Hundreds of firms flagged for wrongdoing still doing business with state

ONLY 18 companies have been barred from engaging in business with the government despite the Special Investigating Unit (SIU) flagging nearly 500 firms in its recommendations.  

This emerged from Finance Minister Enoch Godongwana’s parliamentary replies to ActionSA MP Alan Beesley. 

A report from the Presidency to the Standing Committee on Public Accounts earlier this year revealed that 467 individuals and companies were recommended for inclusion in the Restricted Supplier Register, but only one entity appeared on the list, prompting Beesley to demand transparency regarding the remaining 466 companies that have slipped through the cracks.

He asked about the organs of state that failed to notify the National Treasury of the specified companies and individuals recommended for blacklisting and the reasons for the failure to blacklist them despite the SIU recommendations.

In his response, Godongwana said a list of 509 referrals was received by the National Treasury from the Presidency on September 20.

“Of the referrals, 18 have been blacklisted, and 491 are still under review,” he said.

He also said the National Treasury has made a follow-up and communicated with the affected organs of state after receiving referrals from Eskom, Umngeni Water Board, and Transnet.

Godongwana stated that the Media, Information and Communication Technologies Sector Education and Training Authority (MICT-SETA) submitted its restriction requests prior to the National Treasury making a follow-up.

The minister confirmed that the MICT-SETA restrictions were uploaded, but some were outstanding.

Godongwana added that the Free State Provincial Treasury submitted its restriction requests, but they were returned due to insufficient information.

Subsequent to the National Treasury’s communication sent to all the organs of state, some have duly processed their restriction requests.

“These companies were either restricted or referred back due to non-compliance with legislative requirements such as the Instruction Notes, General Conditions of Contract, and Preferential Procurement Regulations.

“However, several organs of state have yet to submit their request for restrictions to the National Treasury.”

Godongwana stated that the National Treasury did not initiate the restriction but facilitated the process of loading the restriction on the database of restricted suppliers.

“The process is initiated by the organs of state, and in the absence of requests from the organs of state, the National Treasury cannot restrict the affected suppliers; though the SIU has issued a report, organs of state must still follow the restriction process,” he said.

Some of the directors and companies recommended for restrictions include EOH, SAP, Impulse International, former Eskom official Matshela Koko, businesswoman Shauwn Mpisane’s Zikhulise Group, Abantu Batho Congress leader Philani Mavunda and his company PG Mavundla Engineering, and Digital Vibes, among others.

Beesley said Godongwana’s response confirmed ActionSA’s longstanding warning that consequence management in the public procurement system was fundamentally broken and urgent reforms were required to prevent further abuse of public funds.

He said several suppliers implicated in State Capture corruption scandals have still not been blacklisted and remain fully eligible to win new government contracts.

This extended to companies implicated in the PPE procurement scandal.

He said the fact that the companies remained legally permitted to continue trading with the state was an indictment of the government’s inability to reinforce even the basic consequences of wrongdoing.

“We have, therefore, laid a complaint with the Public Protector to investigate this systemic maladministration.”

Cape Times