Wits School of Governance (ETDs)
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Item Factors contributing to transgressions in the procurement practices of state-owned entities (SOES): Eskom and Transnet(University of the Witwatersrand, Johannesburg, 2024) Moloto, Bonolo; Setlhalogile, MatlalaPublic procurement is a vital process for governments and state-owned enterprises (SOEs) to procure essential goods and services. However, state capture and unethical practices have plagued it. The State Capture Commission Report highlighted issues such as poor governance, unethical conduct, and insufficient internal control systems. This has led to financial and operational challenges for SOEs, which heavily rely on state guarantees and bailouts. In South Africa, the government spends around R1 trillion annually on procurement, which represent 12% of the country’s gross domestic product (GDP) (National Research Foundation, n.d.). The Auditor General (AG) report for the 2020/21 financial year reported that most SOEs had high balances of irregular expenditures. Transnet had the highest irregular expenditure, totalling R14.1 billion, followed by Eskom with R11.6 billion (Maeko, 2021). This study aimed to identify the underlying governance factors contributing to transgressions in SOE procurement practices and to provide remedial actions to prevent recurrence. Agency Theory was used to examine the identified issues, and a comprehensive literature review was conducted to investigate the underlying factors. The study found that failure to address these governance issues could lead to qualified audit opinions, issues of going concerns for SOEs as well as impact investments and public confidence. The study also revealed that the slow implementation of consequence management could foster a culture of noncompliance and accountability. The current South African public procurement system ca is characterised by political interference and cadre deployment, which undermines transparency, accountability, and good governance. Political appointments and cadre deployment in critical positions encourage wasteful spending, undermine governance, and promote dictatorship. Politicised boards and management in SOEs has led to an increasing prevalence of corruption. The AG, Standing Committee of Public Accounts (SCOPA), National Treasury (NT), Department of Public Enterprises (DPE), and the respective SOEs’ boards have been unable to conduct their oversight functions effectively due to their unwillingness to do the right thing and failure to establish robust preventative controls. The state's approach to board nomination lacks transparency, operates in an ad hoc manner, and is excessively politicised. iii Remedial actions to address these issues require a dedicated commitment from top leadership, fast implementation of corrective measures, and periodic monitoring and evaluation processes. Limiting political interference in the administration of remedial actions can enhance the effectiveness, fairness, and integrity of the anti-corruption process.Item Analysing state capture through public procurement weaknesses in South Africa(University of the Witwatersrand, Johannesburg, 2023) Aikins,Nana; Lynge, HalfdanThis research report reviews and analyses the procurement system in South Africa concerning the legislative and institutional frameworks that govern state owned enterprises (SOEs). This study aims to assess the system's flaws and inherent weaknesses and highlight how these pitfalls have ultimately aided the phenomenon of state capture. It is a constitutional requirement that when organs of the state contract for goods and services, they do so in a fair, equitable, transparent, competitive and cost-effective manner. When a public organisation is captured by private interests, it loses its autonomy to act in the furtherance of public welfare, which manifests in its inability to contract competitively, achieving low prices and high quality. A postulation is made in this study that public procurement personnel lack the integrity and personal will to resist collusive behaviour and do not have the institutional strength to detect and withstand corrupt dealings that contribute towards state capture. Following the publication of the State Capture report by the Public Protector of South Africa in 2016, the concept has gained significant political momentum. However, despite this development, there has been a notable lack of academic research on the phenomena, particularly regarding its connection to public procurement. This research aims to fill this gap. This study draws most of its data from the transcripts of the hearings conducted by the Judicial Commission of Inquiry into State Capture. Through a qualitative explanatory case study approach, using thematic analysis, the study sought to understand the patterns of abuse that occur at each stage of the procurement cycle and what factors contributed to these transgressions. The findings of the study identified challenges associated with lack of capacity, non-compliance with legal policies, bid-rigging and collusive behaviour, and political interference