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Cape Town – National Treasury’s tech-savvy chief procurement office could become a major stumbling block in any attempt to capture Treasury for nefarious purposes.
Fin24 was granted an exclusive interview with acting chief procurement officer Schalk Human, just days before the removal of former finance minister Pravin Gordhan and former deputy finance minister Mcebisi Jonas on March 30.
This special feature story contains:
- Video: Get a glimpse of the life of Treasury’s corruption buster Schalk Human, who is seen working in his corner office which overlooks President Jacob Zuma’s offices at the Union Building.
- Q&A: How the centralised tender system has generated an extra R7bn in 2016, and has cut out 12 000 dead people from the system (these names were used for corrupt purposes).
- Q&A: The office’s role in the nuclear energy programme and comments on Eskom acting CEO Matshela Koko’s stepdaughter.
- Q&A: How a new leadership team (ie Malusi Gigaba and Sfiso Buthelezi) will impact the work of the procurement office, and whether it could undermine its purpose to protect SA from corruption.
- Q&A: How the centralised tender system has modernised South Africa, putting in place far tougher checks and balances to prevent corruption taking place.
WATCH: Treasury’s corruption buster
Q&A with Schalk Human and Fin24’s Matthew le Cordeur:
- Is your unit a corruption-busting unit, or a revenue-generation unit?
The chief procurement office is all about efficiency; it’s about making sure that the right commodities at the right price at the right time are delivered to the people of SA.
We do that through setting norms and standards, and ensuring that those are upheld when we use public funding.
- How much revenue can you save though this facility?
Public procurement is just over R500bn a year – in the past financial year the office of the CPO (chief procurement officer) generated R7bn in savings by identifying the top 100 projects of supply in government and renegotiating those rates that are favourable terms for government.
Secondly, we aggregate numbers – bulk-buying results in a reduction in unit costs and as the biggest buyer in SA and possibly in Africa, we have the luxury of renegotiating the prices to more favourable terms for government.
- What are some of the more shocking things you discovered when you implemented the central database system in terms of finding irregularities?
The central database is firstly established to reduce red tape for all businesses in SA. We are acutely aware that we must grow the economy, and breaking down barriers to entry for small suppliers – all kinds of suppliers – is priority number one.
But in doing so we found there are a number of aspects we would be worried about.
Firstly, suppliers with ID numbers of deceased persons; 12 000 of these were identified, and I’m happy to report they could be removed from the database.
The second important aspect is tax compliance. Government does business with law-abiding, tax compliant businesses and this supplier database provides a very easy, accessible method to determine tax compliance.
Thirdly, we don’t entertain public servants doing business with the public service. One thousand such instances could be identified and they were reported to the Department of Public Service and Administration and the first disciplinary hearings have been concluded.
- There are thousands of tenders in SA from SOEs (state-owned enterprises) to municipalities. How does government keep track of these?
The procurement system in government is decentralised and accounting officers are responsible to make sure they award procurements in a fair, transparent and competitive way.
The office of the CPO (chief procurement officer) reviews contracts from all organs of state when complaints are registered on a sample basis and using the legal instruments to identify which ones will be evaluated or reviewed.
We use technology to make an assessment of which ones should fall in the sample and which ones not, and the assessment is done by a very small team assisted by specialists when needed.
- The nuclear procurement programme is a talking point and we’ve had a Request for Information. Is that a role of the chief procurement office in Treasury?
The role of NT’s (National Treasury's) procurement office is to make sure there’s compliance to norms and standards when it comes to procurement.
The principles we hold in high esteem are derived from the Constitution. All procurement must be fair, transparent, competitive, equitable and cost-effective.
Procurement that complies with these five principles is a compliant procurement process.
The current RFI is the start of the process and all due compliance points need to be adhered to.
- The Eskom coal review report that you were working on – can you please update us on this, and what the link was with the Sunday Times story that (Matshela) Koko’s stepdaughter (was scoring contracts)? Was there any link there?
The CPO has reviewed the procurement of coal as widely reported by the media. There have been several engagements with Eskom to solicit additional info and clarifications. We are at an advanced stage of concluding this report and the information will be made available to the Eskom board for any final comments and inputs before it will be released and steps taken, if need be and if applicable.
These are two totally different instances and at face value we could not see an initial link to the media reports published on Sunday.
- With this report, if it is made public, can we expect any dramatic insights from the coal tenders at all (without naming names)?
The review is based on norms and standards. Was a compliant procurement process followed? If not, what were the breaches? And then explaining the remedies that could be applied.
Our report will therefore reflect on those norms and standards, and it will identify the areas of non-compliance.
- But without naming names, is there anyone with any political (affiliation) or an individual or an executive... identified in this process?
Our report will be published soon, and all will be revealed therein.
- Moving on to SAA (South African Airways) procurement, what is the latest on your review there with regard to SAA?
SAA is a complex organisation. Procurement forms an enormous part of the spend at SAA. Several of the SAA contracts have been reviewed by the CPO. Some have been concluded and provided back to SAA leadership for remedial action and correction, and others are still in the making.
- How would a future ministry affect the CPO, or not?
Procurement is one of those very clear compliance areas and compliance to norms and standards is straightforward. It’s about whether something was a competitive process, or not. And that will not be influenced by the leadership. Technical assessments happen on the basis of pre-qualified procurement criteria that aren’t necessarily ambiguous and (subject to) political intervention.
- Couldn’t political intervention be a block in how you operate? I know you’ve said there’s a PFMA (Public Finance Management Act) that gives you these rights. But political intervention that is not necessarily the right thing for this department – could it impede the CPO’s work at all?
CPO subscribes to a very strong articulated code of ethics which is based on ensuring that no abuse of the supply chain system occurs. It’s articulated very strongly in legislation and regulations, and we’ve been fortunate to have no political intervention in the CPO at this stage.
- At this stage … but obviously this could change. I’m not going to push on this, don’t worry. In terms of municipalities and their procurement – how is the CPO trying to look at municipal big infrastructure spend?
The finance system of SA has been set up in the way that nine provincial treasuries are responsible for overseeing municipalities. NT (National Treasury) is responsible for cities and secondary cities, and so-called non-delegating municipalities. These represent roughly 70% of the total spend and the NT works with cities to review big ticket items, such as infrastructure, transport, to ensure there’s fair competition and rewards are made in a transparent fashion.
- Finally, what is the health of this nation and the organs of state (regarding expenditure)?
I have the privilege of working with thousands of very dedicated officials on a daily basis, all of whom take their work extremely seriously. For a large percentage of transactions – without fear or favour – officials do their utmost to benefit the people of SA.
If all do their part, the outcome would be positive for SA.
The sentiments from a procurement point of view are that we’re embarking on great modernisation initiatives that will entail a digital economy (and) e-procurement systems, further enhancing transparency in procurement, allowing different opportunities for oversight in society by our political office bearers and the taxpayer.
From where I sit, the CPO has never been in a better position to really execute the billions of rands appropriated for the benefit of South Africans.
My personal opinion is that we are well placed and that we have a lot going for us as a nation.
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