The Zondo Commission Report Released in South Africa

The document submitted to the attention of the President of South Africa pays particular attention to the fight against corruption in public procurement.

The Report stresses that a number of problems are inherent in this area, including:

a high degree of dependence of procurement on the persons that have political and administrative power and scant involvement of the private sector in the drafting of laws regulating this area;
an excessive decentralization of the public procurement system which often results in the assignment of procurement functions to the persons who are not sufficiently qualified, trained and experienced;
the lack of an appropriate reporting system in procurement, appropriate monitoring of and control over the procurement procedures.

With a view to enhancing the effectiveness of the public procurement system the Commission asserts that it is necessary to ensure closer cooperation between the State and the private sector and recommends implementing the following measures:

1) Draft a National Charter against Corruption in Public Procurement providing for the development of a single code of conduct establishing ethical standards guiding procurement of goods, works, services for public needs and adopt it as a legally binding document;

2) Enhance transparency of procurement through the development and implementation of the standards in line with the OECD Principles for Integrity in Public Procurement;

3) Establish a new dedicated anti-corruption authority, i.e. the Public Procurement Anti-Corruption Agency (PPACA) which would enjoy autonomy and have the necessary financial and human resources.

According to the authors of the Report, the PPACA can be established by analogy to the Competition Commission which has dedicated divisions with specific powers in its structure. In particular, the PPACA may have such divisions as the Council, the Inspectorate, the Litigation Unit, the Tribunal, and the Court that will be in charge of drafting guiding principles to enhance the effectiveness of the public procurement system, monitor and oversee public procurement procedures, investigate violations, conclude deferred prosecution agreements etc.

The recruitment of staff of the new Agency is supposed to be carried out through transparent procedures of a public competition rather than through direct appointment by decision of the Government, which will allow mitigating the risks of forming the PPACA staff of the persons loyal to the Government. Additionally, in order to reduce political influence on the Agency it is suggested to foresee other sources of revenue besides its funding from the State budget such as a mandatory fee to be paid to the PPACA by all participants of the public procurement process;

4) Create a Procurement Officer’s Profession with its status enshrined in law. Such professional body will fix the minimum requirements to the qualifications, training and experience necessary for membership of the profession. In the event that a person does not correspond to these requirements, he/she can be excluded from the body or be subject to other disciplinary sanctions;

5) Promote the reporting of infringements in public procurement and protect whistleblowers. To this end, the Commission recommends establishing a dedicated reporting channel in the PPACA, adopting measures for protecting any person reporting instances of corruption, fraud or other offences in public procurement, rewarding the giving of such information by way of a percentage of the proceeds recovered, and offering immunity from criminal or civil proceedings if there has been an honest disclosure of the information which might otherwise render the informant liable to prosecution;

6) Introduce the possibility to conclude deferred prosecution agreements provided that:

a company has self-reported an offence;
it has cooperated with the investigation;
the company has adopted measures to ensure that such conduct is not repeated in the future;
it has paid a fine or has taken other remedial action;

7) Exempt accounting officers from criminal and civil liability for corrupt and fraud offences committed by the company provided that the officer performed his/her duties in good faith;

8) Amend Political Party Funding Act 6 of 2018 to criminalise the making of donations to political parties with a view to obtaining the grant of procurement tenders or contracts;

9) Train the personnel responsible for conducting public procurement procedures, improve the quality of professional training;

10) Amend legal acts regulating the conclusion of public contracts with a sole source provider;

11) Harmonize in general the legislation regulating public procurement.

Additionally, the Commission recommends taking measures for enhancing liability of legal persons for corruption also in the area of procurement by introducing a new corpus delicti, namely the failure to prevent an act of bribery. A private or public sector organisation will be found guilty of the relevant crime in the event that its associate transfers, agrees or promises to transfer any inappropriate reward with the aim to obtain or retain business or an advantage for the organisation’s business. The associate is a person who provides services for the organisation or on its behalf; the official position of the individual in this case is irrelevant. In the event that the organisation has adopted appropriate measures for preventing bribery with regards to its associates, it is suggested that the organisation is exempted from liability.

The Report of the Commission also provides the outcome of some important investigations concluded last year with regard to:

the public company South African Airways (SAA), its subsidiary South African Airways Technical (SAAT) and the public company South African Express, as well as certain officials of these organisations, including Dudu Myeni and Yakhe Kwinana, former presidents of the board of directors of SAA and SAAT respectively accused of having transferred a considerable part of the revenue to the Jacob Zuma Foundation, corruption and fraud;
the public companies Eskom, Transnet and SAA, suspected of misappropriation of public funds to finance the New Age Media outlet owned by the influential Gupta family between 2011 and 2017;
the South African Revenue Service whose effectiveness under the leadership of Tom Moyane was questioned given that the latter was allegedly an ally of former President Jacob Zuma by whom he had been appointed to the position well before the official decision was taken and could have acted in the interest of his patron.

*In addition to the document that has been released, the Commission will publish the other two parts of the Report in late January and in late February 2022 respectively.