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Presenting his Budget plans to the National Assembly on Wednesday Finance Minister Pravin Gordhan announced a major onslaught on fraud and corruption in government.

He told MPs that an inter-ministerial committee on corruption had been established, chaired by Minister in the Presidency Collins Chabane, to coordinate government's efforts to stamp it out.

Measures to be considered include blacklisting of individuals and companies, and improving investigation and prosecuting capabilities.

"A major site of both wastage and inefficiency is in our procurement system," Gordhan said.

"Through a combination of corrupt practices, inefficient procurement, poor planning and, in some instances, collusion by the private sector, we are not getting the kind of value from our purchases that our people deserve," he said.

"Even where there is absolutely no corruption, we sometimes give contracts to people who cannot implement them and so houses are left without roofs, roads crumble when it rains, water schemes break down and school books fail to get delivered," he said.

"Mister Speaker, corruption is an ever-present threat to our ambitions. All South Africans must constantly and consciously work to root out this cancer. If we are to address this scourge, we need improved management capability, governance, enforcement, and oversight in government as well as in the business sector," Gordhan said.

The Finance Minister said that poorly managed tender processes are all too often open to such abuse.

Greater transparency and accountability in procurement systems will therefore be a key focus of reform in the period ahead.

"Additional funds have been allocated to bolster efforts to strengthen supply chain management, and the relevant government departments have intensified efforts to bring perpetrators of tender fraud to book," he said.

"Data matching, the practice of comparing, for example, taxpayer data with social grants registers or housing waiting lists, will become a regular feature of a systematic approach to minimise abuse," he said.

"We are starting to see the early results of these efforts: officials have been disciplined and others fired, five people linked to supply chain fraud were arrested in KwaZulu-Natal last week and more cases have been handed over to the National Prosecuting Authority. We are expecting more arrests very soon," he continued.

The National Treasury said on Wednesday in a paper issued with the budget documents that intensive work by the interdepartmental working group has turned up many cases of fraud and corruption.

"A large number of these relate to fronting," the Treasury said, "where a BEE entity or an SMME created and complies with the set procurement requirements but hides the identities of the real beneficiaries."

The Treasury paper also listed other malpractices which include tenders awarded without following due process, goods and services provided at grossly inflated prices, officials benefiting from government contracts unnecessary purchases and payments for services not rendered.

In addition to the arrests made in KwaZulu Natal contracts to the value of more than R500-million have been suspended.

The task team is preparing a more detailed set of recommendations to strengthen and "fraud proof" the procurement process.

This will include reviewing the supply chain policies and making certain that those responsible for safeguarding public resources are held accountable and brought to book.

Measures now being considered, besides blacklisting people and firms and boosting investigating abilities, include streamlining and possibly centralising the approval of major government contracts, properly training officials involved in the procurement process on best practices and techniques rather than just compliance with the rules.

There are also plans to build internal capacity to manage internal disciplinary processes to ensure speedy finalisation of cases.

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