While delivering his budget speech to Parliament, Finance Minister Pravin Gordhan on Wednesday pointed a finger at tax dodgers among the citizenry and also at state officials involved in tender-rigging.
There are currently 53 investigations involving procurement irregularities, involving contracts worth R3-billion, and the South African Revenue Service (Sars) is investigating nine cases of tender fraud, with a total value of about R1,7-billion, he said. In addition, about 13 000 vendors who won state contracts owe the state taxes amounting to more than R1-billion.
Gordhan highlighted the impact of fraud and corruption in public procurement on the government’s ability to deliver services effectively, saying citizens and taxpayers do not get full value for money because of waste and corruption in public procurement.
“This compromises the integrity of governance and frustrates the pace of service delivery,” he said, adding “A strong procurement framework is critical to boosting jobs and service delivery.”
Rigorous procedures
As of this year, government departments will be required to establish rigorous demand-management procedures, limits will be put in place to restrict deviations from procurement orders, and companies bidding for tenders will be required to disclose the identity of all directors, to ensure that they are tax compliant and to determine whether any directors are government officials.
“Poor delivery and stealing from the fiscus are never acceptable,” he said. “Senior managers of our institutions and municipalities are expected to work actively to improve their procurement processes and oversight.”
This comes a day after the Public Protector, Thuli Madonsela, reprimanded police National Commissioner Bheki Cele for inappropriate and unlawful practices in the procurement of a R500-million lease agreement for police office space.
Gordhan paid tribute to honest taxpayers who contributed to the fiscus, saying: “We have been able to expand spending where other nations have been forced into austerity adjustments.”
Tax revenue for 2010/11 was estimated at R627-billion, 12,3% higher than last year.
However, he added that tax and customs evasion remains a serious threat to the government’s work and said Sars would work with law enforcement to convict tax dodgers.