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Open Letter to the DTI: Fight Corruption by Incentivising Transparency on Enterprise and Supplier Development, as well as Procurement 

Image, South African History Online

It’s been thought that sunshine kills the Coronavirus, but there’s another virus that sunshine laws have been effective on: corruption, particularly in COVID-19 Protective Personal Equipment procurement.


The signatories of this letter ask the Department of Trade and Industry to incentivise the publicisation, within the Broad-Based Economic Empowerment (B-BBEE) Act, of companies’ Enterprise and Supplier Development (ESD) beneficiaries, including those they get Procurement points for procuring from or have other interests in.  The DTI can incentivise transparency by availing enough points to enable B-BBEE scorecard improvements of up to a level. 


Such businesses would display a dashboard on their website or equally public platforms (e.g. their products) featuring ESD company names and amounts spent on ESD and Procurement.  Depending on requirements placed around the dashboard’s ability to highlight trends, this could allow the public to determine where prices have been inflated exorbitantly and know what questions to forward to their public representatives, Chapter 9 institutions, civil society organisations and the like.


“If anything is to be learned from our present difficulties, compendiously known as Watergate, it is that we must open our public affairs to public scrutiny on every level of government.”  These words were written by then-Chief Justice Earl Warren following the discovery that President Richard Nixon was spying on and interfering with the opposition.  Lawmakers in the United State subsequently passed the Federal Advisory Committee Act to show who government decisions were influenced by.  The other was the Government in the Sunshine Act, requiring that government meetings be held in public.  We’re skipping over a lot of detail but the upshot is these laws substantiated the ideal of government being “of the people, by the people, for the people”, or as we put it in the Preamble of our Constitution, “based on the will of the people”.  


Any perceived gap between those ideas is closed when we logically contemplate that people cannot will when their willing is in conflict with the will of stakeholders who know them but of whom they do not know.  Stakeholders must, therefore, enjoy “equality before the law” through mutual transparency about one another’s existence.  One imagines this is why the Political Party Funding Act (PPFA) exists — to “enhance multi-party democracy by providing for and regulating both public and private funding of political parties”.


The Watergate Scandal was paradigmatic of all political scandals, and the remedy of transparency has lessons for our time as we, too, have “state capture” scandals.  President Cyril Ramaphosa’s open letter to members of the ruling party (among other events) is an acknowledgement that there exists corruption linked to political figures; he further said in his Q&A before Parliament, “We cannot continue to use procurement systems that belong to the ice age”, proposing blockchain technology as an accountability mechanism.


Legislative instruments may pave the way (also, how embarrassing would it be if corruption marred the process of procuring anti-corruption technology?).  It’s also only fair to update B-BBEE to match the PPFA lest we have a scenario where corrupt procurement processes launder money into party coffers.  The idea that B-BBEE is a vehicle for this or any other enrichment of an elite few has created a word-cloud association of corruption, crony capitalism and tenderpreneurship around it, which, in turn, has created (for our consultancy in particular) the difficult task of selling transformation legislation compliance as more than just a tick-box exercise for politically-connected white-owned businesses, but as a tool for achieving inclusive economic growth and social cohesion for all.


Alongside PPFA, the Financial Intelligence Centre Act (FICA) and the Regulation of Interception of Communications and Provision of Communication-Related Information Act (RICA) are legislative crime-fighting instruments that B-BBEE can be aligned with and borrow insights from.  Naturally, all state-owned enterprises would follow suit and re-read the Public Finance Management Act (PFMA) in light of this new emphasis on transparency in B-BBEE. 


The Secretary General of the ANC (who was summoned into a meeting with the party’s Integrity Committee), Ace Magashule, said nothing in law stops politicians’ families from doing business with government.  Indeed, the laws referenced in the afore-hyperlinked report, such as the Executive Ethics Act, the Municipal Systems Act, the Municipal Finance Management Act and the Public Administration Management Act, say office-bearers ought to “act in good faith and in the best interest of good governance”, and disclose financial interests and avoid doing business with government outside what their jobs require.  “Is there actual legislation on relatives of government insiders not doing business with the government?” Marianne Merten asks.  “Yes, but such proscriptions are spread across several laws.  And this has created a gap that may be exploited by those in search of loopholes, not interested in ethics and good conduct.”  Ethics and fairness may be real, but they’re also intangible.   


We, the people, can push for different pieces of legislation to be updated by Parliament for greater clarity.  Then we can merely hope those laws are enforced consistently.  Or, seeing that almost unprosecutable corruption almost always involves procurement and procurement almost always involves B-BBEE, the DTI can turn B-BBEE into the crime-fighting tool that substantiates the spirit of all the other legislation by building into it a self-reporting tool whose displayed data can be corroborated or rejected by verification agencies for the public.  


We, the people, can require that B-BBEE be indeed broad-based by giving more visibility into the narrowness or breadth of procurement practices and opportunity-availing activities in  the economy.