As part of his testimony on the second day of the judicial commission of inquiry into state capture, veteran treasury staffer Willie Mathebula said deviations from procurement rules have become the norm.
On Tuesday, Mathebula was the first witness to testify before the commission headed by Deputy Chief Justice Raymond Zondo. His testimony applied to a central element of state capture — the irregularities within government’s procurement processes.
The commission was established to inquire and make recommendations into any and all allegations of state capture, corruption and fraud in the public sector. The inquiry is tasked with investigating whether or not there has been deliberate efforts to undermine the power of state institutions to benefit the politically connected Gupta family.
In his opening statement on Monday, the head of the inquiry’s legal team, Paul Pretorius SC, asked that the commission investigate, amongst other things, the procurement practices of state-owned entities.
“What can be done both in the short term and long term to prevent a recurrence of was found to have occurred and the effects it had? … Do the provisions regulating procurement need [an] overhaul?” Pretorius asked.
Mathebula is not one of the witnesses mentioned in former public protector Thuli Madonsela’s ‘State of Capture’ report. However, his testimony is crucial given that the position he occupies is arguably one of the most important gatekeepers at treasury. As acting chief procurement officer, his office oversees government’s annual expenditure of around R840-billion. He was appointed by then Finance Minister Malusi Gigaba in September 2017.
Mathebula’s mandate before the commission was to lay out government’s procurement processes.
The commission’s head of evidence Leah Gcabashe SC noted that because his testimony is purely technical, there would be little reason for anyone to apply to cross-examine him.
Mathebula pointed out that his career has been spent “setting the rules of the game” regarding procurement processes. The office of the chief procurement officer was set up to ensure transparency and to help regulate procurement, he said.
His predecessor, Kenneth Brown, resigned from the position under a cloud with a Hawks investigation into the payment of two properties hanging above him.
In his testimony, Mathebula described a “complex” and “fragmented” system which regulates public procurement. He noted that there are 10 distinct pieces of legislation, apart from the Constitution, which regulate public procurement. These include the Public Finance Management Act (PFMA), the Preferential Procurement Policy Framework Act (PPPFA) and treasury regulations.
Gcabashe explained that many consider the PPPFA — which mandates organs of state to determine their own procurement policies that advance the interests of historically-disadvantaged citizens — as “the soft underbelly of procurement”.
She added that the myriad allegations of flouted procurement procedures might mean there is something systemic that gives rise to these irregularities.
The most recent example of such allegations has emerged from Transnet.
The entity’s board issued its chief executive, Siyabonga Gama, chief procurement officer Thamsanqa Jiyane and supply chain manager Lindiwe Mdletshe with precautionary suspension notices last Thursday.
All three, Transnet’s statement noted, have been implicated in the alleged contravention of the Constitution; the PFMA; the PPPFA and its regulations; Transnet’s internal procurement policies in the issuance of requests for proposals; the Companies Act and Fiduciary Duties; and improper changing of evaluation criteria and failure to comply with government policy on local content requirements.
When pressed on how the office of the chief procurement officer enforces regulations, Mathebula said that when gaps in the system are revealed, the office issues instructions to augment the system. But he questioned whether these instructions alone would ensure that entities live up to these prescripts.
“It’s a war that we are fighting to make sure that there is no abuse of the system,” Mathebula said.
Mathebula raised the fact that, once these irregularities are bought before the courts, the fates of transgressors are out of the office’s hands — an element of procedure that he conceded perhaps deems changing.
Gcabashe said that the statement Mathebula submitted to the commission was preoccupied with contract deviations. “Instead of deviations being an exception from the norm, deviations became the norm,” Mathebula said.
Mathebula suggested that the clause in the treasury regulations, which is meant to assist government entities in emergency situations by allowing deviations, has been used by certain entities to circumvent the system. He did not specify in his testimony which entities have used deviations to dodge the rules.
He said that these deviations effectively give entities “a blank cheque”, adding: “It’s given to me and I can decide to give it to anybody. I think that’s just the unintended consequence of a very good intention in terms of that instruction,” Mathebula said.
Mathebula reiterated in his testimony that a process of reform is already underway within treasury. He said that this is being done through the Public Procurement Management Bill, which is intended to give the public a role in adjudicating tenders.
Mathebula said the Bill will tighten the oversight structures with regard to procurement, which he said is a matter of urgency.
He said that certain parts of the legislation will be repealed and others amended “to make sure that we have one piece of legislation in the country that deals with procurement”.