and industry spokesperson Donovan Jacobs said his department did not comment on matters relating to Cipro, despite the institution having been incorporated into the department.