Business Corruption

According to observers, corruption is rife in the granting of government contracts in South Africa. Bribery thrives at the central government level, as exemplified by the high-profile procurement scandals that have been exposed within the last decade. In addition, there are numerous, though less publicised, scandals at the provincial level, indicating that the provinces are also struggling with serious irregularities in public procurement and contracting.

Multinational companies have been involved in what is commonly known as the 'Arms Deal', which is the largest corruption scandal in post-apartheid South Africa. Read more about the South Africa Arms Deal.

Companies are recommended to use a specialised public procurement due diligence tool in order to help mitigate the corruption risks associated with public procurement in South Africa.

See more on public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Political Corruption

Cases of corruption involving politicians and public officials from provincial governments are numerous and often involve persons with the ability and authority to influence tender procedures. For example, according to a November 2011 article by Times Live, John Block, the African National Congress (ANC) Northern Cape leader, was arrested in November 2011 for tender fraud in relation to the purchase of water purification equipment. Block had also been previously accused of channelling ZAR multi-million tenders to a construction company owned by a businessman, who introduced Block to his wife. According to an October 2011 article by Mail & Guardian, the case related to the purchase of water purification equipment is now postponed to February 2012.

President Jacob Zuma, was accused of being involved in the 'Arms Deal' scandal, where he allegedly demanded a bribe of ZAR 500,000 from the companies involved in the scandal. Charges against Zuma himself were repeatedly dropped and revived, and in September 2011, the South African government announced that a commission of inquiry will be set up to probe allegations that surround the ZAR multi-billion arms deal. The commission is scheduled to complete its task within two years, after which a final report will be submitted to the president with recommendations, according to a September 2011 article by BBC News and an October 2011 article by Times Live. Read more about the South African Arms Deal.

A commission has been appointed to investigate the alleged illicit activities of certain South African companies and individuals connected to the UN Oil-for-Food Programme in Iraq. There are allegations that the ANC received financial support from companies that obtained tenders from the UN programme as well as alleged kickbacks from the regime of Saddam Hussein. A report was submitted to the Presidency in June 2006 by the commission and, according to an October 2011 press release by the official Presidency Republic of South Africa website, President Zuma agreed to release the report to the public no later than 7 December 2011.

See more on public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Frequency

World Economic Forum: The Global Competitiveness Report 2011-2012:
- Business executives give the diversion of public funds to companies, individuals, or groups due to corruption a score of 3 on a 7-point scale (1 being 'very common' and 7 'never occurs').

- Business executives give the favouritism of government officials towards well-connected companies and individuals when deciding upon policies and contracts a score of 2.5 on a 7-point scale (1 being 'always show favouritism' and 7 'never show favouritism').

The World Bank & IFC: Enterprise Surveys 2007:
- 32.2% of the companies surveyed expect to give gifts to secure a government contract.

- The value of a gift expected to secure a government contract is 1.7% of the contract value.