The real cost of corruption – part three

By Lorraine Louw

In the last of our three-part series on the cost of corruption, we take a closer look at the work of the Special Investigating Unit and the office of the auditor-general in quantifying the lossed incurred by the country annually.

According to the SIU’s latest annual report for 2011/12, the president issued eight proclamations for the unit to investigate allegations of maladministration, some cases dating back to 2006. The auditor-general also publishes regular reports on public spending – and misspending.

For example, in his 2009 report on corruption in the public service, the auditor-general, Terence Nombembe, reported that civil servants scored more than half-a-billion rand in government tenders, which were irregularly awarded to their spouses and relatives. His investigation into government officials who moonlighted as business executives, found that more than 2 000 were involved in tender-rigging and corruption worth more than R610-million, Times Live reported.

That report was presented to parliament in April 2009, but was never formally discussed because parliament was winding up its business ahead of the general election. The auditor-general found that between 2005 and 2007, government officials in eight of the nine provinces cashed in on tenders worth R540-million. KwaZulu-Natal was still being audited. The remainder of the R610-million was fleeced by officials in national government.

Unauthorised expenditure in government supply chain management:

• 2010/11: R4.3-billion
• 2009/10: R6.3-billion
• 2008/09: R2-billion

Irregular expenditure in supply chain management:

• 2010/11: R10-billion
• 2009/10:R4.7-billion
• 2008/09: R3.2-billion

Fruitless and wasteful expenditure in supply chain management:

• 2010/11: R260-million
• 2009/10: R253-million
• 2008/09: R56-million

In a provincial analysis for the 2010/11 financial year, there was R11-billion in authorised and irregular expenditure.

Money and Politics Project

In a December 2011 paper, “The Cost of Public Corruption in Democratic South Africa”, the Money and Politics Project of the Open Society Foundation for South Africa, said “The total drain of corruption on South Africa’s economy is estimated in the hundreds of billions of rands per year or 10 percent to 25 percent of gross domestic products. Auditor-general reports of unauthorised, irregular, and fruitless/wasteful spending found roughly R15-billion in 2009 and R26-billion misspent today. The government’s Special Investigating Unit likewise estimates that R25-billion to R30-billion in public spending was lost in 2010 because of graft – fully 20 percent of the state’s procurement budget.”

In 2009, the auditor-general found more than 2 000 government officials from various parties were in business with the state and had directly or indirectly benefitted from government tenders worth than R600-million.

It goes further than other reports, in listing what could have been achieved with this R26-million: it could have doubled the annual incomes of seven to 10 million South Africans living in acute poverty on less than R278 a month; it could have built nearly half a million RDP homes; It could have brought electricity to nearly two million unconnected homes or met the annual electricity needs of 4.7 million low-income households; it would have been enough to provide HIV treatment to over eight million infected citizens, full medical care to 13 million who lack ready access, or nearly 20 million vaccinations a year. “Indeed, R26-billion in misspent public funds exceeds the total state budgets for housing, public transport, education, public health, and energy.”