Since the political transition of South Africa in 1994 and the implementation of Broad-Based Black Economic Empowerment (B-BBEE), tender fraud became an issue South Africa is facing.
There are 7 main types of tender fraud:
- Misrepresentation of a company’s credentials including their ownership, management and control, directors and turnover, by submitting forged documents.
- Collusion and manipulation in the tendering process between employees and issue of the tender in the form of bribes or kickbacks.
- Falsification of statements and claims in the tendering process which includes the failure to meet the contract specifications.
- Substitution of products by supplying a product of lower qualification that was originally offered.
- Price fixing and tender rigging through collusion with competitors.
- Awards made to companies that did not submit a tender.
- Inflating of prices, especially within the water purification, medical and pharmaceutical industries.
The most common type of tender fraud is bribery. It is now the norm, for all tenders regarding state and government contracts, to be published on the website of that relevant department. The disclosure of the personal details of all directors, shareholders, trustees and key officials, should take place.
Policies and procedures need to be in place to ensure early detection of tender fraud. The ability to detect fraud on an early stage and implementing stiff penalties, as well as the exposure of those found guilty of manipulation during the tender proses, should be the main objective to focus on.
ABOUT THE AUTHOR
Dominique van Deventer obtained his LLB degree from the University of the Free State. He is a SEESA BEE Legal Advisor at our Bloemfontein office and has been with SEESA for more than 2 years.