Tender process for low cost housing needs to be changed

The news that the State’s Special Investigatory Unit has arrested nearly 2 000 government officials, most employed in housing delivery, on charges of fraud, corroborates a statement made by himself earlier this year, says Paul Henry, MD of Rawson Developers.

In that statement Henry said that the tender process for low cost housing needs to be changed and the actual work done placed largely back in the hands of private enterprise – with strict controls from an independent body.

Media reports have indicated that initially 7 353 government officials were identified by the Auditor-General for suspected fraud, 930 were arrested and 781 found guilty. R21,7 million was then recovered.

Subsequently the SIU identified another 25 659 civil servants as suspects on subsidy fraud, of whom 634 were arrested and 385 found guilty. This time R15,4 million was recovered.

A further 6 974 municipal council officials were also investigated and 151 eventually found guilty of fraud. 76 cases here are still awaiting trial.

Forty independent contractors involved in housing have been “restricted” from working with the Department again and ±20 await further investigation which could lead to prosecution.

SIU chief, Willie Hofmeyr, has been quoted as saying that with the connivance of officials, the Department was “taken for a ride” on contracts which had an average value of R100 million each.

“It is ironical,” said Henry, “that the main reason given some years back for putting State and municipal officials in charge of housing was that it would eliminate corruption. We have to congratulate Minister Sexwale on his firm anti-corruption actions but it is now clear that what happened under the previous system pales into insignificance with what has been going on since the State was given full control.”

In his original statement criticising the government for its slow housing delivery and stating that, if private enterprise contractors were given a bigger say in the whole process, delivery could be vastly speeded up, Henry tackled the corruption issue head on.

Corruption, he said, had to be eradicated and this was probably only possible if a highly paid independent advisory body made up of the industry’s leading professionals and lawyers was given an ongoing watchdog role to check on all tenders, all contracts and all schedule keeping – with a special brief to penalise poor quality workmanship.

“The important point,” said Henry, “is that as non-participants they should have absolutely nothing to gain by condoning corrupt practices. Instead, they should be incentivised by bonuses for every conviction they achieve.”

Referring to the Indian experience, Henry said that under British rule roads, infrastructure and housing delivery had been controlled by various departments of public works but they in turn reported to the ruling figures in the Indian Civil Service – who were highly paid, and mostly highly educated graduates with exceptionally strong ethical standards.

“A strong elite of that kind will ensure that the middle men are kept under surveillance and that they have no alternative but to be honest. In India any major attempt at bribery of an ICS official resulted in an immediate blackballing on all future government work.

Some of the corruption here in SA, added Henry, probably emanates from the fact that many newly established contractors or suppliers playing the BEE card to get work are in fact not capable of doing it profitably or on time – and, therefore, resort to dishonest methods to ensure their survival.

Article from: www.rawson-developers.co.za