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1. 1
MONEY
down the
DRAIN
Corruption in South
Africa’s water sector
A Water Integrity Network / Corruption Watch report
1. 2
Money down the Drain:
corruption in South Africa’s water sector
March 2020
Principal researcher and author: Mike Muller
Editing: Janine Erasmus
Design: Janine Erasmus
This work is published by Corruption Watch and the Water Integrity Network and licensed under the Creative
Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY-NC-ND 4.0). To view a copy of
this license, visit https://creativecommons.org/licenses/by-nc-nd/4.0/.
Every effort has been made to verify the accuracy of the information contained in this report. All information was
believed to be correct as of March 2020. Nevertheless, Corruption Watch and the Water Integrity Network cannot
guarantee the complete ness of the content, nor can they accept responsibility for the consequences of its use for
other purposes or in other contexts.
Corruption Watch is a non-prot organization launched in 2012 that uses public reports as an important source of
information to ght corruption and hold leaders accountable for their actions.
Corruption Watch (RF) NPC
8th Floor, South Point Corner
87 De Korte Street
Braamfontein 2001 Johannesburg
PO Box 30630 Braamfontein 2017
https://www.corruptionwatch.org.za/
The Water Integrity Network (WIN) supports evidence-based advocacy for collective action to prevent and reduce
corruption in the water sector worldwide.
Water Integrity Network
Alt Moabit91b
10559 Berlin, Germany
www.waterintegritynetwork.net
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CONTENTS
ABBREVIATIONS 5
SUMMARY 7
Background
Corrupon drivers and strategies
What is being done?
RECOMMENDATIONS 7
Designate the water sector as an ‘island of integrity’
Ending impunity – inslling a culture of consequences
No honest instuons without honest and ethical people
Procurement
Environmental factors that must be addressed
Preferenal procurement
Regulaon of polical pares
Educate the private sector
Support civil society
CONCLUSIONS 10
CHAPTER 1 – INTRODUCTION 12
THE WORLD OF WATER - A complicated business 13
WHAT IS CORRUPTION AND WHY DOES IT MATTER IN WATER AND SANITATION? 14
CHAPTER 2 – CASES AND THEIR CONSEQUENCES 17
2.1 THE MOKONYANE PORTFOLIO 18
Sweetwaters, Kanana Park Extension 6 – a prologue 18
The Giyani Water Project- and the problems of BIG infrastructure 18
SAP –The perennial problem of ICT contracts 21
Lesotho Highlands Water Project 22
The War on Leaks ends in defeat 23
Drop a block 26
Blue, Green and No Drop reports - dealing with awkward monitoring 27
The bucket toilet tender snk 28
Mhlatuze–Mgeni merger rings alarm bells 28
Raising Clanwilliam Dam – grow jobs and economy or support patronage? 29
TCTA and the Mzimvubu project 31
2.2 THE ATTRACTION OF LARGE CAPITAL PROJECTS 32
Mangaung and the Gariep pipeline 32
Nelson Mandela Bay – How desalinaon dreams derailed city’s water security 33
Mpumalanga’s municipal budgets – Hijacked or rescued? 35
2.3 THE BUSINESS SIDE OF CORRUPTION 36
How water tankers cause taps to run dry 36
Chemical toilets in Ekurhuleni 37
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Illegal connecons – corrupon or simply unauthorised service provision? 38
Mining licences, polluon and public versus private interests 39
Corporate corrupon creaon: EOH’s move from SAP to specialised water services 41
Ekurhuleni Meters - Regulaon 32 abuse 43
The chickens of state capture come home to roost, in microcosm 44
2.4 CORRUPTION IS NOW ENDEMIC AND SYSTEMIC 45
CHAPTER 3 - CORRUPTION STRATEGIES: Making sense of the evidence 47
3.1 MANIPULATION of procurement and operaonal processes 47
Beang bureaucracy or creang opportunies for corrupon? 47
Qualicaon and pre-qualicaon 47
The tender process – specicaon, evaluaon and adjudicaon 48
The panel strategy 48
The emergency strategy 49
The Regulaon 32 ‘piggy-backing’ strategy 50
The direcves strategy – give orders then blame the ocials, or the President! 50
The turnkey strategy 51
The ongoing challenge of managing construcon contracts 52
3.2 INFLUENCING THE POLICY AND REGULATORY FRAMEWORK 52
Regional bulk infrastructure grant - creang opportunies for corrupon? 52
Local economic opportunies or protecon rackets? 53
Water projects –a pipeline for polical funding? 54
3.3 TAKING CONTROL OF INSTITUTIONS 56
Instuons – weak or deliberately weakened? 56
Weakening oversight mechanisms 56
Board membership – a duty or a privilege? 57
The broader challenges of instuonal capture 58
STRATEGIES FOR CORRUPTION – A STRUCTURED SUMMARY 59
CHAPTER 4 – WHAT IS TO BE DONE? Confronng two ‘wicked problems’ 63
The context for acon 63
Acons to date 65
Learn Lessons 66
Eecve operaonal management systems 66
The threat of consequences 66
Acon by governance structures 67
Governance arrangements that constrain centralised powers 67
Pressure from external instuons 67
CHAPTER 5 – RECOMMENDATIONS 69
CHAPTER 5 cont. – CONCLUSIONS 75
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ABBREVIATIONS
African Naonal Congress ANC
Airports Company of South Africa ACSA
Auditor-General of South Africa (the instuon) AGSA
Auditor-general (the individual) AG
Black Economic Empowerment BEE
Chief execuve ocer CEO
Chief nancial ocer CFO
Department of Public Service and Administraon DPSA
Department of Water and Sanitaon 1 DWS
Deputy director-general DDG
Director-general DG
Disaster Management Act DMA
Energy & Water Sector Educaon Training Authority EWSETA
Enterprise Outsourcing Holdings EOH
Informaon and communicaons technology ICT
KwaZulu-Natal KZN
Lesotho Highlands Water Project LHWP
Member of the Execuve Council MEC
Mpumalanga Economic Growth Agency MEGA
Naonal Development Plan NDP
Non-governmental organisaon NGO
Public Finance Management Act PFMA
Regional bulk infrastructure grant RBIG
Sector Educaon Training Authority SETA
Special Invesgang Unit SIU
Standing commiee on public accounts SCOPA
Strategic Water Partners Network SWPN
Stascs South Africa Stats SA
Trans-Caledon Tunnel Authority TCTA
1 The Department of Water and Sanitaon has undergone several name changes in the past 25 years. It start-
ed o in 1994 as the Department of Water Aairs and Forestry, changed to the Department of Water and Environmen-
tal Aairs in 2009, and has been the Department of Water and Sanitaon since 2014. The ministerial tles have also
changed accordingly, from Minister of Water Aairs and Forestry, to Minister of Water and Environmental Aairs, then
Minister of Human Selements, Water and Sanitaon. In this report ‘minister’ is understood to be ‘minister of water
and sanitaon’.
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ABBREVIATIONS
African Naonal Congress ANC
Airports Company of South Africa ACSA
Auditor-General of South Africa (the instuon) AGSA
Auditor-general (the individual) AG
Black Economic Empowerment BEE
Chief execuve ocer CEO
Chief nancial ocer CFO
Department of Public Service and Administraon DPSA
Department of Water and Sanitaon 1 DWS
Deputy director-general DDG
Director-general DG
Disaster Management Act DMA
Energy & Water Sector Educaon Training Authority EWSETA
Enterprise Outsourcing Holdings EOH
Informaon and communicaons technology ICT
KwaZulu-Natal KZN
Lesotho Highlands Water Project LHWP
Member of the Execuve Council MEC
Mpumalanga Economic Growth Agency MEGA
Naonal Development Plan NDP
Non-governmental organisaon NGO
Public Finance Management Act PFMA
Regional bulk infrastructure grant RBIGm
Sector Educaon Training Authority SETA
Southern African Development Community SADC
Special Invesgang Unit SIU
Standing commiee on public accounts SCOPA
Strategic Water Partners Network SWPN
Stascs South Africa Stats SA
Trans-Caledon Tunnel Authority TCTA
1 The Department of Water and Sanitaon has undergone several name changes in the past 25 years. It started o in 1994 as
the Department of Water Aairs and Forestry, changed to the Department of Water and Environmental Aairs in 2009, and has been the
Department of Water and Sanitaon since 2014. The ministerial tles have also changed accordingly, from Minister of Water Aairs and
Forestry, to Minister of Water and Environmental Aairs, then Minister of Human Selements, Water and Sanitaon. In this report ‘minister’ is
understood to be ‘minister of water and sanitaon’.
Communal tap in Soweto
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SUMMARY
Corruption in South Africa’s water sector, its consequences and a way forward
Background
South Africa faces signicant water challenges; water is oen not available where and when it is
needed, or of the quality needed, due to unpredictable rainfall, limited infrastructure, the misuse
of nancial resources, and poor management – aggravated by corrupon. The impact of corrupon
in the water sector is measured in dry taps, lost jobs and polluted rivers; many, parcularly young
children, old people, and those with compromised immune systems, have become ill from drinking
unsafe water or their homes, and toilets cannot be kept hygienic.
Corrupon in the water sector has resulted in deaths.
This corrupon extends from taps in rural villages to the systems that supply South Africa’s economic
heartland. Village taps have run dry so that councillors and their friends could get contracts to truck
water. Construcon of a dam to provide water to Gauteng has been delayed by years, in part because
a minister sought to change procurement rules to benet her friends. In the Western Cape, the
raising of the Clanwilliam Dam, which would create thousands of new farming jobs, has been delayed
for similar reasons.
Companies have paid bribes to get business. Some companies have promoted unnecessary projects
and claimed payment for work done badly or not at all, oen colluding with ocials who oversee
their work. Others have monopolised specialist areas of work to grossly over-charge for their
services. Individual households are involved through unauthorised, unmetered water connecons,
oen made by the same plumbers who maintain the supply systems, using material from their
workplaces.
These problems are aggravated by a failure to appoint competent people to do the jobs required
and ocials being pressurised by policians and seniors to do the wrong thing – risking dismissal or
worse if they don’t comply.
Corrupon drivers and strategies
The report analyses a range of corrupon strategies including:
• Manipulaon of procurement and operaonal processes;
• Inuencing policy and regulatory decisions; and
• Taking control of the decision-making sites of key instuons.
This analysis, combined with an understanding of the drivers of corrupon, informs the
recommendaons made. Corrupon in the water sector is systemic; the formal rules have been
superseded by informal rules that bypass or distort formal processes.1 The soluon to this is not
simply strengthening the formal rules. If the underlying driver is polical – for example, securing
polical party funding or securing polical power - which appears to be the case in some instances,
strategies to address it must be dierent from where the main driver is personal nancial gain.2
What is being done?
The combined eorts of whistle-blowers, invesgave journalists, the Auditor-General of South
Africa (AGSA) and the Special Invesgang Unit (SIU) have begun to address many of the issues
raised in the report. However, although some ocials have resigned and others face internal
disciplinary acon, there have been few serious consequences. This raises quesons about the
eecveness of these acons.
1 Helping countries combat corrupon: the role of the World Bank. 1997
2 Helping countries combat corrupon: the role of the World Bank. 1997
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RECOMMENDATIONS
Designate the water sector as an ‘island of integrity’
The huge socio-economic impacts of corrupon in the water sector provide strong grounds for designang
it as an island of integrity.
3
South Africans cannot aord the burden of corrupon in a sector which is a vital
determinant of health and life (drinking water), dignity (sanitaon) and economic prosperity.
It will take combined work from government and civil society to achieve this. One useful model would be
the establishment of an an-corrupon forum such as the An-Corrupon Health Forum. This forum, led
by the SIU, brings together key stakeholders including law enforcement agencies, relevant government
departments and agencies, representaves of the private sector, regulators and civil sector organisaons
acve in healthcare and in combang corrupon. Reports of corrupon and gross irregularies are
submied to the forum and allocated to the agency best placed to address them. The involvement of the
AGSA and other Chapter 9 instuons would further strengthen this.
Ending impunity – inslling a culture of consequences
Corrupon in the water sector will not end if agrant abuses go unpunished. A culture must be
established in which misconduct has consequences. This is the responsibility of the relevant water sector
instuons, the AGSA and the broad family of law enforcement authories, including the SIU.
Rampant irregularity in the management of public resources should be regarded as red ags for
corrupon. Furthermore, given the ubiquitous presence of polical appointees in so many alleged
instances of grand corrupon, the likelihood of polical corrupon should always be considered by
the invesgave authories. Indeed, the authories could do well to open invesgaons into all large
procurement contracts concluded during the ministerial tenure of Nomvula Mokonyane.
No honest instuons without honest and ethical people
There are two important requirements for the water sector to become an island of integrity. Ethical
leaders must ensure that appointments to organisaons reinforce these values and processes must be in
place to remove those who break the rules for corrupt purposes.
Consideraon should be given to the involvement of external agencies such as the Public Service
Commission in panels responsible for appointment and discipline.
The appointment of the boards of the public agencies in the water sector should be made in consultaon
with panels constuted to develop and ensure the adherence to merit-based criteria in lling these
important posions.
Procurement
The 2012 Naonal Development Plan highlights the importance of creang a transparent, responsive and
accountable public service. Some organs of state already make substanal amounts of procurement data
public, although more could be done. At present the primary corrupon challenge is the systemic capture
of parts of the state apparatus and disregard for procedures. Detailed reform of procurement systems will
not be appropriate unl greater control is gained over public nancial management.
Once this has been achieved, there are many systems that have been trialled elsewhere that could
strengthen the sector, including a variety of open contracng models which seek to mobilise parcipaon
from the private sector and civil society to achieve greater accountability in public procurement.4,5 Open
contracng recognises that greater transparency from government is insucient – accountability requires
that the private sector compete fairly and that civil society monitor and analyse the public procurement
process. Methods used include integrity pacts, e-procurement, data standards, and red-ag monitoring.
Polical appointees, such as the minister and board members of public agencies, should not involve
themselves in procurement and appointment decisions and where they do so, it should be treated as a
red ag for corrupon.
3 The impact of ‘islands of integrity’. hps://knowledgehub.transparency.org/helpdesk/the-impact-of-islands-of-integrity
4 See, for example, hps://www.open-contracng.org/
5 Opportunies for Open Contracng in public sector procurement: a review of legislaon. hps://www.researchgate.net/
publicaon/325765499_Opportunies_for_Open_Contracng_in_public_sector_procurement_a_review_of_legislaon
1. 9
Environmental factors that must be addressed
The roots of corrupon in the water sector are located in the wider society. Corrupon will not
successfully be combated unless these are also addressed.
Preferenal procurement
All forms of preferenal procurement, whether for local employment, industrial development or black
economic empowerment (BEE) introduce complexies into the process that can open opportunies for
corrupon.
The social benets of BEE jusfy the connuaon, even intensicaon, of the programme. However,
the operaon of elaborate regulatory frameworks such as BEE should be closely policed, parcularly
at key decision-making points. The savings in reduced instances of corrupon would pay for increased
expenditure on close scruny of the applicaon of BEE transacons. It would also enhance the credibility
of BEE as well as of preferences for the local sourcing of goods and services as well as local employment.
Regulaon of polical pares
The funding of polical pares oers obvious opportunies for extending the inuence of money over
polics. This resulted in the Polical Party Funding Act being passed in 2019.
However, recent controversies foreground important money/polics relaonships that are not covered
by an Act conned to polical party funding, such as the funding of internal polical party leadership
contests. This points to the need for general regulaon of polical pares and not only regulaon of
party funding.
Simultaneous responsibility for managing a large party programme that demands signicant funding and
execuve responsibility for a government department that has a large procurement budget supports an
inference that state responsibilies are being abused to support party responsibilies.
This supports our recommendaon that ministers be prohibited from parcipaon in procurement
decisions. Further consideraon may be given to regulang the role of party oce bearers in the
management of state assets.
Educate the private sector
Too oen, private business is seen as the vicm of corrupon: bribes are paid and tender awards
accepted with the excuse that such pracces are necessary to get work. This atude must be
challenged. Private sector bidders that enter into irregular contracts are breaking the law and placing
their businesses at risk. Companies have a legal duty to ensure that correct procedures have been
followed in the award of public contracts. They should be appropriately penalised when they don’t.
Support civil society
The work of the media and wider civil society in uncovering corrupt acvies, publicising them and
pursuing them unl remedial acon is taken, must be recognised, emphasised and supported.
The right of cizens and civil society organisaons to access informaon about public management
processes, must be recognised and respected, including informaon on procurement processes and
regulatory decision-making. This will enable them to concentrate on the analysis of informaon and
engagement with instuons rather than on court bales to obtain informaon.
The water sector already has extensive linkages with a variety of civil society organisaons and these must
be supported. They have important operaonal insights that may not be available through government
structures which make them valuable allies.
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CONCLUSIONS
Corrupon in the water sector must be tackled: water is too important to allow its management to be
undermined.
Much of the corrupon is driven by wider polical and economic challenges. Unless these are also
addressed, it is unlikely that eorts to improve and enforce procedures and transparency will be
enough to change the situaon. A parcular focus is needed on the queson of polical funding.
The social and economic impacts of corrupon in the water sector must connue to be highlighted as
part of broader an-corrupon campaigns. The goal should be to mobilise public opinion to protect
society from water sector corrupon.
Ending corrupon will not solve all the country’s water problems, but an eecve campaign to wash
corrupon out of the water sector could create the environment in which larger water problems can be
tackled. It could ensure that water security for all becomes, once again, the primary goal of the water
sector. And, in doing this, the water sector could provide guidance and inspiraon for the rest of the
naon.
1. 11
CHAPTER 1
Introducon
1. 12
INTRODUCTION
South Africa was seen as a global leader in water resource management and the
provision of water services.
Not long ago, democrac South Africa was seen as a global leader in the management of water
resources and the provision of water services. It had achieved the 2015 Millennium Development
Goal for domesc water supply; through its free basic water policy it had given praccal eect to
the Human Right to Water, and it had given legal protecon to environmental water ows. In 2002,
it led the campaign to set a global goal for sanitaon provision that is now included in the UN’s
Sustainable Development Goals.
Since then the performance of South Africa’s water sector has declined signicantly.
• The reliability of water supply services is falling according to ocial data;
• The resilience of services to problems such as drought has decreased. While Cape Town’s
temporary water restricons gained worldwide publicity, regular supply failures are normal
for millions of people around the country;
• Payment for water is falling and, as a result, municipal debt is increasing, undermining
service provision in many localies where there is simply not enough money for operaon
and maintenance;
• Polluon of rivers due to failed municipal wastewater management and poorly regulated
mining operaons is widespread and growing;
• In 2018 the Auditor-General and Parliament’s Standing Commiee on Public Accounts
reported that the management of the naonal Department of Water had collapsed, with
billions of rand of irregular expenditure, huge debts and failed projects.
Many of these problems have been aributed to corrupon. This report seeks to document some
cases of corrupon in the water sector, to understand its impact and to consider how it can be
controlled so that people, their livelihoods and their environment are protected. To do this, it is
rst necessary to be clear about what we mean by corrupon and to recognise the dierent forms
that it can take.
Corrupon is the abuse of public resources or public power for personal gain by anyone at
any level of government or in business. It exists in all countries, the only dierence being
a maer of degree. But how do those responsible benet from it? Who loses and who else
gains? Those quesons are more dicult to answer.
Corrupon is oen linked to the unproducve accumulaon of personal wealth. And,
if we measure the health of a society by its nancial wealth, then the conclusion of the
Internaonal Monetary Fund is important: “systemic corrupon has a parcularly pernicious
eect on economic performance”.
But in complex sociees, not everyone benets from economic growth. Many indeed feel
marginalised as some people become beer o while they are le behind. Their resentment
is helping to drive populist polical movements around the world. Policians recognise
and respond to this. They promise to do what is necessary to provide jobs and services to a
community, in exchange for votes.
Is this reected in the kind of corrupon that is found in South Africa’s water sector? More
precisely how does corrupon impact on the water security of South Africans and their
society more broadly?
This report seeks to present a systemac analysis of corrupon in the water sector and the impact
that it has had, based on specic examples. The analysis shows that the water security of South
African society, “the reliable supply of an adequate quality and quanty of water to meet social
The corruption
that contributes
to the failure
to achieve and
sustain water
security must
be addressed.
It cannot be
allowed to
destroy hopes,
health and lives.
1. 13
and economic needs while protecng the environment”,1 depends on eecve governance and
management. When and where this fails, poor people are oen aected rst and hardest, but
eventually the whole society carries the cost.
The corrupon that is contribung to South Africa’s failure to achieve and sustain water security
must be addressed. It cannot be allowed to destroy peoples’ hopes, health and even their lives.
THE WORLD OF WATER - a complicated business
We distinguish between water as a natural resource (underground and river water) and the
provision of water supply and sanitation services (the water in the pipes)
What do we mean by the “water sector”? In this report, a disncon is made between water as a
natural resource (the water in the rivers and underground) and the provision of water supply and
sanitaon services (the water in the pipes).
Many public organisaons are involved in protecng, managing and using the country’s water
resources and providing water supply and sanitaon services. These range from the naonal
Department of Water and Sanitaon (currently part of the Ministry of Human Selements,
Water and Sanitaon) to local municipalies. Naonal government is responsible for much of the
management of water in rivers, wetlands and lakes – including those shared with other countries.
Municipalies are responsible for providing water services, working within a framework of
regulaons and standards set by naonal government.
The work of all these organisaons helps to ensure that water ows through natural systems and
human-made infrastructures to meet people’s needs. And they need to work together, eecvely.
If one water management funcon fails - to protect the resource from polluon, for instance -
communies and enterprises may be harmed. So this report considers the full scope of the water.
sector because failures in one organisaon oen impact on others – and corrupon is oen the
cause of such failures.
The complex nature of water management presents many opportunies for corrupon. Decisions
have to be taken about the allocaon of available water resources between dierent users
and uses. Acons need to be taken against polluters. The construcon and operaon of large
1 Grey D, Sado CW (2007) Sink or swim? Water security for growth and development. Water Policy 9 (6):545–571
1. 14
infrastructures – dams, canals and pipelines – involves specialised technical services and
complicated procurement procedures.
The provision of water supply and sanitaon services is a separate but related acvity It involves
taking water from a reliable source, treang it to ensure it is safe to use, and distribung
it to the households, businesses and social instuons that need it – all of which involves
infrastructure. Once it has been used, wastewater has to be collected and treated before it is
released back into the environment.
All water management acvies require funding. This may come from government’s tax revenue
or payments by users for the services they receive. And, because just about everyone in society
depends on the sustainable management of the resource and services, water management
instuons are usually part of government or related public management systems.
Over many decades, South Africa has developed both the instuons and the infrastructure
systems needed to provide naonal water security. When these systems work, they are almost
invisible but, when they fail, it can be disastrous. This was shown by the recent crisis situaon in
Cape Town and connues to be demonstrated by the ongoing water services challenges faced in
many small towns and rural areas across the country. In many cases, corrupon has contributed
directly to these failures.
WHAT IS CORRUPTION – and why does it maer in water and sanitaon?
In South Africa’s water sector, corruption has seriously undermined the water security of
households, communities and cities
Corrupon, the abuse of public resources or power for personal gain, is not just about money.
The gains of the perpetrators may include access to power, social status or favours such as
preferenal treatment for family and friends. And the abuse may involve acon or inacon, as
when a factory’s polluon is ignored by the regulator.
This report focuses on the drivers and consequences of corrupon – the public losses that result
from the personal gains. There are far too many examples in South Africa’s water sector where
corrupon has seriously undermined the water security of households, communies and cies.
The most obvious impacts have occurred in poor communies where service provision is
already weakest. Where funds are scarce, any corrupon that diverts money from public
purposes to private pockets directly reduces the provision and quality of services. In parcular,
where needs are great and money scarce, corrupon diverts funds that could have provided
services to under-served users (see The Giyani Water Project).
Although transporng water by road is vastly more expensive than providing a piped supply, it
has become a lucrave business for private tanker operators. Shockingly, there have been cases
where municipal ocials worked with tanker owners, interfering with the public water supply
to create business opportunies for themselves (see How water tankers cause taps to run dry).
And where tanker supplies are provided by the municipality itself, it is common for drivers to
demand payment for the water they are supposed to make available free of charge – and oen
to sell it to more well-o households at the expense of the poor.
Bad public policy decisions, made for the wrong (corrupt) reason, can have signicant negave
impacts. This is evident, for example, where large and expensive capital projects are promoted
instead of smaller, more cost-eecve alternaves (see The Giyani Water Project and Mangaung
and the Gariep pipeline). At the least, this puts up the cost of services to users and to the state,
not only in the construcon, but in the ongoing operaon and maintenance costs.
But once a culture of corrupon has spread, it has more insidious, and arguably more corrosive,
eects. Eecve management is an obstacle to corrupon. So competent and honest ocials
1. 15
are oen challenged – and threatened and dismissed – if their recommendaons and acons do not
suit those of their corrupt superiors or indeed of their subordinates (see IT contracts are a perennial
problem).
To add to the confusion, acon against honest ocials is oen based on their alleged
contravenon of the rules and regulaons that are supposed to protect the public from
corrupon. But there is ample evidence that these provisions are used to inmidate
or remove ocials who are inconveniently competent and honest. This clears the path
for procurement processes to be ignored, for contracts to be awarded to incompetent
consultants and contractors, for licences to be issued inappropriately, and for regulatory
oences to be ignored (see Mining licences, polluon and public vs private interests).
While some businesses are willing partners in corrupon (see Corporate corrupon
creaon), many others are also its vicms. Interference in procurement and regulatory
processes and shortage of funds delays projects, which impacts on the water sector’s
wider community of partners and stakeholders such as construcon companies and
their sta September 2019, Stats SA reported that 30 000 jobs had been lost in the
construcon sector over the previous year. And many of the water sector’s leading
construcon and consulng companies have been sold to foreign owners or just closed
down. Corrupon played a part in the loss of these jobs.
One specialist contractor EsorFranki (who had bid for the Giyani project) stated in the
company’s 2018 annual report2 that:
“Alongside contract delays, non-awards and failure to implement stated policy, we have also
experienced an increase in unjust tender awards which are then challenged in court. This lengthy
legal and court process not only delays the contract commencement but also incurs legal fees
impacng results.”
Aside from the delays and addional costs, these problems led the rm to retrench almost 1 000
sta, 40% of its workforce. More would have been jobless if the company had not had other work
outside South Africa.
This was a company that made a real eort to stay in the sector. Others have just given up. Aveng,
one of South Africa’s top ve construcon companies, recently sold its water business and now
intends to work on other projects, mainly outside South Africa.
Leading consulng engineering rms, unable to maintain an adequate workow, have sold out to
internaonal companies or just gone out of business. They include Ninham Shand, which developed
the concept for the world famous Lesotho Highlands Project which sustains the people and economy
of Gauteng and surrounding provinces. With these rms goes the knowhow built up over many years
as well as vital opportunies to train the new generaon of professionals who will be needed to deal
with increasingly complex future challenges to our water security.
In the meanme, the safety and reliability of water supply, parcularly in poor rural communies, is
declining dramacally, according to household surveys undertaken by Stats SA. The DWS reported
that in 2016 in the country’s poorest rural districts, only 37% of households had a reliable supply,
despite the billions of rand that has been spent on infrastructure. The cases outlined below show how
corrupon and mismanagement more generally have undermined South Africa’s water security and
damaged countless lives.
2 hp://www.esor.co.za/sites/default/les/Annual%20Reports/Esor%20IAR%202018%20%28singles%29.pdf
Competent and
honest ocials
are challenged –
and threatened
and dismissed – if
their actions and
recommendations
are deemed
unsuitable for
corrupt purposes
1. 16
CHAPTER 2
Cases and their consequences
1. 17
CASES – AND THEIR CONSEQUENCES
The problems are systemic, involving people at all levels, from plumbers and tanker
drivers to mayors and ministers. Many private businesses beneted richly from
corruption and in some cases, actively organised and encouraged it.
This report was prompted by a series of invesgaons published in the City Press about corrupon
in the water sector. These revealed serious irregularies involving huge sums of money in DWS
projects in Giyani, Limpopo. Concerns grew when reports emerged about thousands of unpaid
and unemployed trainees in the department’s mul-billion-rand ‘War on Leaks’ project. Then it
emerged that nearly a billion rand had been commied to a computer project that wasn’t needed.
These cases, it is alleged, all involved former water and sanitaon minister Nomvula Mokonyane
and her associates.
However, the problems of corrupon in the water sector go well beyond just a few individuals. They
are clearly systemic, involving many people at all levels, from plumbers and tanker drivers to mayors
and ministers. Many private businesses joined in too, beneng richly from corrupon and in some
cases, acvely organising and encouraging it.
A wide variety of cases have been idened across many areas of acvity. They range from
corrupon in the supply of water by road tankers and the provision of temporary toilets, to the
systemac loong of large scale construcon contracts intended to develop water resources and
keep the country water secure. Corrupon means that mining’s impact on water has not been
properly regulated. And the fourth industrial revoluon also gures large with massive corrupon
in huge and unnecessary IT projects.
The strategies used for this loong have included the capture of enre water sector organisaons.
But every facet of management has been exploited, including policy making, procurement, and
operaonal and contract administraon. Collusive business pracces have helped to create an
environment for corrupon. And, even at the level of the household tap, corrupt ocials have found
ways to exploit people’s basic needs for personal prot.
The cases presented have been selected to illustrate parcular generic areas of focus. Also included
are a few cases where aempts at corrupon failed - these show that corrupon can be curbed and
provide some ideas about how to reduce, if not prevent, it.
1. 18
2.1 THE MOKONYANE PORTFOLIO
We start with cases that emerged during the tenure of Nomvula Mokonyane as minister of
water and sanitaon (2014 – 2018). Corrupon was already a problem in the department before
Mokonyane’s arrival, with external invesgaons underway since 2012. But at that stage, the scale
was sll relavely small – the Special Invesgang Unit (SIU) reported 28 criminal cases involving
R50-million.3 By the me Mokonyane le, irregular expenditure was well over R4-billion with new
cases sll being uncovered and DWS eecvely bankrupt.
A paern appears to have emerged of ministerial intervenon to favour certain businesses
and programmes and to intervene in the stang of the DWS and water sector instuons to
get her way. The events between 2014 and 2018 provide what appears to be a textbook case
of the pervasive impacts of high-level instuonal corrupon and the mismanagement that
is invariably associated with it – or vice versa. They oer a cauonary tale about what can
happen if polical leaders have the wrong objecves and incenves.
Sweetwaters, Kanana Park Extension 6 – a prologue
Nomvula Mokonyane was involved with the water sector long before she became minister of
water and sanitaon. While a Member of the Execuve Council (MEC) for housing in Gauteng in
2005, she tried to have the Sebokeng wastewater plant south of Johannesburg expanded. When
she le the naonal porolio of water and sanitaon in 2018, it was sll unnished (see below).
But another legacy, relevant to the focus of this report, was the Gauteng project to provide water
and sewage infrastructure in Kanana, a suburb in the same area. The project became controversial
aer the board of directors of the company that was contracted to build it wrote to the South
African president, asking for the contract to be cancelled.
It was reported in the press that “LTE provides consultaon for engineering companies, but was
strangely awarded a tender for the construcon of water and sewer reculaon of 2 689 stands in
Sweetwaters’ Kanana Park Extension 6, even though it does not have the capacity to do the work.
The board of directors were not aware they had landed the contract, but the leer of appointment
was handed to its chief execuve.” 4
According to the report, “Majola [CEO of LTE] appointed Khato Civils, a construcon company, to
do the work as LTE did not have the capacity to execute the project. The contract had apparently
been secured by Majola. Pillay [LTE chairperson] said Majola was mandated to secure contracts on
behalf of the company. However, Majola had to inform the board and ensure that all the proper
procedures were followed, because it could put the company at risk.”
Quite what went on at LTE remains uncertain. Pillay resigned as chairperson of the company that
he had established aer an armed robbery at his house shortly aer his leer to the president.5 But
LTE, Khato and their associates connued to cast a shadow over the water sector. The next me they
appeared together in the public domain was in 2016, when then president Jacob Zuma asked the
SIU to invesgate two maers, LTE’s Sweetwaters contract and the increasingly controversial project
to supply water to the community of Giyani.
The Giyani Water Project- and the problems of BIG infrastructure
How R502m grew to R2.7bn in a year.6 That was the headline of the April 2016 City Press report
which revealed that Zuma had ordered the SIU to probe the award of contracts for emergency
works to supply water to Giyani. Two years later, with the department in a nancial crisis, the
Auditor-General’s oce told Parliament that there had been R2.2-billion of irregular expenditure on
the project because contracts had been awarded irregularly. Meanwhile, DWS said that it would cost
R10-billion to complete the project and bring water to all the people in this small town and its 90+
surrounding villages.
3 SIU presentaon to the joint sing of the Porolio Commiee on Water and Sanitaon and the Standing Commiee on Public
Accounts (SCOPA), 27 March 2018
4 Take back R200m tender! hps://www.iol.co.za/news/polics/take-back-r200m-tender-1789219
5 Water wars expose a roen system bleeding cash hps://mg.co.za/arcle/2015-02-12-water-wars-expose-a-roen-system-
bleeding-cash/
6 How R502m grew to R2.7bn in a year hps://city-press.news24.com/News/how-r502m-grew-to-r27bn-in-a-year-20160423
By the time
Mokonyane
left, irregular
expenditure was
well over R4-
billion
1. 19
MP Themba Godi, chairperson of Parliament’s standing commiee on public accounts (SCOPA),
called for a full parliamentary inquiry and for criminal charges to be opened, saying that the
Department of Water and Sanitaon had suered a complete collapse under Mokonyane. But the
case shows how one small incident of corrupon before she arrived on the scene escalated into a
monster once an enabling environment had been created.7
Giyani was established in 1960 to be the ‘capital’ of the Gazankulu ‘homeland’. Many of the
municipality’s 250 000 people are from families that were forcibly moved to this arid area, with
limited agricultural potenal, as part of the apartheid government’s separate development policy.
Almost half of working-age people are unemployed; most have an income of less than R800 per
month. In 2011 almost 70% were reported to be indigent.
Their household water came from boreholes with limited capacity, and a small local dam.
More water is available in the Nandoni Dam, 45km away, but whether this is needed has been
quesoned. In 2011, the Mopani District Municipality, responsible for the region, reported
that Giyani had enough water for basic services but that it was not yet piped to all villages. It
complained of vandalism, unwillingness to pay for water and noted that
“…. Over-usage of water is generally observed in most of the areas, amounng to more
than 150 litres per person per day in both towns and villages.” 8
But when a drought in 2009 aggravated supply challenges, DWS took the opportunity to promote
a so-called emergency scheme to bring water from the Nandoni Dam to the local Giyani water
works at a cost of R247-million. Addional work was sll needed to take the water to local village
reservoirs from which the municipality was to pipe it to the households.9 In the meanme,
another emergency project was started to x local boreholes.
The DWS used a regional bulk infrastructure grant (a budget over which it had eecve control) to
fund the project and appointed the Mopani Municipality to implement it. In 2010, local company
Tlong Re Yeng was appointed to build the Nandoni pipeline. The award was contested by an
unsuccessful bidder since the winning company was only created aer it had secured the tender
and had no employees, assets or income. In 2012, a judge ordered that the contract be cancelled,
describing it as “a fraud on the municipality” but, aer a succession of appeals, the decision was
only conrmed in 2014. Since some work had already been done, the Supreme Court of Appeal
ordered DWS “to take such steps as may be necessary to determine the extent of the works
necessary to perform remedial work and to complete the construcon of the pipeline and the
other works as contemplated in the aforesaid tender, for purposes of publishing a tender for the
said remedial work and the compleon of the works”.10
Instead, newly appointed minister Mokonyane directed Lepelle Water Board to act as her
implemenng agent. Contrary to the court order which required a tender for the remediaon and
compleon of the works – although she told Parliament that she was complying with it11 – she
instructed Lepelle to appoint consulng rm LTE, with whom she had a previous relaonship,
which was done without any tender process12 13. LTE in turn appointed two associated companies,
Khato Civils and South Zambezi to build the project14
As quesons were raised about why there was sll no water in Giyani’s villages, DWS, Lepelle
and LTE began other intervenons, ‘rehabilitang’ boreholes, building ‘emergency reservoirs’,
reculaon systems and new water treatment facilies – most of which was done without proper
technical planning, budgeng or procurement processes.
7 hps://www.news24.com/SouthAfrica/News/mokonyane-lambasted-for-collapsing-water-dept-scopa-decries-reshuing-and-
calls-for-charges-20180227
8 hp://www.mopani.gov.za/docs/idp/nal%20Mopani%202018%202019%20Versions%203.pdf
9 hp://www.mopani.gov.za/docs/idp/nal%20Mopani%202018%202019%20Versions%203.pdf
10 Esorfranki Pipelines v Mopani District Municipality (40/13) [2014] ZASCA 21 hp://www.saii.org.za/za/cases/ZASCA/2014/21.pdf
11 Minister on Media Reports on DWS bankruptcy/ Kgetleng, Water and Sanitaon Commiee, 3 March 2017 hps://pmg.org.za/
commiee-meeng/24078/
12 hps://pmg.org.za/commiee-meeng/27686/
13 hps://briey.co.za/10033-mokonyane-pushed-r27bn-deal-a-construcon-rm.html
14 hps://city-press.news24.com/News/siu-sues-giyani-water-contractors-for-r22bn-20181127
1. 20
By the me the Auditor-General of South Africa (AGSA) invesgated, R2.5-billion had already
been spent, projected to increase to R2.8-billion and beyond. The Auditor-General found that
the contractors had been irregularly appointed, and that many of their claims were clearly false.
When it transpired that the DWS did not have the funds to pay them, construcon ground to a
halt. Despite the vast expense, the main pipeline had sll not been completed in 2019. Almost
as an aside, the AGSA noted that there was, anyway, no plan to fund its operaon.
The Giyani project illustrates some of the many ways in which corrupon works in the
water sector. The quesonable decision to build the Nandoni pipeline was facilitated
by a drought emergency – and by the fact that the DWS had a pot of funds to dip
into (see RBIG – creang a corrupon fund). Although no funding was provided to
operate the pipeline, the municipality was happy to have the infrastructure and, with
it, opportunies to appoint its own favoured rms.
Instead of correcng the municipality’s inial corrupon, as ordered by the judge,
the minister directed Lepelle Water to do the work. She allegedly took advice
from controversial lawyer Luvo Makasi, former chairperson of the Central Energy
Fund, to dodge direct responsibility for the irregular appointment of LTE.15 LTE in
turn exploited the opportunity to grossly overcharge for the work done by their
associates.16 While Mokonyane was legally entled to give direcves to water
boards, her department should have been responsible for paying the costs incurred.
So a small incident of tender fraud triggered a frenzy of mismanagement and major corrupon
involving billions of rand. Both DWS and Lepelle Water have been deeply damaged, weakening
their ability to discharge their funcons. Local municipalies have been le with a dysfunconal
system that they cannot aord to operate. Giyani’s households are lile beer o than they
were before. One unanswered queson is where all the money went.
15 Nomvula Mokonyane’s ‘Ben 10’ calls the shots hps://city-press.news24.com/News/nomvula-mokonyanes-ben-10-calls-the-
shots-20181213
16 hps://pmg.org.za/commiee-meeng/27686/
Many projects
were done without
proper technical
planning, budgeting
or procurement
processes
Nandoni pipeline construcon
1. 21
SAP –The perennial problem of ICT contracts
The Giyani case is complicated. The case of DWS’s SAP contract, on the other hand, is clear: a
decision was taken to spend a huge amount of money buying an IT system for organisaons that
did not need it, without asking them rst.
Once again, the details were rst made public by the City Press which reported, in April 2018 that
under former minister Mokonyane, the DWS had concluded a ve-year contract worth R950-
million for soware services from the German SAP company. This was despite Mpho Mofokeng,
one of the DWS’s two CFOs, warning in a leer to former director-general (DG) Margaret-Ann
Diedricks that:17
• The department had already acquired ‘unlimited’ SAP licences for R178-million in 2013
and didn’t need more;
• The department’s own ‘water trading enty’ which was supposed to use the SAP system
had not been consulted;
• The water boards that were supposed to use the system had not been consulted, even
though they were likely using dierent soware packages;
• Money to pay for the SAP licences was simply not available; and
• The procurement of the licences had not been planned for.
The City Press’s informaon came from an AGSA report, which the authors of this report have
seen, which included further detail about how the minister and certain ocials had simply
ignored the department’s and government’s own structures and procedures. On the basis of that
evidence, the AGSA had no diculty in concluding that the acquision was irregular.18
It was reported that when asked about the allegaons, the DWS spokesman said that “… the
acquision of SAP was approved by the execuve authority (Mokonyane) and was duly nalised
by the Accounng Ocer”.19
In September 2018, President Cyril Ramaphosa ordered the SIU to invesgate this transacon.
It was suggested that R35-million had been paid in kickbacks as part of the contract process. In
November, the SIU informed Parliament that it would iniate civil ligaon in the rst quarter of
2019 and report to the president by 31 March 2019.20
Reports suggest that acon has been taken to recover payments from SAP but there is no
informaon on acon taken against those responsible. This may be a complicated process
because SAP uses other organisaons to sell and implement its products. In another corrupon
case, it explained that it uses ‘sales partners’ and that, if they are the ‘eecve cause’ of SAP
gaining a contract, they would get 10% of the contract value. In the DWS case, the successful
bidder was EOH Mthombo, a unit that had been established to focus on public sector business,
about whom more below.
While, in this case, the ngers point directly at Mokonyane, it is not oen noted that she was
simply following the example of her predecessors, Buyelwa Sonjica and the late Edna Molewa.
When Molewa’s DG Maxwell Sirenya refused to authorise an IT contract that she wanted, he was
red. Sonjica had similarly dismissed DG Pam Yako over allegaons (most of which were rejected
by the tribunal that nally heard them when she appealed her dismissal), that she had irregularly
favoured a parcular IT company. The paern of abuse of specialised services such as IT is one
17 The big thirst hits Limpopo as R772m goes down the drain hps://www.news24.com/SouthAfrica/News/r772m-down-the-
drain-20180422
18 Report of the auditor-general to the joint commiee of inquiry into the funconing of the Department of Water and
Sanitaon: Challenges facing the water and sanitaon porolio. 23 March 2018. hps://www.corruponwatch.org.za/wp-content/
uploads/2020/02/180327AGSA-Challenges_Water_Sanitaon.pdf
19 Nomvula Mokonyane did not sign R1bn contract, says spokesperson. hps://www.iol.co.za/news/polics/nomvula-mokonyane-
did-not-sign-r1bn-contract-says-spokesperson-16934674
20 SIU invesgaons: progress report; Department of Water and Sanitaon challenges: Treasury brieng, with DWS Minister.
hps://pmg.org.za/commiee-meeng/27686/
1. 22
characterisc of corrupon in the water sector in which business has acvely facilitated
misconduct, as is discussed in more detail below.
Lesotho Highlands Water Project
Before informaon technology became such a money-spinner, construcon projects were
the tradional magnet for corrupon because they involve large amounts of money, are
complex and dicult to monitor, and because, since each one is dierent, they are dicult to
benchmark against each other in relaon to cost. The control of such projects has long been
a target for capture because it opens many opportunies for substanal procurement and
contract management abuses. So the various phases of the Lesotho Highlands Water Project
(LHWP), one of the largest construcon projects in Southern Africa, oer a further example of
persistent abuse of power for personal gain at the expense of the public interest.
The LHWP provides some of the water to over 15-million people in South Africa’s inland
economic hub. It diverts water that would ow into the Orange River in South Africa to
ow instead into the Vaal tributary, which passes just 50km from Johannesburg. Instead of
pumping the water 700km uphill, it ows down under gravity to where it is needed, halving
the cost of making water available.
While the project concept is simple, its scale is huge, costs are high and its management is
complex. The two countries co-operate in terms of a treaty which shares the savings from the
project between the two governments.
In the 1990s, the rst phase of the project provided
a textbook case of corrupon in large public sector
construcon projects. 21 22 More recently, it has provided
an insight into the way in which aempts to capture the
management structures and gain control over procurement
and contract management issues can disrupt and delay an
important public project and put a substanal part of South
Africa’s economy at risk.
One consequence of the corrupon in Phase 1A of the
LHWP is that substanal eorts were made to avoid further
corrupon in Phase 2, the construcon of the Polihali
Dam. However, as the minister now responsible from the
South African side, Mokonyane acvely sought to change
the procurement requirements for the project. These
arrangements had been established bilaterally by the two
governments, in consultaon with the World Bank and other
potenal funding agencies.
Mokonyane’s rst step was to replace the leader of South
Africa’s delegaon on the project with her own nominee.
She publicly stated that her aim was to ensure that the work would not go to “the usual
companies”, ignoring the fact that the design and supervision of the Lesotho infrastructure
was highly complex and required internaonal co-operaon between a number of leading
companies. At the same me, she allegedly worked with directors of LTE, her favoured
consulng company, to nd ways to change the project specicaons, to enable them to
parcipate in the re-design of the project.
As City Press reported at the me:23
“• In March 2015, Mokonyane’s director-general, Margaret-Ann Diedricks, demanded
that Dr Zodwa Dlamini – South Africa’s chief delegate to the water commission – halt
the project’s procurement processes, oering no reasons for this.
21 LL Thetsane and GH Penzhorn SC, Case Study: The Lesotho bribery prosecuons, presented at Conference on the Protecon
and Opmizaon of Public Funds - the Cooperaon between Naonal and Internaonal Authories, Rabat, May 14-16, 2007
22 Fiona Darroch (2003) The Lesotho corrupon trials — A case study, Commonwealth Law Bullen, 29:2, 901-975, DOI:
10.1080/03050718.2003.9986648
23 Nomvula Mokonyane’s Watergate. hps://city-press.news24.com/News/nomvulas-watergate-20160710
1. 23
• LTE boss Thulani Majola met with Lesotho ocials to demand tenders, freely dropping
Mokonyane’s name in the meengs.
• In October, Mokonyane removed Dlamini – who has 10 years of experience in water
mega-projects – from the project, oering no reasons for this. She was replaced by
Gauteng’s former MEC for infrastructure development Bheki Nkosi, who served under
Mokonyane when she was Gauteng premier, and worked alongside her in ANC provincial
structures.
• In April 2015, Maseru’s government removed Charles Putsoane, its most senior and
experienced ocial from the project, cing ‘incompetence and insubordinaon’.
• Dlamini and Putsoane were removed aer meeng with LTE Consulng and refusing to
give the company tenders without going through the formal process.”
Although Zodwa Dlamini was reinstated aer an intervenon by the Public Protector, she chose to
leave aer receiving a full payout for her outstanding contract. But the Public Protector’s report
conrmed that it was disagreement about procurement policy that led to her departure.
There were always going to be opportunies for South African businesses. Since the LHWP’s rst
phase, the procurement rules always required parcipaon from both countries. What they do
not allow is for ministers from either South Africa or Lesotho to decide who gets which job. And
this was what Mokonyane apparently wanted.
In 2018, the LHDA, the Basotho organisaon which leads construcon of Phase 2, organised road
shows in South Africa to brief local contractors on the many opportunies the project would oer.
Their spokesman concluded by warning his audience that they shouldn’t think that they could
get work by going to Maseru and buying expensive drinks for project sta. There was a formal
procurement process and they should follow it.
LHWP2 is back on track for now. However, even if procurement proceeds cleanly and smoothly,
Mokonyane’s intervenons have further delayed an already delayed project. The result is that the
region served by the Vaal system and Lesotho’s dams will be at risk of serious supply restricons
if there is a drought before 2026, the current opmisc project compleon date. Already, new
developments in major cies have been halted as a result. The current and potenal economic
impacts are signicant.
The War on Leaks ends in defeat
Because projects like the LHWP have been delayed, and because South Africa is a water scarce
country, it is vital that South Africa’s major cies reduce their water losses so that, given their
limited supplies, they can cope with growing demands. When, in 2018, young protesters
threatened burn public buildings and trash government oces, aenon was focused on the
expensive failure of DWS’s War on Leaks project.24
From 2015 to 2019, over R3-billion was spent on training 10 000 arsans and ‘water agents’,
supposedly to help reduce water losses. However, the War on Leaks has neither reduced water
losses nor created jobs. Mokonyane and her senior ocials ignored the country’s well-recognised
capabilies to implement eecve water loss control programmes. The approach taken instead
appears to have been guided by polical consideraons – oering temporary training jobs - rather
than reducing water losses, which is a formal priority for municipal managers.
Pipes that leak water are eecvely leaking money – the cost of the water, treatment chemicals and
energy for pumping. Further nancial leaks occur when water gets to users but is not accounted or
charged for. Reducing this non-revenue water cuts costs, delays the need for new (expensive) supply
investments and improves the quality of service to water users.
Policians understand this logic. So in 2009, then president Jacob Zuma made acon on water
leaks a naonal priority; in 2010, he set a target for the reducons to be achieved, echoed by the
2012 Naonal Development Plan (NDP). In 2013, Minister Edna Molewa announced a naonal
24 Follow up informaon to War on Leaks Trainees. hp://www.randwater.co.za/WarOnLeaks/Knowledge%20Hub/Follow%20
Up%20Informaon%20to%20the%20WOL%20Trainees.pdf
1. 24
Lesotho Highlands Water Project – Katse Dam
1. 25
campaign, supported by organised business’s Strategic Water Partners Network (SWPN). But
it was Nomvula Mokonyane who formally launched the War on Leaks shortly aer she was
appointed as minister of water and sanitaon in 2014.
Water loss reducon projects are about improving the
management of water systems. Properly run, they oen pay
for themselves through the savings they achieve - contractors
are typically paid the value of one or two year’s savings. This
was how the project was originally conceived by the DWS’s
technicians. But Mokonyane ignored technical guidance
and the advice of her SWPN partners and decided that her
programme would simply train 15 000 arsans to work
in municipalies to reduce water losses. At best, this was
unbelievably naïve. While water loss reducon programmes
need people on the ground, they have to be managed as part
of a planned and structured eort.
As with the Giyani Water Project, Mokonyane distributed DWS
funds to other agencies, bypassing nancial management
controls. Rand Water was directed to recruit and manage
the trainees – they employed nearly 100 people to run this
naon-wide programme. The cost of trainees’ spends and
administraon amounted to over R1.7-billion.
Meanwhile, the Energy & Water Sector Educaon Training
Authority (EWSETA), the ocial training authority for the
electricity and water sector, was asked to manage the
training. This was inially supposed to be for arsans25. But
it proved impossible to recruit and train so many people to
naonal standards and the Department of Higher Educaon
and Training decided that their Technical Vocaonal Educaon and Training colleges should
not parcipate. So “the EWSETA then re-directed their focus toward accreding private Skills
Development Providers for the War on Leaks programme”.
Overnight, the EWSETA became the second largest training authority in the country. In a murky
process, EWSETA appointed Boikgantsho Consulng and Events (BCEI), a small company with no
substanal track record in the eld, to manage the programme. It has not been explained how
BCEI procured the trainers and 89 training venues at a cost of almost R2-billion. Some of the
‘training instuons’ chosen did not even have chairs and desks for their trainees.
As the programme proceeded, it emerged that the municipalies where the trainees were
supposed to nd jobs had not been consulted. It was dicult even to place trainees for the
praccal experience that they needed to graduate. As one training expert commented: “a
placement programme that rst trains and then goes to look for host instuons will forever
bale to nd placements”.26
Challenges were now accumulang. In 2017, Rand Water suddenly received a “withdrawal
direcve” and was told that Mhlatuze Water, a small water board in northern KwaZulu-
Natal (KZN), would take over administraon of the 5 000 trainees in the third phase of the
programme. (The chairperson of Mhlatuze Water was the controversial Dudu Myeni, with
whom Mokonyane was working to land a bigger sh - see Mhlatuze-Mgeni merger rings alarm
bells). Rand Water resisted and in March 2018, informed Parliament that DWS must ensure a
proper handover to manage ongoing sta and contractual commitments.27 But Mhlatuze had
already awarded a R98-million contract to another lile-known training company; sensibly,
learning from Rand Water’s experience, the contract was subject to conrmaon of funding
from DWS.
25 EWSETA 2015/16 annual report. hps://ewseta.org.za/annual-reports/
26 WoL Evaluaon literature review, page 10
27 Rand Water Board & Sedibeng Water Board 2016/17 Annual Report, with Minister and Deputy Minister. hps://pmg.org.za/
commiee-meeng/25939/
Municipalies need to take a
systemac approach to reduce their
water losses. They must nd out
how much water they put into their
distribuon systems and where it
goes. Physical losses, through leakage
in the public distribuon system
can be reduced by nding and xing
individual leaks as well as by lowering
the pressure in the pipes. Distribuon
pipes may be replaced once the worst
zones have been idened.
Where water users are not registered
on administrave systems, just
regularising and metering their
connecons can signicantly reduce
water use. In the 60% of households
who do not pay for water, xing
leaking taps and toilets which oen
account for much of the water ‘used’,
further reduces physical water losses.
1. 26
Before this transfer could happen, the programme collapsed. The AGSA found that it had not
been budgeted for and that money was being diverted, illegally, from other DWS programmes.
DWS could not pay the trainees and Rand Water, already owed half a billion rand, refused to
advance any further funds. By 2018, DWS was eecvely bankrupt; at the end of 2019, it was
sll struggling to pay outstanding debt and restart essenal programmes.
Many quesons remain. Most of the trainees graduated as so-called water agents whose
qualicaons are not formally recognised, even aer they completed praccal placements.
Thulas Nxesi, minister of employment and labour, recently warned (at a Southern African
Clothing and Texle Workers’ Union conference in September 2019) that huge amounts of
funding were owing to private training providers with lile control on quality – was this
another example?28 The majority of trainees were ‘nominated’ by individual municipalies
rather than properly recruited and opposion pares claimed that this was to distribute
polical patronage.
There is now lile to show for the expenditure. Trainees received some spends and training,
albeit mostly of quesonable quality. EWSETA must sll explain how it spent R2-billion on
trainers and venues and how it assured the value of the qualicaons provided.
Over 20% of DWS’s annual budget of close on R16-billion (and a whole year’s worth of the non-
capital budget of around R3-billion) was diverted from its intended purposes. This severely
disrupted many crical regulatory acvies. Crically, revenue from water sales was not paid to
the state- owned Trans-Caledon Tunnel Authority (TCTA), which is responsible for meeng the
loan commitments on large infrastructure projects such as the Lesotho Highlands Water
Project. This ill-discipline threatened TCTA with nancial failure and could make it more dicult
for them to raise investment funds for future water projects.
Drop a block
In some of the poorer townships of Gauteng, 70% or more of water provided is lost. Throughout
the night, ow into those areas hardly reduces despite the fact that no one is actually using
water. It is being lost to leaks, parcularly in the households themselves rather than in the
street.
The War on Leaks trainees could usefully have been deployed to go house-to-house and do
basic plumbing repairs as part of a larger programme of water loss control. The municipalies
could have saved more than enough to pay for the costs of xing the leaks. But, because of
the failure to implement a coordinated programme, the trainees lost job opportunies, water
connues to ow to waste, and the municipalies connue to lose money.
One useful acvity in which some trainees were involved was the ‘dropping a block’
programme. This reduces the volume of water used for ushing toilets by pung a brick-sized
plasc block into their toilet cisterns. But why were the trainees used for this specic acvity?
It transpires that the DWS distributed just over a million plasc blocks at a cost of R161 424 000
– R161 each for a hollow plasc block, the size of a brick, lled with sand. The minister had
directed Sedibeng Water to procure the blocks.29 This was another project on the AGSA’s list of
the department’s irregular projects that were not budgeted for.30
28 DWS unauthorised, irregular, fruitless & wasteful expenditure: hearing, with Minister and Deputy Minister. hps://pmg.org.za/
commiee-meeng/27688/
29 Report of the auditor-general to the joint commiee of inquiry into the funconing of the Department of Water and
Sanitaon: Challenges facing the water and sanitaon porolio, 23 March 2018
30 Department of Water & Sanitaon nancial posion & contested audit: Treasury & Auditor General brieng. hps://pmg.org.
za/commiee-meeng/26328/
If there had been more aenon to stopping leaks and less to giving business to friends, a great
deal of money would have been saved and young people would have had the opportunity to do
useful work. One of the corrosive impacts of corrupon is that it diverts energy from building
solid organisaons that do a good job and making public services work beer.
1. 27
Once again, who beneted from providing a million extremely over-priced plasc blocks? How
they were selected? This informaon has not yet been revealed.
Blue, Green and No Drop reports - dealing with awkward monitoring
In 2008, DWS announced an important iniave to support its oversight of municipal water
supply and sanitaon performance. It introduced the Blue Drop and Green Drop monitoring
reports. As explained by then-minister Lindiwe Hendricks,
“… the rst process would be a Blue Drop cercaon, which would be awarded to
municipalies that complied with 95% of the criteria set for eecve drinking water
management. The Green Drop cercaon would be awarded to municipalies that
complied with 90% of the criteria set for wastewater management.
“… the aim of the cercaon was to build the condence of the cizens and tourist. It
would indicate that consumers would be able to drink tap water with condence, and
also indicate that wastewater was properly managed and discharged in a sustainable
and environmentally acceptable manner.”31
(A No Drop report on the extent of water losses was added to the monitoring porolio in 2014,
in partnership with the Strategic Water Partners Network)
The rst Blue Drop report was published in 2009 and by 2010, 95% of all municipal water
service authories were parcipang. Many of those that achieved a Blue Drop, with a rang
of over 90%, proudly adversed it in their publicity material. But eorts to name and shame
municipalies that were not complying with regulaons were not appreciated. And opposion
policians made polical capital of the rst Green Drop report, which showed that the majority
of South Africa’s municipal wastewater works were dysfunconal.
31 Dwaf unveils new water cercaon scheme for municipalies. hp://www.engineeringnews.co.za/arcle/dwaf-unveils-new-
water-cercaon-scheme-for-municipalies-2008-09-11
‘Drop A Block’ green plasc block
1. 28
As a result, polical resistance to publicaon of the results grew. In 2013 the
Green Drop release was cancelled ‘pending submission to Cabinet’. The last,
abbreviated, set of reports was released in 2014. Subsequently, owing to a
reported shortage of funds, no further reports have been published.
This was the period in which substanal resources were directed to projects such
as Giyani and War on Leaks. Connued monitoring would have revealed that,
despite the expenditure of billions of rand, water supply in Giyani was sll grossly
decient and that water loss had not been signicantly reduced.
The bucket toilet tender snk
Much of this report focuses on water supply issues since they are oen the most immediate
priority for everyone from poor households to big businesses. But sanitaon is an integral part of
water services and, in households with waterborne sanitaon, it is one of the biggest water uses. It
is important for sanitaon to be water ecient and for wastewater to be safely disposed of.
However, sanitaon provision has also been prone to corrupon and the strategy used has been
depressingly familiar. A priority – or even beer, an emergency – is idened and an approach to
address it is proposed that is oen more concerned with opportunies for prot than with eecve
soluons. If communies are lucky, their sanitaon will be improved – but it does not always
follow.
Bucket toilets are a good example. There is general agreement that the manual collecon of human
waste from individual households is unacceptable. In the past, it was used in urban areas with no
sewerage system and where pit latrines are not acceptable. But a naonal polical decision was
taken, correctly, that bucket toilets must be eradicated. And that has created an apparently endless
source of prots for well-connected businesses.
A 2015 invesgaon chronicled how, in the Free State, polically well-connected construcon
company Babereki Consulng Engineers was appointed in 2013 by the Bloem Water board, without
following formal procurement procedures, apparently on instrucon of DWS.32 The rm was already
controversial aer having been removed from a contract to build a new hospital in Kimberley,
because of alleged poor performance – ahead of that contract, it was reported that Babereki’s CEO
Tshego Motaung had donated more than R1-million at a 2008 Jacob Zuma fundraiser in 2008. 33
In court acon against DWS and Bloem Water, Babereki stated that they had invoiced Bloem
Water for R50-million and that Bloem Water had said it was waing for funds from DWS.
Babereki le the site and Bloem Water was sidelined. Shortly aerwards, DWS chose Vharanani
Properes from a previously established panel of ‘preferred contractors’ to complete the
project at a cost that had now risen to R994 150 000. This was the same company that had
taken over the Giyani pipeline contract. Its owner, David Mabilu, has a wide range of business
interests from property to media (and the collapsed VBS Bank), a amboyant lifestyle, and a
record as a polical funder.
Despite the expenditure of hundreds of millions of rand, it is reported that many provincial
households sll have no alternave but to use buckets. Yet one thread runs consistently
through the process: large contracts have been arbitrarily allocated to companies known
for their record of polical funding. In this case, the AGSA told Parliament’s water and
sanitaon commiee that money had been taken from water supply projects to fund the
never-ending bucket eradicaon project.34
Mhlatuze–Mgeni merger rings alarm bells
Given the experiences described above, there is growing awareness of the risks posed by
instuonal capture in the water sector. So alarm bells rang when a merger was proposed between
Umgeni Water and Mhlatuze Water in KZN. There were fears that the proposal was not being
driven by eciencies to be gained from raonalisaon. Umgeni, the country’s second largest water
32 Protector asked to sni out toilet tender snk. hps://mg.co.za/arcle/2015-04-23-protector-asked-to-sni-out-toilet-tender-snk
33 Rape claim against ANC backer. (Fourth paragraph from end) hps://www.iol.co.za/news/polics/rape-claim-against-anc-
backer-426471
34 Department of Water & Sanitaon nancial posion & contested audit: Treasury & Auditor General brieng. hps://pmg.org.za/
commiee-meeng/26328/ and hps://pmg.org.za/les/180509agsa.pdf
One thread runs
consistently through
the process: large
contracts have been
arbitrarily allocated
to companies known
for their record of
political funding
1. 29
board, has long been targeted by unscrupulous business people seeking to partner with public
ocials to make a quick buck.35
In 2016, Dudu Myeni, the controversial chairperson of Mhlatuze and head of the Jacob
Zuma Foundaon, had been found by courts to have overstayed her legally allowed tenure
in Mhlatuze and had to vacate her posion. The subsequent concern was that the merger
of Umgeni and Mhlatuze would allow Mokonyane to appoint Dudu Myeni as chairperson
of the merged enty instead and thus gain control over Umgeni’s sizeable project porolio
and nancial reserves. To further facilitate the merger and perhaps a wider plan for the two
instuons, Mokonyane had dismissed the Umgeni board and appointed an acng chief
execuve accountable only to herself.36
The threat to the nancial reserves led to the merger being halted and the board’s governance
structures being restored. To fund its operaons in the late 1990s, Umgeni had borrowed
billions of rand by issuing bonds. The bonds had been bought by major nancial instuons
who were concerned that, under the new arrangements, interest payments might not be met.
Future Growth, a subsidiary of nancial giant Old Mutual, warned Mokonyane that it would
block the merger to protect its interests, part of a wider eort by the nancial sector to curb
mismanagement in state-owned enterprises.37 38
Fears that the aack on Umgeni Water’s governance was an aempt to inuence the award of
tenders were reinforced when, in 2018, it was alleged that a R220-million security contract had
been irregularly awarded by Umgeni Water to an ANC-linked security company. Controversial
‘piggy-backing’ procurement provisions (see below) were used to give the contract to
Reshebile Aviaon and Protecon Services without a tender. The contract was awarded on
the basis of Reshebile’s exisng contract with the Airports Company of South Africa (ACSA);
ironically, that contract was itself controversial because it had been found that Reshebile did
not qualify to parcipate in ACSA tender processes.28 39
Events like these only served to conrm that the move for many of the intervenons in
water board governance and management was to gain control for irregular purposes. They
also showed that, once control has been gained, formal procurement rules provide limited
safeguards against misappropriaon. What was eecve were threats by nancial instuons
to bring down the whole structure by withdrawing their nancial support.
Raising Clanwilliam Dam – grow jobs and economy or support patronage?
The stop-start project to raise the Clanwilliam dam is an example of how capture can delay
achievement of public goals while opportunies are sought to achieve private benet. The
85-year-old Clanwilliam Dam does not meet current safety standards and it has long been
proposed that, during rehabilitaon, it could usefully be raised. The extra capacity would
increase the yield of the dam by about 40%, allowing over 5 000 ha of addional land to be
irrigated and creang almost four thousand new jobs.
The DWS’s under-employed construcon unit was able to do the job and the project would
have enabled the department to provide much-needed on-the-job training to its sta. Aer
many delays by previous ministers, Mokonyane announced in her 2015 budget speech that the
project would start. The DWS team moved onto site and began preparaons; surrounding land
was acquired and the Cape Town-Namibia N7 naonal highway was diverted to make way for
construcon.
35 Misconduct at Umgeni water board – Kasrils. hps://www.iol.co.za/news/polics/misconduct-at-umgeni-water-board-
kasrils-68117
36 Acng Umgeni Water chief execuve appointed. hps://www.news24.com/SouthAfrica/News/acng-umgeni-water-chief-
execuve-appointed-20170627
37 Water and sanitaon minister’s ‘meddling’ could cost SA R3bn. hps://www.news24.com/SouthAfrica/News/nomvulas-
meddling-could-cost-sa-r3bn-20170923
38 Umgeni Water in R220m tender scandal. hps://city-press.news24.com/News/mon-3pm-piggybacking-the-way-to-get-the-
job-20181224
39 Bidvest Protea Coin (Pty) Ltd v Airports Company of South Africa. hp://www.saii.org/za/cases/ZAGPJHC/2017/110.html
1. 30
Then the minister abruptly stopped the project. She had decided to bring in external
contractors and some familiar names were raised. In 2017, Naonal Treasury was asked to
approve a new budget and informed that it was now going to be built by external contractors
“as a result of the need to accelerate the project”. It was suggested this was because the
departmental team did not accept proposals to bring in her preferred providers for some of the
highly specialised specialist services on this technically dicult project.
In 2018, following Mokonyane’s departure, the new minister Gugile Nwin instructed the DWS
to revert to the original approach. Construcon has begun again – a year aer Mokonyane
announced that it would be concluded. Compleon is now scheduled for 2023.
When the project was relaunched, an indicaon of the issues at stake was provided by Helen
Zille, then premier of the Western Cape, who claimed: “Over 2 000 people were bussed in for
the launch, with catering and transport contracts for the event being awarded to the ANC’s
regional treasurer, an ANC acvist and beneciaries of craysh quotas.” According to Zille, ANC
speakers demanded that they be awarded contracts on the project and that the long delay had
been due to pressure from ‘tenderpreneurs’ seeking contracts.40
This may reect a wider challenge, discussed below, where local groups demand parcipaon
in construcon projects and take acon to obstruct work if they are not involved or paid o.
A number of important projects in other sectors have been delayed or stopped as a result,
including a major bridge on the N2 highway in the Eastern Cape and parts of the Rea Vaya Bus
Rapid Transport network in Johannesburg.
40 Tenderpreneurs circle Clanwilliam dam wall project - Helen Zille. hps://www.policsweb.co.za/polics/tenderpreneurs-
circle-clanwilliam-dam-wall-project
Clanwilliam Dam
1. 31
But the cost of responding to these pressures, perhaps with the intenon of also beneng
selected service providers, can be measured in development opportunies lost. In Clanwilliam, it
was thousands of jobs in agriculture. But it also represented a huge waste of departmental funds
and human capabilies, as the construcon team stood idle for more than a year while across the
country, communies were crying out for assistance.
TCTA and the Mzimvubu project
Happily, eorts to capture instuons in order to promote inappropriate projects are somemes
prevented. But this does not happen without conict and casuales.
The Trans-Caledon Tunnel Authority (TCTA) was originally established to manage South Africa’s
contribuon to the Lesotho Highlands Water Project. It was then decided to use its capabilies
inside South Africa to develop large water resource infrastructure on a ‘project nance’ basis
where project beneciaries could fund the costs through taris. It promoted the Berg River Dam
which helped Cape Town and the Western Cape survive the recent drought; the Vaal River Eastern
Sub-system Augmentaon Project, which would increase the security of water supply to Sasol and
Eskom power staons; and an intervenon to manage acid mine drainage.
Given its focus on large capital projects, it was inevitable that the TCTA would come under polical
pressure. It is vulnerable because, as with the water boards, the minister of water can direct
it to undertake specic tasks. Mokonyane made a number of aempts to direct TCTA to fund
inappropriate projects. Perhaps the most audacious were her eorts to force the TCTA to take a
loan from a Chinese bank to build the Mzimvubu dam.
The Mzimvubu development shows how projects in the water sector can go o the rails if polical
leaders have the wrong objecves and incenves. The Mzimvubu is South Africa’s third largest
river, owing almost enrely through the Eastern Cape, one of the country’s three poorest
provinces. Its waters ow into the Indian Ocean at Port St Johns, almost enrely unused.
For decades, eorts to nd ways to use the water producvely have been stymied by geographical
challenges such as deep valleys, with lile irrigable land. The area also receives sucient rain for
dryland farming which, although less producve, is cheaper and easier than irrigaon. Hydropower
development was rejected because of environmental impacts. It seemed that the only use for the
water would be to export it to cies outside the basin which would only be needed some decades
in the future.
In 2013, a review of 17 opons for integrated development considered economic acvies from
agriculture to tourism, and a new dam at Ntabelanga, between Maclear and Tsolo, was proposed.
It could generate a lile hydropower, irrigate 2 800 hectares of reasonably ferle soils and supply a
large regional water scheme.
Mzimvubu river mouth
1. 32
But its feasibility was challenging. The water would be expensive and agriculture would only be
viable if commercial farms produced high-value crops, displacing exisng residents from their
tradional land. The provincial agriculture department did not support this, saying that far more
people could benet with less funds in other places and that commercial farming schemes on
tradional land had generally failed. Eskom was not interested in the small amount of power oered
because of its high cost. And cheaper sources are available for domesc water supply.
However, policians who were enthusiascally promong the scheme, promising jobs and
development, disregarded the important detail – that it could only be viable if power, agriculture
and potable water were developed together. Minister Mokonyane took advantage of the 2015
China-South Africa summit to instruct TCTA to sign an agreement with the China Communicaons
Construcon Company which oered a loan from a Chinese bank. But it was clear from the outset
that the beneciaries of the project, as structured, would not be able to pay operaonal costs, let
alone repay a loan. And Naonal Treasury refused to guarantee the loan since it would add to the
country’s budgetary burden.
Despite this, Mokonyane led a delegaon to China in 2016, including most of the board of TCTA, with
the intenon of proceeding. TCTA’s board, aware that the project could not be nanced through its
normal project nance methodology, explicitly instructed the TCTA CEO (a Mokonyane nominee)
not to sign any loan agreement. So, despite huge pressure from the minister, no loan was signed.
TCTA’s latest annual report states that preparatory work has now stopped as funding is not available.
Fortunately, because TCTA is dependent on nance from the private capital markets, the minister
could not simply dismiss the board without undermining private sector funding sources for other
major projects.
Mokonyane’s determinaon to proceed might be explained by the fact that back in 2015, DWS
had appointed Pro-Plan, a small consulng company with no relevant experience, for the “Design,
construcon supervision and quality control for uMzimvubu Water Project”. Pro-Plan is based in
Mokonyane’s home town in Gauteng; it had worked for her while she was in the Gauteng provincial
government and was also nominated by DWS to oversee another mul-billion-rand white elephant
project to be implemented by the Sedibeng Water Board.
The project remains on the polical agenda, not least perhaps because Pro-Plan has allegedly
been paid almost R500-million for preparatory design work to date, although there is currently a
contractual dispute and it has been suggested that the company’s appointment was irregular in the
rst place.
Both ministers who succeeded Mokonyane have connued to make the polical case for the dam to
be implemented. But, so far, they have recognised the need to ensure that they have willing partners
in the agriculture and power sectors. And they have been prepared to stay within the nancial
management system to do it.
2.2 THE ATTRACTION OF LARGE CAPITAL PROJECTS
Corrupon and mismanagement in the South African water sector cannot
be aributed to just one powerful person although Nomvula Mokonyane
certainly showed that one determined individual can have a devastang
impact. The more tradional view, that the large sums of money involved
in construcon projects aract corrupt people, connues to be true as the
examples presented below demonstrate.
What these examples also highlight, however, is the danger that the potenal
corrupt gains from large projects may lead to projects being promoted
that are inappropriate or indeed unnecessary. On the Mzimvubu project,
Mokonyane provided a useful example – but some of the many others are
outlined below. As these show, the bale for corrupt gains oen starts long
before contracts are signed.
Mangaung and the Gariep pipeline
Mangaung, formerly Bloemfontein, capital of the Free State province and seat of the country’s
Supreme Court of Appeal, currently draws water from two principal sources, the Modder and
Caledon rivers. While these sources have had problems, planning studies have shown that, if
What these examples
also highlight is
the danger that the
potential corrupt
gains from large
projects may lead
to projects being
promoted that are
inappropriate or
indeed unnecessary
1. 33
properly managed, they should be adequate for years to come, parcularly if the city reduces its
water losses.
However, whenever there is a supply problem, aenon turns to the Gariep dam 200km away on
the Orange River. It has long been suggested that the city should build a pipeline to bring water
from the dam although the costs of construcon and pumping the water 200 metres uphill would
substanally increase water costs.
In 2016, Mangaung Metro Municipality appointed GladAfrica, a consulng engineering and
project management rm, to undertake a feasibility study of the pipeline. In its integrated
development plan, the municipality indicated that it hoped to leverage nancing through an
agreement with naonal government.
Meanwhile, LTE Consulng, which has gured in many other cases, was contracted by Bloem Water,
which falls under Department of Water control, to do a feasibility study of the same project, at a
cost of R17 459 000.41 This followed an announcement by Mokonyane in her 2016 budget speech
that “The Department has already commenced with feasibility studies working towards conveying
water from Gariep Dam to Mangaung through the construcon of the Caledon Bloemfontein
potable water supply scheme.” 42
To date, no decision has been taken. The technical managers connue to maintain and renovate
the exisng scheme, to keep it operaonal. In this case, the logic of the department’s own
planning work, together with the very limited funding available and the fact that the proposed
pipeline would likely double the cost of water to the city seem to have stopped another ambious
plan to implement an unnecessary project.
As reported to a parliamentary commiee, “The Gariep pipeline was started in 2004, and was
then priced at R2-billion. The Metro had to compete with Water and Sanitaon …. It was agreed
that Water and Sanitaon would implement, but the price had escalated to R8-billion, and the
Department did not have money.” 43
The fact that two facons were compeng to reap the benets from its promoon may,
perversely, have helped since the project will only proceed if both pares can agree. Once
again though, this suggests that decisions are driven as much by personal interests as by formal
planning and procurement processes.
Nelson Mandela Bay – How desalinaon dreams derailed city’s water security
The experience of Nelson Mandela Bay Metro Municipality is similar to that in Mangaung except
that delays due to eorts to promote an inappropriate project have created a real crisis. Cape
Town became globally famous for its threatened Day Zero when all residenal taps would be
turned o, although that was never really a likely prospect.
At the same me, the Nelson Mandela Bay metro was facing similar challenges. A long drought
had depleted the city’s water reserves and they were, nominally, trying to reduce domesc
consumpon to the same 50 litres per person per day as Cape Town had enforced in 2018.44
As in Cape Town, the problem was less about the drought and more about the failure to do what
was necessary to ensure the city’s water security, since droughts occur regularly in South Africa.
Unlike Mangaung, Nelson Mandela Bay metro already has access to extensive Orange River water
resources, transferred through an apartheid-era system. All that was needed was a 40km pipeline
to link to the city’s Nooitgedacht treatment works. In 2006, the city had published a 20-year water
plan which stated that the Nooitgedacht scheme would be needed by 2015. So why in 2017 was
its water sll not reaching the city?
41 List of consulng rms currently contracted to the enes. hp://pmg-assets.s3-website-eu-west-1.amazonaws.com/RNW1099-
2018-05-29-Annex_C.docx
42 Water and Sanitaon Dept Budget Vote 2016/17. hps://www.gov.za/speeches/address-minister-water-and-sanitaon-ms-
nomvula-mokonyane-occasion-budget-vote-number-36
43 Mangaung & eThekwini Metropolitan Municipality brieng, NCOP Finance, 21 August 2018. hps://pmg.org.za/commiee-
meeng/26870/
44 Port Elizabeth’s dams at lower level than Cape Town. hps://www.aljazeera.com/news/2018/08/port-elizabeth-dams-level-cape-
town-180810092406757.html
1. 34
Gariep Dam
1. 35
Other agendas were in play. Around 2005, a group of local entrepreneurs and leading municipal
ocials decided to promote the construcon of a desalinaon plant.45 46 They were not deterred by
the extremely high cost of water from this proposal, many mes more than that of readily available
Orange River water. This would have involved the kind of private sector investment that creates
many opportunies for individual prot at the public expense. And when a naonal ocial asked
about the challenges of nancing the proposed project, the Singaporean promotor simply said, not
to worry, it was ‘all in the bag’ [pers comm 2019].
But the desalinaon project required either a bankable undertaking from the municipality to buy
the water or a central government subsidy. The municipality’s nancial track record was too weak to
convince lenders while eorts to obtain nancial guarantees or emergency drought funding failed to
persuade a scepcal naonal government. Local and naonal authories nally decided to proceed
with the Nooitgedacht scheme but, aer years of delay, funds sll had to be found. As a result, when
the region suered yet another drought, it had to introduce extreme water restricons.
So eorts to promote an unnecessarily expensive scheme for the wrong reasons le
the city vulnerable. The city’s municipality was notorious for corrupon. The book How
to steal a city describes how no project would advance in Nelson Mandela Bay unless
someone in the leadership beneted.47
The repeated water restricons that the city suered saw industries close for lack of
water and further jobs lost in agriculture. By 2016, a black market had emerged in water
stolen from swimming pools by the tanker-load. In September 2019, with the crical
Nooitgedacht infrastructure sll not in place and drought threatening the region once
again, organised business warned of a “jobs blood-bath”.48
This is the cost of corrupon which blocks projects from which municipal leadership
cannot benet and it highlights the need to prevent unethical local leadership from
capturing control of instuons.
Mpumalanga’s municipal budgets – Hijacked or rescued?
In 2012, DD Mabuza, then premier of Mpumalanga and now deputy president, expressed his
concern about the state of municipal water supply services in his province. He said that the
province’s district municipalies were not making adequate progress with investments to improve
the situaon and were indeed returning some of their budget allocaons to Naonal Treasury.
So he announced that his provincial government would take control of their investment funds. At
a meeng aended by almost 100 local and provincial polical heads, ocials and technicians,
he said that the municipalies concerned should transfer their funds for water infrastructure
development to the Mpumalanga Economic Growth Agency (MEGA) which would now implement
water projects. While he recognised that these funds had been allocated to the municipalies, he
warned that if any mayor disagreed with this proposal, they could have a discussion in another
place (understood to be the provincial ANC oce).
While the approach was disnctly novel, the stated move seemed reasonable. Since local
government elecons were due in two years, the premier wanted to ensure fast progress in
improving services since reliable water supplies were a high priority in many constuencies.
Depending on one’s standpoint, this was either a dramac iniave to address an important
problem or the brazen hijacking of municipal budgets.
The test would be whether the intervenon yielded the promised results. On this count, the
benets were less obvious. A review of the projects to be funded (and for which designs were
ready) found many worrying anomalies – including treatment plants without water sources,
reservoirs without supplies to ll them, and many pricing anomalies.
45 Mystery PE man in massive Coega deal. hps://www.environment.co.za/east-cape-wild-coast-south-africa/mystery-pe-man-in-
massive-coega-deal.html
46 GE to build innovave desalinaon plant in South Africa. hps://www.reliableplant.com/Read/6504/ge-to-build-innovave-
desalinaon-plant-in-south-africa
47 Olver, C., 2017. How to steal a city: The bale for Nelson Mandela Bay: An inside account. Jonathan Ball.
48 Dwindling water supply could lead to “job blood-bath” says Business Chamber. hps://www.groundup.org.za/arcle/dwindling-
water-supply-could-lead-job-blood-bath-says-business-chamber/
Eorts to promote
an unnecessarily
expensive scheme
for the wrong
reasons left the
city vulnerable.
The municipality
was notorious for
corruption.
1. 36
MEGA’s procurement of a consultant engineer to manage the investment process got o to a
dicult start. When the bids were opened and presented for evaluaon, the administrave
ocer responsible for procurement informed the bid evaluaon commiee that most tenders
were not compliant and would have to be disqualied. It transpired that, a few days before the
tender closed, s/he had circulated a revision to the request for tenders which required some
addional informaon to be included in tender submissions.
The ocial responsible proposed that the commiee should therefore award the contract to
the only technically qualied bid amongst the few remaining tenders – which was signicantly
more expensive than those that were disqualied. The commiee refused, poinng out that
the last-minute details required were not material. It decided to evaluate all bids rather than
delay the process by starng the process over again. From this process, another company was
recommended.
However, aer the meeng, MEGA’s CEO Boyce Mkhize apparently altered the
commiee’s recommendaons. It was alleged that Mkhize changed the scores of
the commiee to favour a company which the commiee had scored as among
the worst. That company was subsequently appointed. When these issues came
to light, Mkhize resigned, taking a golden handshake of over R4-million.
A few months later, responsibility for the projects was taken from MEGA and
returned to the municipalies and some of the work was eventually nished.
Quite how much money had been spent, where, by whom and for what requires
detailed invesgaon. And Mpumalanga water supplies have connued to
deteriorate.
Ethical leadership focused on achieving public goals is clearly a prerequisite for
achieving water security.
2.3 THE BUSINESS SIDE OF CORRUPTION
Many of the cases presented above focus on the behaviour of public ocials. Yet many private
individuals and businesses deliberately develop and exploit weaknesses in the public sector.
Such behaviour can be found from the level of the community plumber and tanker driver up
to the boardrooms of major internaonal companies. As in other cases, the impacts of this
behaviour are no less serious and are felt most acutely by poor households and communies.
But large businesses, in pursuit of their own goals, oen acvely create the condions in which
corrupon ourishes, at the expense of the natural environment and public health.
How water tankers cause taps to run dry
The focus of an-corrupon eorts is usually on mul-million-rand contracts and high-level
ocials. However, residents of poor communies have another set of problems. They interact
with frontline ocials and sta working for small local municipalies. In these areas, the
concern is oen with the way in which services are actually provided – or, too oen, why they
fail.
Even in the best run systems, piped water supplies somemes fail and it may be necessary to
supply water by tanker. This may be the result of pipe bursts, power failures or interrupons to
allow maintenance and construcon. Because of the inconvenience for users and high costs –
oen 20 mes more than a piped supply – tankers should never be used as a long-term opon.
However, for some people, emergencies that require tanker transport are an opportunity.
Many municipalies hire tankers from private contractors when they are needed. In these
cases, municipal ocials, the tanker owners and even tanker drivers can all benet from tanker
use. But if there is no emergency, the investment in tankers is unproducve and drivers are
idle. This can create dangerous situaons.
In 2014, three people were killed during protests in Mothutlung, a small community lying
between Brits in the North West province and Ga-Rankuwa, part of Tshwane in Gauteng. The
community’s water supply failed, it was reported, because all three pumps serving the area
Ethical leadership
focused on
achieving public
goals is clearly a
prerequisite for
achieving water
security.
1. 37
had broken down. In the interim, the Brits-based Madibeng municipality told residents that they
would be served by tanker.
The residents refused to accept this. They alleged that the pumps had been deliberately sabotaged
to enrich the private owners of water tankers, who had paid kickbacks to municipal ocials to
cut the supply.49 This allegaon was credible. Mothutlung is not a distant rural village. It is close to
major urban centres with reliable water supplies and well developed maintenance facilies, just
10km from the municipal water treatment plant.
Shocked by the conict, provincial and naonal government ocials intervened. They took
control of the municipality, not for the rst or last me, and quickly restored the piped supply. But
problems connued and, even when water was restored, it was not drinkable.
Such problems with tankers are widespread. In Umlazi, eThekwini, residents recently protested
because, they said, tanker drivers were demanding R200 to ll their house tanks aer four weeks
without water.50 There too, protest leaders alleged that the supply cuts were deliberate: “We hear
that ocials are cung our water supply so that we will get water delivered by tankers. We hear
that the ocials are beneng from the water tankers,” said protest leader Nkanyiso Msomi.
In Limpopo province, DWS ocials reported that: “Many tankers were bought during the 2015/16
drought. One anonymous example given is where Sekhukhune ocials buy tankers (at R1.3
million) and then rent these to themselves. ‘They ll the tankers from the Municipal supply and
sell the water at R20/bucket (R1/litre!!). Over Christmas the public supply pipe was closed (by
these same ocials) in order to keep their tankers busy’. And the community feels powerless.”
The DWS has idened tankering as a recurrent problem. A 2018 report notes that “it is
an expensive way of providing water, for both consumers and their Water Authority. It also
perpetuates the underlying problem – absence of a sustainable supply – not only diverng funds
that could be used for permanent infrastructure but also ‘by reducing the will to act’. The urgency
of providing piped water is lessened.” 51
49 Dirty water scandal. hps://www.meslive.co.za/news/south-africa/2014-01-16-dirty-water-scandal/
50 Protesters blame corrupon for lack of water in Umlazi. hps://www.groundup.org.za/arcle/protesters-blame-corrupon-lack-
water-umlazi/
51 Tankeri ng as a Social Issue (internal document). DWS 2018
Nissan Diesel CW41 water tanker
1. 38
The departmental document also acknowledges systemic corrupon:
“Failure to maintain water supply systems results in interrupons to the
service and the need for emergency supplies (i.e. water tankers). Lack
of maintenance thus becomes part of the business model of those with
interests in transporng water (and) tankering becomes an operaon
that is dicult to stop. … Where tankering services are contracted in,
the owners of these tankers become reliant on the business and have
no incenve to see this come to an end. … Once one starts tankering
it is very hard to stop, as local interests become entrenched. If there is
tankering into an area where a project is planned, then that project is
going to fail.”
The departmental document draws the obvious conclusion, but it is not easy to enforce:
“…. tankering ‘frustrates the will to act’ by the supply authority. What may frustrate this ‘will to
act’ to x formal infrastructure is the blossoming industry around water tanker services – with
backward and forward linkages to the District Municipality….. One always needs some emergency
capacity (like one always needs a re engine) – but this is emergency capacity – and should not be
in permanent employ.”
Yet in many regions where local management has failed, municipalies resort to tanker supplies,
connuing the vicious cycle and sustaining the corrupt interests at the expense of providing
eecve basic services to the communies concerned.
Chemical toilets in Ekurhuleni
Similar situaons arise with sanitaon in poor communies. Reports of failure to provide decent
sanitaon services are, correctly, a source of embarrassment to the whole society. So policians
from all pares support calls for acon to improve sanitaon. Just as reliably, protable soluons
will be developed and promoted to achieve this.
Sanitaon provision in informal selements, parcularly those that are regarded as unlikely to be
permanent, is parcularly dicult. Municipalies are reluctant to build permanent infrastructure
that may eventually be abandoned. A convenient soluon is to provide portable chemical toilets.
The aracon of these is that they just need level ground to install and can be hired from service
providers who empty and clean them – correctly managed, this is slightly beer but not much
dierent to a bucket toilet system.
Many companies provide toilet hire services which have become one more lucrave opportunity
for corrupon. In Gauteng’s Ekurhuleni Metro Municipality, a R1.9-billion, three-year tender to
provide and service almost 40 000 chemical toilets was suddenly set aside, sub-divided and re-
allocated to chosen beneciaries.
Of the 250 companies which bid for tenders to supply portable chemical toilets, quite a few of
the lucky 16 to be selected had no experience or equipment and simply hired toilets from larger
companies whose bids had been unsuccessful. This ‘diversicaon’ of tenders was alleged to
have distributed the prots between polically connected pares and, indeed, some of the
beneciaries are beer known for polical corrupon than sanitaon provision.52
This kind of arrangement also leads to problems of supervision and it is common for community
members to complain that toilets are not being maintained. This occurs in parcular where the
successful tenderers do not have their own capacity and have simply sub-contracted supply
from other companies. In these cases, either the price of the service has to be inated, diverng
funds which could be used for other purposes, or contractors make their prots by skimping on
maintenance commitments.
Illegal connecons – corrupon or simply unauthorised service provision?
Even in the poorest communies, many households are directly involved in what some people
call corrupon when they are connected to the supply network without authorisaon. Such illegal
connecons are widespread and they can signicantly aect access to water supplies, as well as
52 Toilet tender snks, hps://www.news24.com/SouthAfrica/News/amabhungane-toilet-tender-snks-20190703
“We hear that ocials
are cutting our water
supply so that we will
get water delivered
by tankers. We hear
that the ocials are
beneting from the
water tankers.”
1. 39
their reliability and safety. Tapping into pipes ‘informally’ oen damages them, shortens their life
and allows leaks to develop and polluted water to inltrate the supply. Somemes, connecons
are made by simply cung into a plasc pipe and bandaging a new connecon onto it with rubber
tubes from bicycle tyres held on by wire.
Where connecons are not formally registered, users do not contribute to the cost of the public
supply. Households that are entled to a free basic water supply are likely to use more than
their basic allowance if supplies are unmetered and unbilled. Overuse then contributes to poor
maintenance and early failure and oen deprives downstream users of their supply.
Households oen see the situaon dierently, arguing that this approach is simply self-
help and should be allowed, parcularly if they are told that water in a passing pipe
is not for them. This may be because they are in an area not intended for selement,
where the local municipality does not want to provide services. In former homelands,
selement may be encouraged to force municipalies to provide services, which
increases land values for tradional leaders.
Illegal connecons are oen made by current or former employees of the municipality
who have the knowledge and access to the tools and material required. So what
appears to be a simple illegal acon may be relavely complicated, involving not just the
householder and a local plumber but tradional authories and municipalies.
An authoritarian administraon would simply declare such acons illegal and instruct
their technicians to remove illegal connecons. But this creates tension with local
tradional leaders and communies, and presents challenges in a country where lack
of access to services is largely determined by a mixture of race and class. Even legally
connected households may prefer that their neighbours use illegal connecons to avoid
having to share their own tap – which would increase their costs.
Given these dynamics, many service providers simply ignore the problem. Even cies such as
Johannesburg are careful about how they deal with these issues. Joburg Water’s operaonal
management system makes it very dicult for maintenance teams to use city resources to make
illegal connecons. And repair teams are instructed to x leaks found in illegal connecons rather
than disconnect them; they are then supposed to tell the commercial department which should
visit and regularise the connecon but this does not oen happen.
So illegal or unauthorised connecons proliferate, leading to shortages. In the absence of user
payments, maintenance is not done and systems deteriorate. Government’s household surveys
show that service reliability is declining all over rural South Africa and, increasingly, in urban
communies as well. Meanwhile, the queson remains: do illegal connecons reect corrupon
or simply a failure of policy, local polics and community management?
Mining licences, polluon and public versus private interests
In the formal business sector, the problems are dierent. Environmental regulaon is idened
as a risk parcularly in sectors such as mining, because it can impose costs and delays. So, where
public ocials have powers to control water polluon and water abstracon, private interests
have an obvious incenve to nd ways to work with them, for mutual benet.
These problems are exacerbated when the issues regulated are complex and poorly understood,
since soluons to complexity oen open opportunies for corrupon.
This is illustrated by the challenges that arise when water licences are required for mining
acvies. Before a mine is established, water managers have to consider whether:
• the mine’s water requirements can be met from available resources;
• the mine’s operaons could indirectly reduce the availability of water for other users (for
instance by drying up boreholes);
• water pumped out of the mine to enable mining operaons will cause polluon problems;
• indirect polluon, such as runo from mining land, may pollute local water resources;
Even legally
connected
households may
prefer that their
neighbours use
illegal connections
to avoid having to
share their own
tap – which would
increase their costs
1. 40
• mining will damage the water resource itself, by draining wetlands or obstrucng streams;
• adequate nancial and technical provisions have been made to protect the environment
aer mine closure.
Assessment of these issues requires detailed informaon about the site, the nature of the
operaons, the infrastructure to be built, how it will be operated, and how mine closure will be
managed and funded. Crically, the regulator also needs detailed informaon about the current
state of the water resource and other uses.
Legislaon requires a formal approval process to address these issues – and guarantees of funding
for remedial work when mining is concluded. This process is prone to poor and deliberately
improper decisions. But because delays are costly, naonal policy has sought to streamline and
coordinate work of the departments involved (minerals, environment, land reform, and water)
and speed up the process. The present regulaons state that licence applicaons must to be
nalised within 300 working days. This is oen inappropriate since informaon must be provided
by applicants and then conrmed and analysed by regulators. The obvious strategy for applicants is
to dump a great deal of informaon on the regulator, object if more informaon is requested and
complain about the me to reach a decision.
But the mines also depend on the competence and good will of the regulator. Since delays are
costly, there are strong incenves for the applicant to speed up the process and for rent-seeking
ocials to slow it down. It is a recipe for corrupon, and this is what has been observed:
“If you can’t get a water licence, this could delay you for years... So why should R10 000
[bribe] be an obstacle... The policies are good. It’s the implementaon and the instuons.
The website [to apply for licence] you can’t get in, it doesn’t work... The work done by the
polical and execuve arm gets confused with this...Polical inuence is standard. You
must move in the right circles.” 53
Geng a water licence is just the start. Complying with its condions can be just as challenging.
“If an ocial demands a bribe, you won’t say [no] as it will create a bad relaonship
with that ocial and they will come and nd fault on your mine every day so this goes
unreported. There is corrupon at high and low levels of government. We also corrupt
ocials as business people. It happens both ways...” 54
Eecvely, environmental and water use licenses were for sale and for small junior
miners, it may be easiest to ignore water impacts and concentrate on jumping the big
hurdles. The CEO of one small company explained how he worked the system:
“You must nd an individual in the Department of Mineral Resources... oer money
...pop up money all the way... because mining rights can take two years... although
it’s beer now. You rely on that individual to know what to expect. Big companies
have done this before so they know. So it’s not so hard for them... Some mine
without water licences. Some get a mining permit and then mine and get a water
licence later. Some ocials say you can mine, some say you can’t.” 55
An ongoing source of outrage for the environmental community is that many
companies, old and new, large and small, start mining before they have a licence.
This is parcularly problemac for large companies with reputaonal concerns.
The manager of one large company explained that a licence he had been waing
almost a year for, was desperately weak, and imposed impossible condions. It
required wastewater to be treated to a standard cleaner than drinking water; and the
geographic coordinates located the mine hundreds of kilometres o the coast in the
Atlanc Ocean. His opons? “I can point out the errors and then wait for six months
while they x them or simply start mining and argue later, if necessary”.
53 Coal, water and mining owing badly. Kally Forrest & Lesego Loate, Society, Work & Development Instute, June 2017
54 ibid
55 ibid
Complex regulation,
weak institutions,
pressures for the
transformation of
the mining sector
make for a toxic
environment in
which it is likely
that corruption
will ourish unless
there is strong,
ethical leadership in
business as well as
government
1. 41
Complex regulaon, weak instuons, pressures for the transformaon of the mining sector
make for a toxic environment in which it is likely that corrupon will ourish unless there is
strong, ethical leadership in business as well as government.
Corporate corrupon creaon: EOH’s move from SAP to specialised water services
Regulatory corrupon in mining might be regarded as a deviaon from normal business pracce.
But, beyond mining, the strategies of some large private sector companies appear to have been
structured to enable corrupon. The SAP case described above has shown that public sector IT
provides opportunies for corrupon because of the technically complex nature of the contracts,
which make it dicult to assess value for money and performance. But other specialist services
that oer similar opportunies have increasingly been targeted.
A case in point is Enterprise Outsourcing Holdings (EOH), a conglomerate that branched out from
its original IT business into other specialist services. At one point, it had a mindboggling set of
almost 300 subsidiaries. They range literally from A (About Time Soware, which sells US business
soware services) to Z (Zusiza Pty Ltd, oering training courses ranging from oce cleaning to
project management, and boasng strong relaonships with the country’s SETAs, which control
billions of rand from government’s training levies.)
EOH’s wider business acvies became notorious when it was revealed that a whole division
had apparently been structured to promote public sector corrupon. As the IT business became
increasingly compeve and commodised, EOH started looking for opportunies to run the
specialised technical funcons inside the businesses that used their IT. And, in South Africa,
the obvious place to do that is in the public sector, where many organisaons appear unable to
manage their own operaons. So in 2015, EOH made an aggressive foray into the water sector,
buying up specialist service providers.
By 2018, it had acquired at least 12 companies. Stock market commentators approved: “The
company is looking to provide a one stop soluon for government municipalies in South Africa
and also in developing African countries. They will assist these municipalies in managing their IT
and infrastructure needs eciently. In this space there are numerous small scale technologies to
be adopted that will increase the package of services oered to their customers … in South Africa
water and electricity management are key areas of focus. Any acquision that could bolster their
service oering in this area or strengthen their relaonship with government municipalies in
South Africa or the rest of Africa would make sense.” 56
56 Weekly update for 09/04/2018 – EOH: Changing tyres for a long road ahead, Merchantec, Johannesburg.
Acid mine drainage
1. 42
These companies represented a signicant investment. While EOH’s annual reports do not specify
the revenue from the water sector, “the aggregate carrying amounts of goodwill” allocated
to the water “cash-generang units” was R281 151 000 (6.6% of the total); if “Infrastructure
management’s” R113 701 000 is included, it made up over 9% of the business. And, according to its
annual reports, EOH’s ambion was to expand further in this area.
Rather than look at big construcon projects, EOH concentrated its eorts on the management of
water distribuon networks. This made sense. A reducon of water losses was a naonal priority,
and by 2015, it was clear that the War on Leaks was not going to achieve it. The challenge was to
make money out of good intenons.
So EOH bought the following companies:
• 4 Water Supplies, which specialises in water demand management and loss control, oering
a comprehensive range of products in this eld;
• CivEc Consulng Engineers has designed and installed water networks cies and towns
across Gauteng and Limpopo provinces;
• Combined Systems was PricewaterhouseCoopers’s asset management subsidiary and
had signicant water sector business in a specialised niche where EOH already had three
companies operang;
• CSVwater Consulng Engineers focus on ”the science and engineering of water” and had
worked on DWS’s Green and Blue Drop monitoring programmes;
• Dihlase Consulng Engineers “understand water services, from data collecon and
evaluaon to project design, development, and management”;
• JOAT Consulng and their regional companies oer to reduce non-revenue water “through
a winning combinaon of leading experse, reliable world class products, and in-depth
knowledge of complexies”;
• WRP Consulng Engineers are specialists parcularly “in water conservaon and water
demand management, including non-revenue water reducon” (and, signicantly, were
historically direct competors of JOAT);
• GCT (Grid Control Technologies) specialises in the supply and management of smart meters
for water and electricity and related informaon systems;
• Paterson Candy Internaonal has a focus on water treatment. wastewater and industrial
treatment sectors; and
• GLS Consulng and its subsidiary soware company specialise “in the analysis, planning and
management of water-related and electricity systems” and have a “holisc approach to the
modelling and planning of municipal water, sewer and electricity infrastructure systems by
the applicaon of in-house developed high technology soware and processes”
EOH’s structure allows it to operate a ‘design, build and operate’ business through its subsidiaries,
creang three potenal prot centres – similar to turnkey models. This is a classic strategy for
privasaon but avoids using the sensive ‘P’ word. It allows the company to buy goods and services
where it wants (including from its associates or other preferred providers) and to charge for dierent
elements in a way that makes it dicult for clients to ensure cost eecveness.
The two legs of EOH’s strategy in the municipal water market were thus rstly, to establish a group
of apparently independent companies working in the same elds and, secondly, to develop business
based on turnkey-type projects.
The third leg was hinted at by EOH’s own statement that business with South African local
government depends on “good relaons” with the clients. Aer some massive corrupon scandals,
EOH eventually admied that those relaons were somemes corrupt.57 The company’s internal
invesgaons “found evidence of a number of governance failings and wrongdoing at EOH, including
unsubstanated payments, tender irregularies and other unethical business pracces which are
57 7 burning quesons for EOH as corrupon allegaons bubble over. hps://www.biznews.com/sa-invesng/2017/07/28/eoh-
corrupon-allegaons
1. 43
primarily limited to the public sector business” (and) “….may relate to legimate transacons,
the or bribery and corrupon payments”. 58
In this context, EOH’s water focus raises obvious quesons. How did the company benet from
its focus on specialised areas of operaons such as the management of municipal distribuon
systems? What benet did it receive from the fact that it owned mulple companies that worked
in the same small sub-sector? Were they really compeng against each other or did they enable
tender processes to be rigged, by ensuring that the key bidders were not independent but
members of the same team?
There are suggesons that these weaknesses were protably exploited. During Cape Town’s water
crisis it is alleged that two EOH companies competed separately for a water-saving project. Both
were shortlisted. But because of a (deliberate?) error in the tender documents, the company that
oered the lower price was disqualied. As a result, the more expensive EOH company took the
contract, with a hey premium.
South Africa’s Compeon Commission had considered the potenal risks of allowing EOH, which sll
claims to be Africa’s largest ICT company, to expand its reach.59 When GCT was acquired in 2015, the
Compeon Tribunal agreed with the Commission that “the transacon is unlikely to substanally
prevent or lessen compeon in any relevant market”.60 When PricewaterhouseCoopers wanted to sell
its Combined Systems operaon to EOH, the Commission recognised that the combined group would
probably control over 50% of its asset management market, but concluded that “the proposed merger
raised no signicant concerns given that this is a tender market and that there are certain alternave
service providers acve”. The Tribunal concurred.61
The Cape Town water loss control contract illustrates the danger of relying on the existence of
tender markets as a defence against market dominance. And GCT showed that tenders were
no defence against an-compeve behaviour when it became the focus of a major corrupon
scandal involving control of the South African Police Service’s computer system. Those concerns
saw GCT returned to its shareholders in 2017. EOH’s CEO said that “… all the quesonable
contracts done by the GCT Group were concluded before they were bought by EOH….”
As a consequence of its admissions of corrupon, EOH’s fortunes have connued to decline.
Its share price collapsed as prots turned into substanal losses. The April 2019 interim report
warned shareholders that there had been under-performance in the water space, with, amongst
other issues, delays in starng projects as well as new project awards as a result of public sector
funding and administrave delays. And EOH Mthombo was disbanded.62
What was supposed to be an important new business area for EOH has turned into a swamp.
Concern about potenally corrupt acvity in the water sector has not been allayed by the
connued revelaons of corporate malfeasance. It was, aer all, EOH that won the DWS’s
controversial SAP tender back in 2016. So the SIU invesgators who are looking into that irregular
contract have been knocking at EOH’s door. And given the many other contracts that EOH
companies had with DWS and water sector instuons such as the Water Research Commission,
water boards and municipalies, there may yet be more revelaons about how the company’s
water business really worked.
Ekurhuleni Meters - Regulaon 32 abuse
Another specialised technical niche in the water sector that has proven to be vulnerable to
corrupon is the business of water metering. It is crically important to measure the amount of
water that is supplied to users, as this allows municipalies to not only measure how much of the
water that is put into networks actually gets to users, but also to charge users for the volume that
they use (which is why some social movements and community organisaons oppose metering).
58 EOH Holdings Ltd - Further cauonary announcement. hps://www.sharenet.co.za/v3/sens_display.
php?tdate=20190828174300&seq=62
59 EOH survives annus horribilis as it claws its way out of a gra hole. hps://www.businesslive.co.za/bd/opinion/2019-11-03-
stephen-van-coller-eoh-survives-annus-horribilis-as-it-claws-its-way-out-of-a-gra-hole/
60 EOH Intelligent Infrastructure (Pty) Ltd and Pia Solar SA (Pty) Ltd. hp://www.saii.org/za/cases/ZACT/2016/115.html
61 EOH Mthombo (Pty) Ltd and PricewaterhouseCoopers Combined System (Pty) Ltd. hps://www.comptrib.co.za/case-detail/7322
62 Corrupon-tainted EOH Mthombo to be shuered. hps://www.itweb.co.za/content/VgZeyqJARBPMdjX9
1. 44
However, with the benets come costs. Meter reading also provides opportunies for corrupon
and has proven to be one of the more problemac water supply management funcons, whether
it is performed in-house or out-sourced to private contractors.
Nor is it a problem limited to small household water users. In 2018, the City of Johannesburg
charged employees of Waterfall Estate, one of the largest property developments in the country,
with using illegally installed meters to avoid payment for over R8-million worth of water. So there
is always an appete for metering systems that will provide reliable, tamper-proof, water use
informaon. And the supply of meters – for electricity as well as for water – is a lucrave and
specialised public sector business that has aracted polically connected entrepreneurs.
In Ekurhuleni, it was alleged that R205-million had been spent on buying water meters from
Lesira-Teq without proper procurement procedures, and that the meters supplied were
unreliable. More important, they were grossly overpriced at over R1 800 each while, in a tender
process that was ignored, comparable units were oered for as lile as R1 025.
The municipal ocials invoked the much-abused Regulaon 32 piggy-backing provision that
allows one local government to save me (and money) on procurement by using a tender that
has been awarded by another municipality. They simply purchase the goods or services accepted
in one municipality on the same terms. There is an important condion: The municipalies must
ensure that “there are demonstrable discounts or benets for the municipality or enty to do so”.
That clause was ignored in Ekurhuleni and a number of other municipalies.63 And the original
contract was suspect because Madibeng, where it was awarded, is considered to be one of the
most corrupt municipalies in the country.
There was a paern in this process. Similar contracts were won in other municipalies where
Slindokuhle Hadebe, the head of water in Ekurhuleni, had previously worked. And, in some cases,
it appeared that the municipalies did not really need, or use, the meters. Indeed, in Mangaung,
it was alleged that the company had commied fraud by invoicing for meters that were not
installed. The company’s claim that the meters had been supplied and then taken back because
they were not told where to install them was dicult to contest because none of the employees
at the me were willing to provide informaon. The city lost the case and nearly R20-million.
It may be relevant that Lesira-Teq’s chairperson Baker Maseko was head of strategy for the ANC’s
1998-1999 naonal elecon campaign, and that Hadebe was deputy chair of Edna Molewa’s
advisory council while she was minister of water aairs.
The chickens of state capture come home to roost, in microcosm
The systemic challenges of corrupon in South Africa are widely recognised and oen described
as a problem of state capture – a parcularly damaging form of corrupon that refers to the
capture of decision-making centres of the state by syndicates comprising business interests and
powerful polical leaders. The captured instuons are then repurposed to serve the interests
of their captors – the business interests gain privileged access to state contracts and regulatory
decisions while the polical interests use the largesse to consolidate their polical power. In
many cases, parcularly in local government, the water sector and its acvies are the vicm of
these larger bales over control of resources more generally.
The Lekwa municipality in Mpumalanga province provides an example of how inghng in a
municipality, in this case between ANC facons, has had disastrous impacts on water supply.
Standerton, Lekwa’s main town, is home to the main poultry processing plant of Astral Foods,
the biggest in Southern Africa. It is also one of the largest employers in the area, with over 2 200
workers. But its future is under threat, owing to the lack of a reliable water supply.
Disputes between dierent facons of the ruling party, essenally to capture control of the
municipality’s limited resources, distracted aenon from the crical job of maintaining and
expanding the town’s water supply. Despite the company’s assistance, the municipality had failed to
undertake even minimum maintenance. Even a court order compelling the municipality to provide the
63 Municipal corrupon in spotlight in R614m water scandal. hps://www.meslive.co.za/news/south-africa/2012-08-02-
municipal-corrupon-in-spotlight-in-r614m-water-scandal/
1. 45
contracted volume of water had no impact. As a consequence, the company has had to truck water to
its installaons at considerable expense. It is now considering shiing producon elsewhere.64
2.4 CORRUPTION IS NOW ENDEMIC AND SYSTEMIC
The cases presented above involve all levels of society from municipal plumbers to naonal ministers,
from poor householders to the directors of mulnaonal companies. They suggest that corrupon
is now endemic, present and taken for granted, across the South African water sector. It’s simply
regarded as what may be needed to get work done. And it is not limited to the public sector.
Recently, a water sector expert was asked by a large company to provide a shortlist of consultants
who could tender for a specialised technical project. A group of young black sciensts whom he
had idened tendered against some experienced (white) experts. Their proposal was judged the
best on both technical and nancial criteria, not least because they were willing to undertake the
gruelling eldwork required, and they won the contract.
Shortly aer they were appointed, they called the person who had put them on the shortlist for
the project. Where, they wanted to know, should they pay the 10% commission that they owed?
They were surprised to be told that they had been listed because they had a team capable of doing
a good job; the reward would be for them to perform well since this would enhance the reputaon
of those involved in idenfying and appoinng them.
When this story was recounted to other people, including some who worked in civil society
organisaons, they were amused. The 10% payment to get a decision was now standard pracce,
they said. One told of a rural non-governmental organisaon (NGO) that had been chosen to
receive a large grant for its community work. The last hurdle was a visit by an independent
evaluator, just to check that everything was above board. As he was leaving, he was taken aside by
the head of the NGO and told that, of course, if the grant was approved, he would be geng his
share. That oer lost them the grant.
Civil society faces a dilemma and it is not just small, local community organisaons. The CEO of the
Mvula Trust, a 25-year-old water sector NGO with an annual income of over R100-million, recently
conrmed allegaons that Ishmael Kgetjepe, then educaon MEC in Limpopo province, was paid
over a million rand to maintain a contract to provide school toilets. According to reports “… the
trust’s managers told the auditors that Kgetjepe phoned them and asked them for money, and
somemes he would ask for money ‘in person’ ….. the trust’s management believed that if they had
refused Kgetjepe’s requests, it would have the ‘potenal to directly or indirectly aect our business
relaonship with his department since he is the polical head’. “ 65
These examples suggest that this kind of corrupon is now systemic, spread through the whole
society. It does not mean that every transacon on every project is corrupt. But it does suggest
that, for people working in the water sector, corrupon is just one more operaonal obstacle to be
dealt with, like bad weather, poor foundaon condions, or an equipment breakdown.
How can such systemic corrupon be dealt with? Twenty years ago, the World Bank described a
situaon which has become commonplace in South Africa:
“Where corrupon is systemic, the formal rules remain in place, but they are superseded
by informal rules ... in pracce the law is not enforced or is applied in a parsan way, and
informal rules prevail. Government tender boards may connue to operate even though
the criteria by which contracts are awarded have changed.”
The soluon, they warn, is not simply to strengthen the formal rules - more is needed than having
the right legal rules in place. First, the queson must be asked:
“… why the informal rules are at odds with the formal rules and then by tackling the causes
of divergence. In some countries the primary reason for divergence may be polical, a
manifestaon of the way power is exercised and retained.” 66
64 Astral Foods secures emergency water arrangement for Mpumalanga facility. hp://www.engineeringnews.co.za/arcle/astral-
foods-secures-emergency-water-arrangement-for-mpumalanga-facility-2019-06-24
65 R1m ‘bribe’ paid to MEC by NGO contracted to build toilets. hps://city-press.news24.com/News/r1m-bribe-paid-to-mec-by-ngo-
contracted-to-build-toilets-20190305
66 Helping Countries Combat Corrupon: The Role of the World Bank. hp://www1.worldbank.org/publicsector/ancorrupt/
corruptn/cor02.htm
1. 46
CHAPTER 3
Corrupon strategies
1. 47
CORRUPTION STRATEGIES – making sense of the evidence
One of the purposes of this report is to understand better the mechanisms used for
corrupt purposes in the water sector. The evidence presented suggests that corruption
can be characterised in three broad areas:
• Manipulaon of procurement and operaonal processes
Tradional an-corrupon eorts oen focus on the processes used by organisaons to purchase
goods and services. This is hardly surprising since the manipulaon of these processes can ensure
that the preferred partner gets the contract although they do not present the best technical or
nancial oer. They will oen pay a handsome share of their prots to whoever facilitates their
success. As a result, the mid- and lower-level personnel who administer these processes become
quite expert in subverng them.
• Inuencing policy and regulatory decisions
At a higher level, there is a more direct way of extracng benet from the management of public
resources. Decisions on which project to build or which applicaon for a regulatory licence to
approve are oen very protable for the beneciaries. This requires a more strategic type of
involvement before any procurement processes begin. In the case of regulatory decisions, geng
people into posions where criteria are set and recommendaons from technical ocials are
approved oers many opportunies for corrupt engagements.
• Taking control of instuons
Many of the administrave obstacles posed by internal rules and regulaons can be overcome if the
leadership of an organisaon has corrupt intent. S/he can appoint compliant people to key posions
to aend to the technical detail. In these cases, what becomes important is to exercise internal
power in ways that do not draw the aenon of external oversight agencies – such as auditors. This
requires a degree of competence as well as compliance on the part of the technicians involved.
Of course, if the wider instuonal oversight environment has also been inltrated, less cauon is
needed and it becomes much easier to proceed.
Set out below are some of the strategies that have been observed in the cases presented, following
this characterisaon.
3.1 MANIPULATION of procurement and operaonal processes
Beang bureaucracy or creang opportunies for corrupon?
Eorts to control nancial management in government have seen a proliferaon of processes and
procedures adopted to try to discipline behaviour. Quite oen, they impede eecve operaons and
implementaon and can actually facilitate misdemeanours if the structures are captured and used to
provide pathways for misappropriaon.
The water sector depends on its built infrastructure and thus on the construcon industry which has
its own complexies. There are many more or less legal strategies that contractors and consultants
use to promise to deliver a project at an apparently impossibly low price yet sll make a prot. So it
is important that their public sector clients employ specialists who understand the system and can
make it work fairly and eecvely while controlling corrupon.
Qualicaon and pre-qualicaon
Tender processes can be rigged even in a well-run system – as long as there are sucient people
willing to inuence the result. The pre-qualicaon phase, oen used in large projects, is a starng
point. Pre-qualicaon helps to ensure that only companies with a reasonable prospect of success
enter the process. This reduces administrave workloads and opportunies for improper lobbying. It
was indeed this process that saw the LTE company excluded from the main LHWP contracts, despite
Nomvula Mokonyane’s determined eorts to promote their parcipaon.
1. 48
But pre-qualicaon can be abused, to reduce the compeon for a preferred bidder. A simple
way to remove a potenal competor of the favoured bidder is to introduce apparently trivial
requirements at a late stage, when many bidders will already have nalised their submissions. The
Mpumalanga programme case described above was a good example.
The tender process – specicaon, evaluaon and adjudicaon
Government regulates procurement processes for all public spending with special provisions for large
infrastructure projects. Naonal departments and municipalies are supposed to establish separate
bid specicaon, bid evaluaon and bid adjudicaon commiees, each of which has a clear mandate.
Some discipline is achieved by involving dierent people in the process of specifying what is required,
evaluang tenders to provide it, and then taking decisions on which tenderer should win the contract
based on recommendaons received.
Yet, in many public organisaons, the outcome of these procedures is oen ignored if senior ocials
believe they can insist on dierent outcomes. So, in the Mpumalanga water programme the bid
evaluaon commiee refused to disqualify the majority of competors, since their non-compliance
with tender condions was judged not to be material. They recommended that the contract be
awarded to the best bid. But the CEO simply changed the evaluaon results and appointed his
preferred company anyway.
A similar approach was taken in the case of the DWS SAP tender which showed that top ocials
were able to ignore procedural objecons with impunity. Thus it is clear that, while it is important for
processes to be followed, they are only eecve if they are complied with at all levels and if there are
consequences for a failure to do so.
The panel strategy
Some procurement rules, intended to enable government to appoint service providers speedily, provide
an apparently easy way to bypass cumbersome tender procedures. An example oen used for the
procurement of consultants and small construcon works is a guideline produced by Naonal Treasury that
explains how a panel of service providers can be established.
“Where consultancy services are required on a recurring basis, a panel of consultants/list of approved
service providers for the rendering of these services may be established. These panels/lists should be
established through the compeve bidding process, usually for services that are of a roune or simple
nature where the scope and content of the work to be done can be described in detail.” 67
The condions for such a list are quite general and, with a lile ingenuity, terms of reference can be drawn
up that favour desired providers; once they are on the panel, work can be channelled to them. This also
allows potenal competors to be eliminated, and its generality makes it more dicult to contest. The
process also allows considerable exibility over costs incurred:
“Once the panel/list of service providers has been approved, only the successful applicants are
approached, depending on the circumstances, either by obtaining quotes on a rotaon basis, or
according to the bid procedure when services are required, with the excepon that the requirement is
not adversed in the Government Tender Bullen again.” 68
According to newspaper reports69, it was through this process that LTE was awarded the controversial
Giyani project:
“Asked how his company received the other nine mega water projects, LTE’s chief execuve, Thulani
Majola, said: ‘A tender was adversed for consultants to be on the panel of the Department of Water
and Sanitaon. LTE responded to the tender and was subsequently appointed. ….’ Once on the panel,
Majola said consultants received work based on their capacity and experience.”
The panel process apparently also led to Vharanani Properes being appointed to complete both the Free
State bucket toilets project and the Giyani programme’s Nandoni pipeline – neither of which fall under the
denion of simple or roune.
67 treasury.gov.za/divisions/ocpo/sc/Guidelines/SCM%20Jan900-Guidelines.pdf
68 Guide for Municipal Accounng Ocers_1. hps://archive.org/stream/mfma_guidelines_guide_for_municipal_accounng_o-
cers_1_pdf/MFMA/Guidelines/Guide%20for%20Municipal%20Accounng%20Ocers_1_djvu.txt
69 How R502m grew to R2.7bn in a year. hps://city-press.news24.com/News/how-r502m-grew-to-r27bn-in-a-year-20160423
1. 49
The DWS’s panels were reconstuted aer Mokonyane had said publicly that she didn’t want work to go to
the same old companies. While this was presented as support for black-owned companies, it soon become
clear that parcular black companies were favoured. The upshot is that awards were made, not on the basis
of price and quality, nor on the basis of the BEE credenals of the chosen rms, but rather on the basis of
their relaonship with the minister. This resulted in a series of failed projects and cost overruns.
The emergency strategy
Unexpected events occur. Pumps break down, pipes burst, and natural disasters include oods that
damage infrastructure and droughts that curtail water supply. The possibility of many of these events can
be predicted and planned for. Ulies should keep a stock of common types and sizes of pipes and ngs.
There should be backup sets of pumps and motors – and if one fails, it should be repaired quickly. The
idencaon and protecon of key infrastructure can avoid ood damage while, once it is recognised that
droughts will occur, operang rules can be developed to trigger early supply restricons rather than wait
unl supplies fail.
Nevertheless, most supply chain management policies make provision to bypass normal procedures in the
case of a genuine emergency. The Naonal Treasury guidelines say that:
“In urgent and emergency cases, an instuon may dispense with the invitaon of bids and may
obtain the required goods, works or services by means of quotaons by preferably making use of the
database of prospecve suppliers, or otherwise in any manner to the best interest of the State. ….
Urgent cases are cases where early delivery is of crical importance and the invitaon of compeve
bids is either impossible or impraccal. (However, a lack of proper planning should not be constuted
as an urgent case.)“
However, corrupt ocials make frequent use of the emergency provision to avoid formal procurement
processes either by claiming an emergency or actually creang one – and somemes both. They may
allow water treatment chemicals to run out or delay the repair of key equipment. At the extreme, systems
have been sabotaged to create condions for an emergency intervenon – as alleged in the North West
tanker scam. When procurement is undertaken in these condions, prices are invariably higher than they
need to be and it is more likely that service providers preferred by the ocials concerned will get the
contract.
The emergency strategy was taken to its extremes in the Giyani case when a
drought in 2009 was sll being used to jusfy new tenders and contracts for
major projects six years later. There was a revealing discussion on this subject
with the Auditor-General’s ocials in Parliament’s water commiee as it
sought to understand what had happened at DWS. The chairperson asked what
the bursng of a water pipe would be classied as. The AGSA representave
responded that “it would be classied as an emergency and it would take a day
or two to aend to the emergency and correct it. However, if a pipeline is built
from one dam to another dam it is not an emergency because the project might
be a mul-year project.”
Andries Sekgetho, who had led the audit of the Giyani project, explained that there
were problems with the budgeng process, nancial management, compliance,
and even the objecves of the emergency project.
“The inial scope allocated to the implemenng agent that was linked to the
ministerial direcve based on the emergency, was R91-million. The direcve was signed by the minister
on 25 August 2014 aer the contractor had already been appointed by the implemenng agent on
20 August 2014. The scope was subsequently expanded to R248-million, based on a new ministerial
direcve signed on 24 October 2014. The current business plan [2017] now indicated total costs of
R13.6-billion. There were no signed contracts between the department and the implemenng agent.”
70
Further detail was provided in subsequent hearings. It was explained that two types of emergencies
are provided for in legislaon, emergencies due to a disaster as per the Constuon and Disaster
70 Contested audit ndings 2016/17 by DWS: Auditor-General brieng. hps://pmg.org.za/commiee-meeng/25407/#s137849583
The emergency
strategy was taken
to its extremes in the
Giyani case when a
drought in 2009 was
still being used to
justify new tenders
and contracts for
major projects six
years later.
1. 50
Management Act (DMA), and emergencies as dened by the Public Finance Management Act (PFMA).
At the least, an emergency needs to pose a risk to health, life, property or environment. It is reasonable
to make inference to meframes spulated by the Constuon and the DMA of 21 days and three
months respecvely. A maximum period of three months can be applied to the immediate acon
meframe as the DMA makes reference to the PFMA. Therefore, the response acons to the emergency
should be executed and completed within the three months. 71
The Regulaon 32 ‘piggy-backing’ strategy
Another provision intended to simplify procurement is also regularly abused. This is the piggy-backing
strategy which allows one public sector enty to use a contract that has been properly procured by
another. So, if the City of Johannesburg has gone through a proper tender process to procure, say, water
treatment chemicals, why should the Midvaal municipality repeat the process? Why not just buy the
same product, from the same supplier at the same price?
This approach is allowed by municipal supply chain management regulaon 32 of 2005. It was the basis
for the award of Umgeni Water’s recent R220-million security contract.72 It was also the provision that
allowed the Ekurhuleni Metro Municipality – and a number of other municipalies – to buy substanally
over-priced and inferior quality water meters.
A parcular variant of this scam is for the inial tender to consist of a bundle of items in which a
small quanty of a few individual items can be included at very high cost without aecng the overall
compeveness of the price. If another organisaon uses the contract price to buy just those items, it is
possible to charge grossly inated prices, apparently legally.
The direcves strategy – give orders then blame the ocials, or the president!
While many corrupon strategies are adopted by ocials in the administraon, there are some that
can only be exercised by a polical head. The Water Services Act (s41(1)) empowers the minister
responsible for the DWS to direct the water boards under their oversight to undertake a specic acvity.
This power was liberally exercised and is at the root of the Giyani and War on Leaks problems where the
department found itself with nancial commitments that had simply not been budgeted for.
This arose because the minister and her senior ocials ignored spulaons in the law that the direcve
must be ‘reasonable’ and that the water board will only pay ‘where the acvity is nancially viable’. In
2018, challenged by the parliamentary commiee on the huge amounts of money owed by DWS to the
Lepelle Water Board, the water board’s CEO Phineas Legodi explained that
…. “when you are given a legal instrucon you can only defy at your own risk because that is
insubordinaon, so direcves had to be understood within that context, as a wrien lawful
instrucon … In good faith the board receives and implements them with the understanding that
money does or will follow.”
Asked whether an illegal direcve would be implemented, the CEO responded that if it is illegal then he
cannot implement. However, as a commiee member pointed out, that is not necessarily the end of the
maer.
”…. the biggest problem faced by the water boards is that a direcve is given and then funding does
not follow but the money remains in the department and the water boards end up spending their
own money. There is a weakness somewhere at the level of regulaon of direcves.”73
The history of Giyani and the War on Leaks show that the minister repeatedly abused her power by
issuing direcves for which she had no funds available. The water board expected that DWS would
pay them so that they could pay the minister’s nominated service provider. But this then raises the
issue of why proper procurement processes were not followed. As already indicated, the excuse about
emergencies does not hold and the queson is whether Lepelle can be held responsible for appoinng
a provider nominated by the minister – and whether it can show that this was indeed her instrucon.
71 Brieng: Auditor-General South Africa, porolio commiee of water and sanitaon. Follow-up on audit key maers. hps://
pmg.org.za/les/180509agsa.pdf
72 Umgeni Water in R220m tender scandal. hps://city-press.news24.com/News/mon-3pm-piggybacking-the-way-to-get-the-
job-20181224
73 Lepelle Northern Water Board & Magalies Water Board 2016/17 Annual Report, with Deputy Minister. hps://pmg.org.za/com-
miee-meeng/25885/
1. 51
Two years later, when the SIU quesoned Lepelle about the appointment of LTE on Giyani projects,
both Legodi and Lepelle’s planning manager Carel Schmahl were reported to have signed adavits
saying that they were instructed to appoint LTE.74 Such discreditable behaviour should be seen in
the context of evidence that, where ocials have refused to do what they were told, in the Lesotho
Water Commission or in the case of DG Maxwell Sirenya and Edna Molewa, the ocial is oen simply
replaced.
Unfortunately, under pressure, ministers can and do blame their ocials for illegal acons, even where
they are simply following orders. This is what Mokonyane did:
“On the irregular, fruitless and wasteful expenditure, she said the Director General present at
the previous meeng had been suspended for derelicon of duty and compliance failures in
management, administraon and accounng. Suspensions were also meted out to DDGs based on
the report of a task team.” 75
If all else fails, a nal strategy used by Mokonyane in 2018 was to claim that she was acng on a
presidenal direcve:
“Ocials accepted that the War on Leaks project had not been budgeted for and was irregular, but
the reason given was that it had been a ministerial direcve. … The idea of the War on Leaks project
had been put forward for inclusion in the State of the Naon Address by the President in 2015 and
then, based on its inclusion in the State of the Naon Address, a memorandum had been sent to the
Minister of Water and Sanitaon requesng her to sign a direcve for the implementaon of the
project.” 76
The turnkey strategy
A feature in a number of cases which could be termed ‘grand corrupon’ has been the aempt to gain
control of the enre process of concepon, design and construcon of projects through the use of
turnkey contracts. This was at the root of the Giyani case and the promoon of the Mangaung pipeline
project, and also underpinned some of EOH’s strategies.
The turnkey approach (also called EPC – engineering, procurement and construcon) can be a very
useful way to tackle complex projects that reduces the risk for the client. The client provides a broad
brief, specifying what is required from the project, for instance, the reliable delivery of a given volume
of water treated to a specied standard. The contractor is then chosen on the basis of their ability to
deliver the required outcome.
This gives the contractor the responsibility for choosing the technologies used, integrang them into the
overall project design, building the project and, when it is completed, pung it into operaon to show
that it is producing according to the specicaons. The contractor is also responsible for coordinang
the work of dierent suppliers and sub-contractors and has to carry the cost of any delay.
A turnkey approach could have avoided the management failures that saw compleon delays and huge
cost overruns in Eskom’s Kusile and Medupi power staons.77 If properly supervised, it will also reduce
the risk of corrupon on individual sub-contracts
However, for turnkey approaches to succeed and provide value for money, the contract strategy must be
well dened and contract details carefully drawn and supervised to ensure that the desired outcomes
are achieved, that the risks are carried by the contractor, and that any specic developmental condions
are not abused. In the Giyani project and the Mangaung proposal, the companies that led the process
were not chosen through a proper compeve process and there appeared to be no tender process or
cost controls for the appointment of their sub-contractors.
74 How Mokonyane paved the way for a consulng rm to earn billions. hps://www.news24.com/SouthAfrica/News/how-mokon-
yane-paved-the-way-for-a-construcon-rm-to-earn-billions-20180317
75 Water Aairs irregular, fruitless & wasteful expenditure & accruals, with Minister: hearing 3. hps://pmg.org.za/commit-
tee-meeng/24880/
76 Ibid
77 Tough lessons from Eskom — or not? hps://www.meslive.co.za/sunday-mes/business/2019-04-21-ron-derby-tough-lessons-
from-eskom--or-not/
1. 52
The ongoing challenge of managing construcon contracts
Large construcon contracts are well known for their vulnerability to corrupon and have
thus drawn considerable aenon. Administrave approaches to inial procurement (tender
processes) are well developed and can work if there is independent oversight with no conicts or
own interests, although many of the challenges and risks have been described above.
However, challenges connue once a contract is awarded. In any large construcon project,
there are uncertaines about, for instance, the detailed foundaon condions. There is usually
provision for variaon orders, changes in the dened work if, for instance there is a change in
detailed design, or in the event of delays due to weather, labour challenges, or the failure of
another contractor to deliver the goods. These eventualies can oen be extremely costly as
contractors are entled to claim for all extra costs incurred.
As projects progress, contractors submit invoices for work done, which must be inspected and
conrmed on a day-to-day basis since many elements of the work will be hidden as construcon
proceeds. The compliance with specicaons for quality and quanty of materials used must
be conrmed. If all of these factors are not carefully managed by the client’s representaves,
addional claims can mount rapidly and shoddy workmanship can be hidden.
The opportunies for collusion between the client’s representaves and contractors is thus
a permanent risk – and highlights the importance of appoinng competent and trustworthy
supervising consultants as the client’s representaves. But it also highlights an obvious strategy
for a client that wants to enable inappropriate claims/payments to its chosen contractor – to
appoint sta who will, if so instructed, process contractors’ invoices and not queson excessive or
fraudulent claims.
Many of these issues were idened in Phase 1A of the LHWP and have been migated in
subsequent phases of the project. But this is a permanent acvity and water sector instuons
need to have access to competent infrastructure specialists who can manage the intricacies of
unforeseen circumstances, scope changes, and variaon orders to control such acvies.
3.2 INFLUENCING THE POLICY AND REGULATORY FRAMEWORK
Regional bulk infrastructure grant - creang opportunies for corrupon?
There are oen choices to be made between dierent projects to achieve the same objecves –
and between projects which might oer more or less social, economic or polical return. These
choices should be made on the basis of public interest criteria – to achieve public policy goals
eciently and cost-eecvely.
But there are many examples where personal polical and private interests seek to guide
decisions towards choices that oer the greatest private prot rather than public benet. In
a perfect world, funds would be allocated to achieve their public purposes through the most
ecient channels. In real organisaons, both private and public, control over budgets is just as
oen a maer of personal power rather than public priority.
When South Africa’s new local government structures were formally established in 2001, DWS
ocials were concerned that they would lose control of the capital budget for water services
to municipalies. While they could sll set condions on the grants from naonal government,
the money would be managed by the municipalies. But they argued, with some juscaon,
that large bulk supply projects which crossed municipal boundaries, would oen be more cost-
eecve.
This was a connuaon of a long debate about the merits of small local schemes managed by the
community of users versus large regional schemes managed by a specialised organisaon. While
cost, technical performance and broad public policy should be the main consideraons, there are
other factors at play. The management of public organisaons oen seek to expand their ability to
deliver on their mandate, as well as to expand their inuence, power and resources – the laer of
which may be exploited to provide more direct personal benets.
1. 53
So South Africa’s water sector NGOs promoted small schemes, oering the
opportunity to support community management. Municipalies wanted to
control acvies in their areas, with the relevant funds. DWS had to argue
that they simply wanted to ensure eecve spending and that, as naonal
regulator of water services, they should be able to set condions on the
use of grant funds from naonal government. It rapidly became obvious
that while DWS could try to inuence the choice of projects to be funded,
municipalies could ignore the regulator with impunity – although the
Mpumalanga case shows that the provincial governments, bypassed by the
formal process, could sll exert informal polical control over the funds.
When municipal supplies started to fail, the situaon changed. Oen, the
problem was that, due to poor planning, distribuon networks had been
expanded without addional supplies of bulk water. But DWS ocials
used the opportunity to promote the concept of large regional schemes that oen pipe water
across the boundaries of individual municipalies. They convinced Naonal Treasury and
the Department of Cooperave Governance and Tradional Aairs to allocate a substanal
proporon of the water grants to DWS through a special regional bulk infrastructure grant
(RBIG).
The RBIG created unfortunate incenves and opportunies. So in some cases, large schemes
have been built rather than cheaper small ones. They are bigger than needed and lile aenon
has been given to the cost of operang them. This approach has oen created liabilies rather
than assets for municipalies. And, as the Giyani project showed, it also enabled corrupon
by evading oversight and weakening incenves to achieve eecve public spending. The RBIG
also helped to limit the accountability of DWS. So when water does not reach households, DWS
simply explains, as they connue to do in Giyani, that connecng households is a municipal
responsibility!
Local economic opportunies or protecon rackets?
A specic feature in South African construcon is the common requirement that a proporon
of the workforce should be drawn from the local community. In communies with high levels
of unemployment and poverty, pressure for jobs even as low-paid general workers is intense.
The polical response has been to require that a proporon of project jobs will go to local
community members. But this has created new challenges.
Whoever is in charge of the recruitment of locals is in a powerful posion. The pracce of
appoinng labour brokers or community liaison ocers to interface between communies
and contractors began on RDP projects in the early years of South Africa’s democracy. This has
become a site of contenon for power and reward and indeed the role of brokers in local polics
has expanded into more general polical acvity.78
Nomvula Mokonyane had personal experience of this. As MEC for housing in Gauteng, she was
responsible for iniang the Sebokeng Regional Sanitaon Scheme (SRSS), idened in 2005 as
a crical naonal project to provide wastewater treatment for the growing populaon of south
Johannesburg and to protect the Vaal River. The project proceeded slowly but was completely
stopped in 2014 by community protests about the 30% quota for local contractors and the
labour employment pracces.
When Mokonyane visited the area in 2015, she heard allegaons of corrupon and neposm.
“Community liaison ocers hire people in a corrupt manner. You’ll oen see ve unskilled
people from one house employed while those with skills sit at home,” said one resident.79
Conicts connued around the project, and in 2018, the new minister, Gugile Nkwin, said that
he would approach the president to declare the SRSS a naonal key point in order to ensure the
security of the infrastructure.80
78 Patronage from below: polical unrest in an informal selement in South Africa. Hannah J. Dawson, 2014. African Aairs,
113/453, 518–539 doi: 10.1093/afraf/adu056
79 Creang employment through infrastructure. Water & Sanitaon Africa, July/Aug 2015, hps://issuu.com/glen.t/docs/wasa_
july_august_2015
80 Steps being taken to x Sebokeng sewer scheme. hps://www.sanews.gov.za/south-africa/steps-being-taken-x-sebokeng-sew-
er-scheme
It rapidly became
obvious that while
DWS could try
to inuence the
choice of projects
to be funded,
municipalities
could ignore the
regulator with
impunity
1. 54
While the Sebokeng problem now appears to have been resolved, with the blockade lied, the
broader problem is now so serious that leading engineering organisaons are warning that it
threatens the whole construcon industry. The CEO of the South African Federaon of Civil
Engineering Contractors believes that the unrest oen witnessed at construcon sites is driven,
to a degree, by the desire of the surrounding communies to become involved in and gain
economically from projects in their area.
“We cannot dismiss that. Th ose expectaons are genuine and have to be met...On the other
hand, you see violence driven by gangs operang maa style. Even worse, they are oen alleged
to be linked to local, provincial and naonal polical gures.”81
It is increasingly common for demands to be made for addional allocaons of funds to the
‘community component’ of the project. These demands are oen unrelated to any actual work
done and are eecvely demands for bribes. They are also somemes presented as a protecon
fee, accompanied by threats - and pracce – of inmidaon and violence against project sta. It is
parcularly dicult for public sector contractors to respond to since their accounng regulaons
do not allow for such arrangements, as the project managers for the Clanwilliam dam project
found.82
Water projects –a pipeline for polical funding?
The cases presented do suggest that there is a connecon between corrupon in water projects
and the funding of polical acvies and that this inuences the approach taken and choices
made. This is not an issue limited to South Africa.
However, the queson this raises is whether the water sector is used as a vehicle to fund polical
acvity. Nomvula Mokonyane has formal ANC responsibilies for elecon processes and has
been cited in the Commission of Inquiry into Allegaons of State Capture (Zondo Commission)
for receiving material support from the infamous Bosasa company. The incidents involving DGs
Sirenya and Yako, who were dismissed when they sought to block large ICT contracts, happened in
elecon periods.
The Mpumalanga municipal budget transfers also occurred in the run-up to an elecon at a me
when the premier (now the deputy president) was widely seen to be consolidang his polical
posion and preparing for higher oce.83 The New York Times explicitly claimed that “Using public
funds, especially those earmarked for educaon, Mr. Mabuza and his allies built one of the most
powerful polical machines in the country, turning Mpumalanga … into the ANC’s second-biggest
vong bloc”.84
As in so many cases of high-level corrupon in South Africa, there are many anecdotes but lile
rm evidence. There is, however, a clear correlaon between incidents of large scale corrupon
and polical acvity.
81 Construcon industry in rapid decline as work wanes, ‘maa’ takes over, warns Safcec. hp://www.engineeringnews.co.za/ar-
cle/construcon-industry-in-rapid-decline-as-work-wanes-maa-takes-over-warnssafcec-2019-04-08
82 Water Aairs irregular, fruitless & wasteful expenditure & accruals, with Minister: hearing 3. hps://pmg.org.za/commiee-meet-
ing/24880/
83 The case against Deputy President David Mabuza. hps://www.news24.com/Analysis/the-pending-case-against-deputy-presi-
dent-david-mabuza-20190530
84 South Africa’s Deputy President, Accused of Corrupon, Faces Uncertain Future. hps://www.nymes.com/2019/05/22/world/
africa/south-africa-david-mabuza.html
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3.3 TAKING CONTROL OF INSTITUTIONS
Instuons – weak or deliberately weakened?
A frequent concern in South Africa – and many other countries where the public instuons
perform poorly – is their lack of instuonal capacity. The weakness of this diagnosc is that
it assumes that there is a desire at leadership level to have strong and capable instuons.
The evidence from DWS cases is that eorts to strengthen the administrave leadership have
been systemacally undermined by polical heads when compliance with the rules became an
obstacle to their agendas.
The auditor-general, in his report on the state of the DWS, made specic reference to the rate of
turnover of directors-general and chief nancial ocers.
There is signicant instability at leadership level within the DWS. There has been a signicantly
high turnover rate relang to the director-general (DG) posion. Over the past four nancial
years, the DWS has gone through four dierent DGs and/or acng DGs – most of the me,
this posion has been lled in an acng capacity. This adversely aects the programmes
(performance) and the internal control environment of the DWS. Three deputy directors-
general (DDGs) were also placed on suspension and returned to work without any evidence that
invesgaons had been conducted and/or concluded. There were also three resignaons at this
level. Furthermore, there are currently ve acng ocials at these levels, which is very high.
The AG’s report also noted that between 2009 and 2017, the average length of tenure of a DG
was just 11 months, with ve of the nine incumbents in that period acng appointees. Over this
period, three of the four formally appointed DGs resigned - although this could indicate either
unacceptable pressure from the minister or acknowledgement of failure to perform. 91
While appointment of DGs is done in consultaon with the presidency, there is no formal
accountability required when a DG leaves prematurely, opening the door to ministers to apply
pressure on incumbents with whom they disagree.
Weakening oversight mechanisms
An essenal part of weakening instuonal capacity so as to remove constraints on illicit
behaviour is to weaken the mechanisms used for oversight of instuonal performance.
South Africa’s water legislaon requires ministers to collect informaon on both water
services and water resources and to provide that informaon to the public. The decision to
stop the producon of the Blue, Green and No Drop reports would appear to be a deliberate
91 Report of the auditor-general to the joint commiee of inquiry into the funconing of the Department of Water and Sanitaon:
Challenges facing the water and sanitaon porolio. hps://www.corruponwatch.org.za/wp-content/uploads/2020/02/180327AG-
SA-Challenges_Water_Sanitaon.pdf
Turnover of directors-general at the Department of Water and Sanitaon - AG report to the joint commiee of inquiry into
the funconing of the Department of Water and Sanitaon. March 2018
1. 57
contravenon of that requirement. Preparaon of the Naonal Water Resource Strategy, which
is explicitly required by law to be produced every ve years to explain how water security is to
be sustained, is more than three years late.
In addion, the department took the unusual step of repeatedly contesng the ndings of the
auditor-general about the state of DWS’s nances. As the AG explained:
“The trend of contestaon to our audit ndings connued and intensied in the previous
audit cycle. Management contested our conclusions in the 2015-16 audit cycle … The claims
of the DWS were dismissed and the conclusions reached by the auditors were found to be
factual, appropriate and supported by adequate work performed. … In the 2016-17 audit
cycle, management contested the audit outcomes of both the DWS and the WTE, which
were again taken through the independent review process. The conclusions and conduct
of the auditors were once again upheld …. The contestaon and pressure placed on the
audit teams, without sucient grounds, appear to be movated by the DWS wanng to
avoid negave audit outcomes and disclosures of irregular as well as fruitless and wasteful
expenditure. The service providers to the DWS where irregular and fruitless and wasteful
expenditure were noted also threatened the AGSA with legal acon.”92
Threats were also made against the AG’s sta at Rand Water:
“Makwetu told MPs that senior employees from Rand Water, a department of water and
sanitaon enty, inmidated his sta in August when they told them that that the AG’s audit
ndings “are cosng them their bonuses”.93
While the issues at Rand Water did not appear to indicate corrupon, the atude towards
the AGSA was a maer of concern and perhaps reected the atude of ocials in the sector
towards the role of the AGSA.
Board membership – a duty or a privilege?
Another ministerial prerogave is to appoint chairs and members of the boards of instuons
under their control. In the case of the DWS, this includes the members of water boards, the
TCTA, the Water Research Commission and a number of other instuons such as internaonal
commissions and commiees. Although, again, there are procedures to be followed, ministers
can generally control the process and ensure that their preferred candidates are nominated.
This provides signicant opportunies for patronage since the incumbents receive a useful if not
exorbitant nancial allowance.
The evidence from the cases has shown that ministers have used board appointments to try to
ensure that their wishes are carried out, notably in the case of Lepelle Water, Umgeni Water
and the Lesotho Highlands Water Joint Water Commission. Eorts to inuence decisions at TCTA
and to enable connued control by Dudu Myeni in Mhlatuze through the merger with Umgeni
further illustrate the dynamics that this creates.
The implicaons of these arrangements were made evident in the parliamentary tesmony
of the CEO of Lepelle Water, when asked how he and the board of which he was an execuve
director would deal with an illegal direcve:
…. “when you are given a legal instrucon you can only defy at your own risk because that is
insubordinaon, so direcves had to be understood within that context, as a wrien lawful
instrucon … “ (cited above)
‘Insubordinaon’ is, of course, a revealing word to use in this context – basic corporate
governance principles hold that a director’s decisions are subordinated to the law and the
duciary duty owed to the company, while the CEO is accountable to the board. The minister
– who is designated the shareowner representave – sets the overall strategic mandate
92 Report of the auditor-general to the joint commiee of inquiry into the funconing of the Department of Water
and Sanitaon: Challenges facing the water and sanitaon porolio. hps://www.corruponwatch.org.za/wp-content/up-
loads/2020/02/180327AGSA-Challenges_Water_Sanitaon.pdf
93 ‘You’re cosng us our bonuses’: Kimi Makwetu tells of death threats to audit sta. hps://www.meslive.co.za/polics/2019-
12-04-youre-cosng-us-our-bonuses-kimi-makwetu-tells-of-death-threats-to-audit-sta/
1. 58
which includes specifying the public interest objecves and the trade-o, if any, with eciency
consideraons. She should not be issuing instrucons to the board, much less the execuve
management.
The broader challenges of instuonal capture
In South Africa’s current system of government, ministers have substanal power. In part, this is
because funcons such as personnel management and procurement that were centralised under the
pre-1994 regime have been assigned to individual ministers and their departments.
In addion, departments such as Naonal Treasury and Public Services and Administraon (DPSA),
that are supposed to maintain oversight over the acvies of line departments, have been weakened.
In some cases, this is formal – for instance, procurement acvies that used to be managed by a
central naonal tender board have now been assigned to departments.
But in many cases, their residual oversight mechanism is oen disregarded. So acvies such as
irregular expenditure that should be reported to Naonal Treasury are simply ignored, with no
consequences unless these are discovered when accounts are audited; even then, lile or no acon
is taken. Similarly, departmental reorganisaons, which are supposed to be communicated to and
conrmed by the DPSA, are made without even a communicaon.
This lack of administrave discipline has been allowed by the polical leadership – the presidency,
the transversal departments and the ANC, as the ruling party – either because they were constrained
polically by the dynamics of the ANC or because they actually condoned it, for their own purposes.
This has contributed to a culture of impunity at ministerial level.
At its extreme, this degeneraon of administrave discipline led to the phenomenon of state capture.
The impact of this has been seen in the water sector with, amongst others, the delays to the Lesotho
Highlands Water Project and the Clanwilliam Dam, and the eorts to promote the nancially non-
viable Umzimvubu Dam and Mangaung pipeline projects.
A characterisc of many of the cases raised is how senior managers – including board members and
CEOs or DGs – if not acvely involved in corrupon, turned a blind eye to fairly obvious illegalies.
One reason for this was oen that their jobs, if not their lives, were at risk if they raised awkward
quesons. Another reason is that, even if they reported their concerns and provided evidence of
them, there would be no consequences for the people responsible.
This comes back to the nature of South African society. In countries with fully developed economies,
there are alternaves for senior professionals who leave an instuon – there is even oen sympathy
for those who leave for reasons of principle. In South Africa, with high levels of unemployment, there
are limited alternave opons for employment with anything like current levels of pay. Many of those
jobs are in professional elds dependent on public sector work, for which good relaonships with
government are crical.
In too many cases, ocials have had to balance their job security against their principles; and for
many, understandably, the cost of principles is simply too high.
1. 59
STRATEGIES FOR CORRUPTION – A STRUCTURED SUMMARY
Corrupon strategies in procurement
Strategy Approach and risk Some cases referenced
Intervenon in pre-qualicaon
and qualicaon processes
Manipulaon of tender
invitaons to benet preferred
companies
EOH’s move from SAP to specialised
water services
Lesotho Highlands Water Project
Intervenon at tender
evaluaon and adjudicaon
stage
Manipulaon of the evaluaon
and award process to enable
preferred companies to be
selected
Ekurhuleni Meters - Regulaon 32 abuse
Mpumalanga’s municipal budgets
Pre-approved panel strategy Mechanism to bypass tender
procedures, promoted as a
way to improve organisaonal
eciency
Giyani Water Project
The bucket toilet tender snk
Emergency strategy Use of emergency legislaon as
mechanism to bypass tender
procedures and avoid scruny
of the capabilies of preferred
candidates and the cost of
alternaves
Giyani Water Project
How desalinaon dreams derailed NMB
water supply
How water tankers cause taps to run dry
The bucket toilet tender snk
Regulaon 32 piggy-backing
strategy
Mechanism to bypass
tender procedures, by
using procedures of other
organisaons to reduce
bureaucracy
Ekurhuleni Meters - Regulaon 32 abuse
Mhlatuze-Mgeni merger rings alarm bells
Construcon contract strategy Organisaon of oversight
systems to allow overpayment
to complicit contractors
Lesotho Highlands Water Project
Giyani Water Project
Turnkey strategy Bundle design and construcon
(and somemes, nance and
operaon) into single contract
to gain control over operaonal
procurement
EOH’s move from SAP to specialised
water services
Giyani Water Project
Mangaung and the Gariep pipeline
Sweetwaters, Kanana Park Extension 6 - a
prologue
Preferences for local economic
opportunies or protecon
rackets?
Local preferences used to
gain control of patronage
opportunies and to extort
payments from contractors
Raising Clanwilliam Dam
Lesotho Highlands Water Project
Sweetwaters, Kanana Park Extension 6 - a
prologue
Preferenal procurement Abuse of requirements for
preference to be given to
black companies, personnel or
community involvement
Giyani Water Project
EOH’s move from SAP to specialised
water services
The bucket toilet tender snk
Lesotho Highlands Water Project
1. 60
HIGHER LEVEL STRATEGIES:
Inuencing policy and regulatory decisions, taking control of instuons
Inuencing policy and regulatory decisions
Strategy Approach and risk Some cases referenced
Control over procurement
processes
Opportunity to alter
recommendaons and bypass
procedures
Mpumalanga’s municipal budgets
Giyani Water Project
Regulatory decision-making Opportunity to benet
preferred companies, block
others and extort payments
Mining licences, polluon, and
public vs private interests
Controlling public oversight of
sector performance
Suppression of performance
data reduces accountability
Blue, Green and No Drop reports
Determining project strategy The approach taken to project
promoon determined by
personal interests, negavely
aecng public outcomes
Giyani Water Project
Lesotho Highlands Water Project
Mangaung and the Gariep
pipeline
How desalinaon dreams derailed
NMB water supply
EOH’s move from SAP to
specialised water services
The War on Leaks ends in defeat
1. 61
Taking control of instuons (abuse of power)
Strategy Approach and risk Some cases referenced
Design of corporate structures
to facilitate corrupon
Public policy priories and
approaches undermined
EOH’s move from SAP to specialised
water services
Sweetwaters, Kanana Park Extension
6 - a prologue
Signing o of procurement
decisions
Procurement processes,
principles and regulaons will
be ignored
Mpumalanga’s municipal budgets
EOH’s move from SAP to specialised
water services
Giyani Water Project
The bucket toilet tender snk
Appointment of key sta
Honest sta sidelined and
others appointed to abet
private interests
TCTA and the Mzimvubu project
Mhlatuze-Mgeni merger rings alarm
bells
Removing key sta Enables principal to appoint
sta to serve personal rather
than public interests
EOH’s move from SAP to specialised
water services
Mhlatuze-Mgeni merger rings alarm
bells
Lesotho Highlands Water Project
1. 62
CHAPTER 4
What is to be done?
1. 63
Priorising project
development
Projects priorised to serve
personal rather than public
interests
Mangaung and the Gariep pipeline
The chickens of state capture come
home to roost
Delegaons and direcves Legal powers abused to bypass
procurement processes and
nancial controls
The War on Leaks ends in defeat
Giyani Water Project
WHAT IS TO BE DONE? Confronng two ‘wicked problems’
Corruption in the water sector has damaged lives and livelihoods in many
communities. Resources that could have improved services have gone into private
pockets and been used to consolidate the power of ruthless politicians. The
performance of water service institutions has deteriorated so seriously over the past
decade that ministers stopped providing the data. Many strategies used to achieve
personal and political benet at the expense of the public have been documented.
The queson that must now be answered is: what can and should be done to turn the situaon
around?
The challenge is that both corruption and sustainable water management
are ‘wicked problems’, not because they are evil but because they have
no easy solutions that are acceptable to all concerned. According to the
social scientists and planners who first described the concept, they are
“… social system problems which are ill-formulated, where the informaon
is confusing, where there are many clients and decision makers with
conicng values, and where the ramicaons in the whole system are
thoroughly confusing.” 94
Corrupon in South Africa is evil, in that it preys disproporonately on the
most disadvantaged communies and individuals, it undermines economic
growth and development, and it corrodes democrac governance systems
which rely on trust between those in authority and the cizenry. But it is also
wicked because it is so dicult to nd ways to address it, given the interplay of contesng interests
and priories in complex human sociees.
The provision of water also has wicked characteriscs. There are usually many dierent ways
in which it can be provided and many dierent users, each of whom has their own needs and
preferences. Once supply infrastructure has been built, it must be operated and maintained and
the inial decisions on how to provide it can have long-term implicaons on the viability of the
service. But if users’ circumstances and preferences change, the original soluon may no longer be
workable and, as we see every day in South Africa, supplies fail – leaving communies desperate.
In such situaons, it is concluded that “the polical context is crucial, that argumentaon must
be transparent and robust, and that policy intervenons may have consequences that cannot be
easily controlled in open and highly pluralised social systems.” 95
Put simply, there are no easy soluons, but a range of acons on many fronts can make a dierence.
94 Crowley, K. and Head, B.W., 2017. The enduring challenge of ‘wicked problems’: revising Riel and Webber. Policy Scienc-
es, 50(4), pp.539-547
95 Crowley, K. and Head, B.W., 2017. The enduring challenge of ‘wicked problems’: revising Riel and Webber. Policy Scienc-
es, 50(4), pp.539-547
There are no
easy solutions,
but a range of
actions on many
fronts can make a
dierence
1. 64
The context for acon
The rst step is to recognise the context. Today’s corrupon cannot be divorced from South
Africa’s past. While bribery, neposm, self-enrichment, and state capture were all present pre-
1994, the very governance systems of colonialism and apartheid were corrupt at their heart
– systems in which public power was used to promote and protect the interests of a small part
of the populaon at the expense of the rest. In addion, a selected group of large domesc and
mulnaonal corporaons were granted privileged access to public services and contracts and
regulatory support.
In water, huge public resources were spent to provide supplies to cies and (white) farmers with a
trickle to the homelands, apartheid’s limited and cynical aempt to create and privilege a ny rural
black elite. The basic needs of the majority of the populaon were largely ignored – in 1994, more
than a third of black South Africans did not have a minimally adequate water supply.
This inheritance has massively shaped the character of corrupon in democrac South Africa and
the measures capable of countering it. A new democrac government immediately had to extend
basic services to the black majority. This required new infrastructure and new instuons to
operate and maintain it.
The massive extension of public services faced severe human resource constraints. These are
apparent in the water sector which requires specialised technical skills to build and operate
large capital-intensive infrastructure as well as commercial and management skills to run the
organisaons required. This programme of service provision immediately created risks, since
infrastructure construcon and provision of sophiscated IT and business services are notoriously
vulnerable to corrupon.
But an equally pressing challenge was to enable the majority of the populaon to parcipate in the
economy. Inevitably, employment in state organisaons was one of the key opportunies in which
rapid progress could be made. Inevitably, there was pressure for the public sector to create more
jobs and polical pressure for polically connected people to benet.
Another priority for the new democrac government was to increase the parcipaon of black
owned businesses in the economy more generally. Preferences introduced under the general
framework of Black Economic Empowerment (BEE) became the agship programme to achieve
this goal. Government sought to use its procurement budget to redress centuries of colonial and
apartheid exclusion by privileging black-owned rms in public procurement.
There is nothing unusual or intrinsically corrupt about a government using its power as a consumer
to achieve its social and economic objecves through preferenal procurement. But as with
any elaborate regulatory scheme, it is vulnerable to corrupon, the more so when the decision
makers are compelled to balance commercial consideraons and public interest consideraons. A
parcularly pernicious form of corrupon of South Africa’s procurement preferences is the pracce
of ‘fronng’ whereby exisng white-owned rms, incenvised to deracialise their ownership and
1. 65
their supply chains in order to be eligible for public procurement contracts, seek to reward black
individuals or black owned rms who can lend the white owned rm their identy in exchange
for a highly leveraged minority share in the white owned business and no semblance of control or
substanal parcipaon.
As a result, there is ample evidence that certain companies gained privileged access to public
procurement contracts, oen at the expense of other genuinely empowered bidders. Some of
these are documented in the case studies in this report. And this pracce has been foregrounded in
evidence presented to the Zondo Commission.
However, what is even more disturbing is the evidence that some of the inducements organised
by individual decision makers have been used to fund polical pares. The infamous Chancellor
House/Hitachi maer, in which the ANC-controlled investment company facilitated a major contract
between Eskom and the Japanese engineering giant in exchange for shares in Hitachi’s South
African operaon, set a benchmark for this kind of behaviour.96 It provided early evidence of the
ANC’s willingness to leverage its polical power to inuence government procurement contracts
to support party interests. And this approach was replicated at a smaller scale in many of the cases
documented in the water sector – and indeed, beneciary companies’ contribuons to polical
pares have been openly acknowledged.
This has created a dynamic that has impacts well beyond the manipulaon of procurement. It has
reached the stage where it has fundamentally aected public decision-making, as acknowledged by
former president Kgalema Motlanthe who stated, as far back as 2007, that: “This rot is across the
board. It’s not conned to any level or any area of the country. Almost every project is conceived
because it oers opportunies for certain people to make money.” 97
The dangers have thus long been recognised – which is one reason that the Naonal Development
Plan98 devoted an enre chapter to ‘Fighng Corrupon’. But these dynamics also have an impact at
an individual and social level. The challenge of enabling a prosperous black middle class to emerge
and ourish merits exceponal measures, such as BEE. Its success is essenal to the country’s
polical stability and sustainability. But members of this emerging class, with no inherited wealth
are very oen supporng a substanal number of less well-o family and community members as
dependants, a huge nancial burden, commonly referred to as a ‘black tax’.99
Those who have jobs help their extended families and communies however they can. They pay the
school fees, electricity and water bills and emergency expenses of many households, which strains
the nances of middle-class wage-earners. And there is pressure on them to help nd employment
opportunies for family members even though, parcularly in the public sector, they may be
accused of neposm.
As Joel Netshitenzhe describes, “rst generaon middle and upper strata” are trying match the
arcially high living standards of their white counterparts, without the underpinnings of decades
of past racial privilege. “As a consequence, they have to rely on massive debt and/or patronage ….
some then try to acquire the resources by hook or by crook.100
In this complex environment, in which policians, individual ocials and businesses all benet from
corrupon, it is lile wonder that the problem has become systemic. A strategic set of responses is
required. What is needed to make them eecve?
Acons to date
Public procurement is widely recognised internaonally as one of the government acvies most
vulnerable to corrupon. This is due to the large sums of money involved, the complex processes
and the intersect between public bodies and the private sector. As the cases presented have
shown, procurement processes can be undermined by a variety of corrupt pracces ranging from
manipulang project specicaons to bribery during tender award processes.
96 Hitachi: a selement payment is not enough. hps://www.corruponwatch.org.za/hitachi-a-selement-payment-is-not-enough/
97 ANC and business: soul for sale. hp://inside-south-africa.blogspot.com/2007/01/nancial-mail-ancs-soul-for-sale.html
98 Naonal Development Plan. hps://naonalplanningcommission.wordpress.com/the-naonal-development-plan/
99 Black Tax: Burden or Ubuntu? Niq Mhlongo (Ed), Jonathan Ball 2019
100 Netshitenzhe, J. (2012) Compeng idenes of a Naonal Liberaon Movement and the challenges of incumbency, ANC Today 12
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A further diculty is that, because of its importance and reach in the economy, public
procurement is seen as a powerful policy lever to support transformaon goals, ranging from
improved gender and racial represenvity in the economy to support for local economic
development and nascent naonal and regional industrial development. The challenge that
this presents is that the integraon of these policy goals further complicates already complex
procurement processes.
In 2003, naonal government’s tender processes were decentralised to departmental level in order
to empower departmental accounng ocers and enable them to be held accountable for their
expenditure.101 However, this achieved limited success, not least because of the complicated policy
framework within which each department had to work.
Many of these issues were addressed in the 2012 Naonal Development Plan (NDP). As the NDP
says,
“The state’s procurement expenditure must be used to push transformaon, but it also
needs to be realisc about the ability of creaking procurement systems to balance mulple
priories.” 102
Acon has been taken in many of the cases presented. It is encouraging and relevant that much
of the informaon about corrupon in the water sector that is in the public domain came as the
result of the eorts of internal whistle-blowers and invesgave journalists. Although in many
water sector instuons the rot has gone so deep that the challenges appear overwhelming, there
are ways forward. A further encouraging nding is that, despite the dicules, many competent
and dedicated public ocials connue to work to maintain the country’s water security and to
resist aempts at corrupon, oen at some cost to their careers.
Amongst formal structures, the work of the auditor-general stands out; many of the media
reports were derived from his team’s inial invesgaons. And, as far back as 2012, the Special
Invesgang Unit was directed by the president to invesgate allegaons of procurement and
contract management irregularies in DWS. Subsequently, in 2016, 2018 and 2019, further
presidenal proclamaons directed it to invesgate water-related irregularies involving DWS,
Lepelle and Umgeni Water Boards as well as the Gauteng Provincial Department of Housing and a
number of municipalies. The total amount involved was esmated at over R4-billion.103
Some of those invesgaons have been completed. The SIU has reported that it has taken legal
acon to terminate contracts and recover funds from the companies involved, and has passed
informaon to the Naonal Prosecung Authority and tax authories to consider criminal acon.
However, although some DWS ocials have resigned and others faced internal disciplinary acon,
there have been few serious consequences, even where the SIU has launched legal acon to
recover funds.104
While the maers are complex, this delay raises quesons about the eecveness of these
acons. A parcular problem is that the framing of the presidenal proclamaons does not
address the accountability of the polical leadership in the instuons concerned. In many
cases, the formal corrupt acon was taken by subordinates, who were presumably acng under
polical direcon; this complicates any direct prosecuon. At this level, perhaps the most notable
consequence has been the removal of Nomvula Mokonyane rst from the water porolio and
then from Cabinet. But this is a relavely minor penalty since she retains the considerable benets
of a rered minister.
Learn Lessons
It is important to learn from cases in the water sector where corrupon has been successfully
constrained. These cases illustrate the circumstances in which this occurs and measures that can
be taken to reduce, if not eliminate, corrupon:
101 hp://www.treasury.gov.za/divisions/ocpo/sc/Guidelines/overview.pdf
102 Naonal Development Plan, Naonal Planning Commission, The Presidency, 2012.
103 SIU, Parliamentary presentaon to SCOPA: SIU invesgaons: progress report; Department of Water and Sanitaon challenges:
Treasury brieng, with DWS Minister. hps://pmg.org.za/commiee-meeng/27686/
104 SIU annual report 2018-19
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Eecve operaonal management systems
The management systems put in place by Joburg Water not only improved the ulity’s
performance but also made pey corrupon more dicult. The system would not issue material or
tools to any plumbers or foremen unless it was for a registered job card. This discouraged lobbying
by councillors for priority aenon (and, somemes, for illicit private work) because it compelled
them to make those requests through a call centre to register and record the job.
The threat of consequences
The criminal prosecuon of both ocials and private companies following rampant corrupon in
Phase 1A of the Lesotho Highlands Water Project certainly appeared to change behaviour - Phase
1B was completed in 2004, close to its planned me and budget. Although there were some
incidents of corrupon (which also led to criminal charges), there were fewer cost increases due to
the contract variaons and claims that are oen abused by contractors.
Acon by governance structures
In the Mzimvubu project, the board of the TCTA, correctly exercising its duciary responsibility,
resisted aempts to promote inappropriate Chinese funding, despite energec eorts by the
minister. While there was not yet any direct evidence of corrupon, eorts to bypass a feasibility
study that would have claried responsibility for the repayment of the loan suggested gross
negligence or a deliberate aempt to out procedures. The explicit instrucon from the board to
the chief execuve prohibing him from signing a loan agreement in China prevented a potenally
wasteful project from proceeding.
Governance arrangements that constrain centralised powers
During current preparaons for Phase 2 of the Lesotho project, eorts by Nomvula Mokonyane
to alter project arrangements to introduce a favoured consultant failed, and the integrity of the
procurement process was retained. This was largely the result of the instuonal arrangements
set up by agreement with funding agencies, who had a clear interest in avoiding a repeat of the
dicules (and reputaonal damage) experienced in the earlier project phases. The governance
arrangements prevented the process from being taken over by one or two powerful pares.
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RECOMMENDATIONS AND CONCLUSIONS
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RECOMMENDATIONS
The following recommendations are made for the water sector on the basis of the
ndings of the report and the lessons that have been learnt. They start with an
overarching strategic approach and then focus on more specic interventions.
Designate the water sector as an ‘island of integrity’
Service delivery problems in the water sector, the impact of corrupon on delivery of water, and
the related social and economic impacts, provide strong grounds for government priorising
an-corrupon eorts in this sector, for designang water an island of integrity.
Water and environmental protecon are rights guaranteed by the South African Constuon and
internaonal law. South Africa’s water resources are constrained by geography and exacerbated
by climate variability and change. Even in a perfect governance environment we would sll face
water problems. South Africans simply cannot aord the added burden of corrupon in a sector
whose product is a vital determinant of health and life (drinking water), dignity (sanitaon) and
economic prosperity.
The aim of designang the sector as an island of integrity is to focus both polical leadership and
cizens on the need to keep corrupon out of water in order to keep the taps owing and the
rivers clean. The designaon should be reected in the choice of minister and the appointment
of senior departmental ocials and in the boards and execuves responsible for water agencies.
They should be people of unimpeachable integrity and technical competence.
Civil society should be encouraged to be vigilant in this area, and supported when they idenfy
issues that need to be addressed – the Cape Town experience has demonstrated the willingness
of the public to respond collecvely to a pressing water crisis. This process will draw on all
instuons of governance, at naonal, provincial and local level. The Auditor-General and law
enforcement instuons should support the processes of tackling corrupon in the sector and
government’s communicaon agencies must reect this.
Ending impunity – inslling a culture of consequences
It will be dicult to end corrupon in the water sector in the current climate in which agrant
abuses go unpunished. Procurement rules are broken with impunity and illegal direcves from
polical heads are not quesoned. Findings of corrupon are made but no eecve acon is
taken against those concerned. The absence of consequences gives perpetrators of corrupon an
incenve to connue; based on experience, they can expect to get away with it.
A culture must be established in which it is expected that misconduct will have consequences.
At a formal level, this is the responsibility of the Auditor-General and the broad family of law
enforcement authories, including agencies such as the Special Invesgang Unit.
The AGSA has played a signicant role in exposing massive irregularies in the management of
water. However, its ndings have, as in many other government agencies, been simply ignored.
The recent amendments to the Public Audit Act (Public Audit Amendment Act No. 5 of 2018)
give the AGSA certain powers to enforce its ndings. These powers should be acvely used in the
water sector as part of the broader integrity campaign.
Rampant irregularity in the management of public resources should always be treated and
invesgated as potenal corrupon parcularly where large-scale irregularies repeatedly occur.
In parcular instuons, public ocials are implicated in serial irregularies and specic rms
regularly benet from these irregularies. Such paerns of irregular conduct should be seen as a
red ag for corrupon.
Furthermore, given the ubiquitous presence of polical appointees in so many alleged instances
of grand corrupon, the likelihood of polical corrupon should always be considered by the
invesgave authories. Indeed, the authories could do well to open invesgaons into all
large procurement contracts concluded during the ministerial tenure of Nomvula Mokonyane.
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The designaon as an island of integrity should be reected in instuonal arrangements that
reinforce the importance of corrupon prevenon in the water sector. One useful model may
be the establishment of an an-corrupon forum along the lines of the exisng An-Corrupon
Health Forum, led by the SIU. This forum brings together key stakeholders in the public healthcare
system including law enforcement agencies, relevant government departments and agencies,
representaves of the private sector, regulators and civil sector organisaons acve in healthcare
and in combang corrupon. Reports of corrupon and gross irregularies are submied to the
forum and then allocated to the agency best placed to address them. The involvement of the
AGSA and other Chapter 9 instuons would further strengthen its role.
A similar iniave has recently been launched to address the problems of the so-called
construcon maa, which has disrupted more than 75 projects valued at over R25-billion,
nominally seeking local jobs and sub-contracts. Acon is being taken within the framework of
the Prevenon of Organised Crime Act and has involved the Asset Forfeiture and An-Gang units
of the Naonal Prosecung Authority, working together with the South African Forum of Civil
Engineering Contractors and other engineering organisaons.
Appointments – no honest instuons without honest and ethical people
There are two important requirements for the water sector to become an island of integrity.
Firstly, honest, ethical and commied leaders must ensure that recruitment and new
appointments to their organisaons reinforce these values. Secondly, processes must be put
in place to enable them to remove those who break the rules for corrupt purposes. Both
appointment and disciplinary processes are important mechanisms for dealing with impunity
since they establish the guiding values of the instuons concerned.
The cases reviewed have demonstrated how both these processes have been abused. Trivial or
trumped-up charges have been used to remove honest ocials from oce where they have been
obstrucng corrupt acvies. This has allowed the appointment of individuals who, if not actually
complicit, are willing to ignore the corrupt designs of those who appoint them. Similarly, where
eorts have been made to act against corrupt ocials, they have been protected from acon
through the manipulaon of disciplinary processes.
Poorly managed, dysfunconal and captured disciplinary and human resource systems are
common across South Africa’s public sector. In order to support the development of the water
sector as an island of integrity, consideraon should be given to the eecve involvement of
external agencies such as the Public Service Commission or civil society organisaons in panels
responsible for appointment and discipline.
There are also challenges related to the appointment of the boards of the public agencies that
are part of the water minister’s porolio. These are usually made by the minister with the
concurrence of Cabinet, but it is well documented that polical aliaon rather than competence
or integrity has been the determining factor in appointments. It is thus suggested that
recommendaons for such appointments should be made in consultaon with panels deliberately
constuted to ensure a focus on the appropriate consideraons and with the power to block
inappropriate appointments.
Procurement
The 2012 Naonal Development Plan noted that:
“The state’s ability to purchase what it needs on me at the right quality and for the right price
is central to its ability to deliver on its priories. Public-sector procurement expenditure also
needs to be used to drive naonal priories such as localisaon and economic transformaon.
Procurement systems tend to focus on procedural compliance rather than value for money,
and place an excessive burden on weak support funcons.”
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To improve value for money while minimising the scope for corrupon the NDP proposed focusing
on ve areas:
• Dierenang between dierent forms of procurement (that is, treang construcon
projects dierently to, say, procurement of medicines or basic security and cleaning
services);
• Elevang trade-os above the project level (so providing incenves for local producon
at producer level rather than through tenders and encouraging a range of mechanisms to
encourage training and job creaon);
• Build relaonships of trust and understanding (supply chain ocials need to understand
the sector they are dealing with to ensure appropriate approaches are taken);
• Build enabling support structures (specically to professionalise supply chain managers
so that they support rather than seek to replace specialist technical professionals in the
procurement process);
• Ensure eecve and transparent oversight.
On this laer point, specically in relaon to corrupon, the NDP highlights the importance of
creang a transparent, responsive and accountable public service.
“State informaon, including details of procurement, should be made openly available to
cizens. Furthermore, an informaon regulator should be established to adjudicate appeals
when access to informaon requested is denied.”
Some organs of state already make substanal amounts of procurement data public, though
much more could be done to systemase the process. However, at present the primary corrupon
challenge faced by South Africa is the systemic capture of parts of the state apparatus and
disregard for procedures. Detailed reform of procurement systems will not be appropriate unl
greater control is gained over public nancial management in this regard.
Once this has been achieved, there are many systems that have been proposed and trialled
elsewhere that could be of value to further strengthen the sector. These include a variety of open
contracng models. Open contracng seeks to mobilise parcipaon from the private sector and
civil society to achieve greater accountability within public procurement.
Open contracng recognises that greater transparency from government is insucient –
accountability requires that the private sector compete fairly and that civil society monitor
and analyse the public procurement process. The publicaon of procurement informaon, in a
useable, standardised way cannot in itself bring about greater accountability – the monitoring
and analysis of such informaon by civil society is crucial. Methods used include integrity pacts,
e-procurement, data standards, and red-ag monitoring.
Integrity Pacts are mutual commitments between public and contracng pares to
refrain from corrupon and guarantee transparency during a procurement process. An
independent third party, usually a CSO, is given access to documents and procedures
and ensures adherence to the integrity pact.
E-procurement envisages moving away from a paper-based procurement system so
that the process takes place on a publically available plaorm. At the very least it
requires the publicaon of procurement informaon on an e-procurement plaorm.
Open contracng data standards prescribe standards for what informaon should
be published and how. The use of this standard ensures that there is uniformity and
standardisaon of data which improves data quality and allows for comparison and
analysis.
Red ag monitoring uses algorithms to analyse data and pick up anomalies. A set
of procurement norms are built into the soware and when a procurement pracce
violates a norm, the system generates a red ag nocaon. Members of civil society
are then able to invesgate this further in order to determine whether the deviaon
amounts to corrupon or non-compliance with procurement law.
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A word of cauon in approaching procurement reform: one response to growing corrupon is to
supplement the rules governing systems like procurement. But such measures oen fail and may
make the situaon worse. In weak instuons, cumbersome compulsory rules bring instuons
to a standsll, with ocials unwilling to take acons that may be considered illegal. And corrupt
ocials who break the rules with polical cover have used trivial infracons to aack honest
people who queson their behaviour. The guiding principle should be to ensure that there are
clear lines of responsibility, simple rules that everyone can follow and procedures that allow
deviaons to be idened and acted against.
In addion, experience in the water sector teaches us an important lesson, namely that polical
appointees, such as the minister and board members of public agencies, should not involve
themselves in procurement appointment decisions and where they insist on doing so, it should be
treated as a red ag for corrupon.
Ministerial and board involvement is clearly appropriate at the strategic stage of a large
procurement – the decision to build a large dam or a power staon, or purchase a eet of
airplanes. But they have no call to engage with the operaonal decision about to whom contracts
should be awarded; if they do, the inference is that they are oering a supplier a polical favour in
exchange for a consideraon.
Transparency in regulatory decisions
There is a need to promote greater transparency in the exercise of regulatory decision-making
by ministers and senior ocials. As an example, the minister of water is empowered to issue
direcves to instuons such as water boards and the TCTA. These have enabled ministers to
bypass government’s planning and budgetary procedures. If some of the contenous direcves
described in this report had been publicised at the me, many of the more gratuitous abuses
could have been spoed and stopped at an earlier stage. A simple amendment to the relevant
legislaon could require such direcves to be gazeed by the minister and reported in the annual
reports of the organisaons concerned.
Environmental factors that must be addressed
The roots of corrupon in the water sector are not in the sector itself but in the wider society.
Corrupon will not successfully be combated unless these are also addressed. Law enforcement
agencies are principally responsible for confronng impunity and are dealt with in a separate
recommendaon.
Preferenal procurement
The vexed issue of polical party funding is also dealt with separately. On BEE, corrupon of that
vital social programme doesn’t necessarily presuppose root and branch reform, much less the
scrapping, of BEE. All regulatory frameworks are vulnerable to corrupon, and the more elaborate
and far-reaching the programme, the greater the opportunies for rent-seeking and corrupon.
While this may necessitate an evaluaon of regulaons and an assessment of the social benets
achieved as a result, it should not imply rampant deregulaon. We have no doubt that the social
benets of BEE jusfy the connuaon, even intensicaon, of the programme, However, what
is implied is that the operaon of elaborate regulatory frameworks should be closely policed,
parcularly at key decision-making points.
We also do not doubt that the savings in reduced instances of corrupon would pay for increased
expenditure on parcularly close scruny of the applicaon of BEE transacons. It would also
enhance the credibility of BEE.
Regulaon of polical pares
The funding of polical pares oers obvious opportunies for extending the inuence of money
over polics and is a much discussed issue in South Africa and in other democracies. In South
Africa this has culminated in the passing of the Polical Party Funding Act of 2019. This act has
been waing for the president to set it in moon for over 12 months because, while it has been
signed into law, a date for its implementaon has not yet been announced.
However, recent controversies serve to foreground important money/polics relaonships that
are not covered by an Act that connes itself to polical party funding. Foremost amongst these
is the funding of internal polical party leadership contests. In a country dominated by a single
1. 73
party, these contests may be far more important than the naonal elecons. The inescapable
conclusion points to the need to consider general regulaon of polical pares and not only
regulaon of the funding of pares.
The experience of Nomvula Mokonyane’s reign at the DWS highlights a parcular challenge of
managing the personal/polical/nancial interface. As ANC local government elecons organiser
in 2016, she was quoted as saying that the ANC had spent R1-billion on that campaign – without
explaining where the money had come from. She was also acve at the ANC’s 2019 naonal
conference where faconal funding played a signicant role in the outcomes.
Simultaneous responsibility for managing a large party programme that demands signicant
funding and execuve responsibility for a government department that has a large procurement
budget supports an inference that the state responsibilies are being abused to support party
responsibilies.
This supports our recommendaon that ministers be prohibited from parcipaon in procurement
decisions. Further consideraon may well be given to regulang the role of party oce bearers in
the management of state assets.
Educate the private sector
Too oen, private business is seen as the vicm of corrupon. Bribes are paid and tender awards
accepted with the excuse that such pracces are unfortunately what is necessary to get the work.
This atude has to be challenged. Private sector bidders that enter into such irregular contracts
need to know that they are breaking the law and placing their businesses at risk.
Companies have a legal duty to ensure that correct procedures have been followed in the award
of a public contract and can be severely penalised if they don’t. A recent high court judgement
conrmed by the Supreme Court of Appeal and the Constuonal Court, ordered Cash Paymaster
Services to repay to the South African Social Security Agency (Sassa) the enre fee earned on an
irregularly awarded contract.
In prior ligaon which resulted in the Constuonal Court invalidang the main contract
between CPS and Sassa, the court noted:
“As Corrupon Watch explained, with reference to internaonal authority and experience,
deviaons from fair process may themselves all too oen be symptoms of corrupon or
malfeasance in the process. In other words, an unfair process may betoken a deliberately
skewed process. Hence insistence on compliance with process formalies has a three-
fold purpose: (a) it ensures fairness to parcipants in the bid process; (b) it enhances
the likelihood of eciency and opmality in the outcome; and (c) it serves as a guardian
against a process skewed by corrupt inuences”.
In short, a rm willing the circumvent or ignore public procurement rules and regulaons may nd
itself having to repay its fee and may nd itself on the wrong side of a criminal invesgaon.
Ironically, a circular from the legal rm of which controversial Mokonyane advisor Luvo Makasi
is a director, warns its clients about the dangers of circumvenng procurement regulaons.
The circular notes that although service providers may be aracted by the “opportunity to
secure work without the rigmarole of an open tender process” they should note that “contracts
concluded contrary to procurement legislaon and regulaons are wholly invalid and cannot be
allowed to stand …. Allowing such contracts to stand would be to allow the conduct (patronage,
collusion, neposm etc.) which the legislaon seeks to prevent.” So companies should be
wary of “appointment by deviaon” from compeve bidding processes. Before accepng
such appointments, they should conrm the reasons and “obtain conrmaon that its current
appointment complied with relevant procurement legislaon and regulaons ….”
If more businesses were to follow these recommendaons – and if they were to be appropriately
penalised when they didn’t – it would contribute to an environment less conducive to corrupon.
It would also reduce their risks.
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Support civil society
Last but not least, the work of the media and wider civil society, including NGOs and professional
bodies, in uncovering corrupt acvies, publicising them and then pursuing them unl appropriate
remedial acon is taken, must be recognised, emphasised and supported.
As a rst step, the right of cizens and civil society organisaons to access informaon about public
management processes, must be recognised and respected. This must go beyond informaon
about public nances (in which South Africa is regarded as amongst the best global performers) to
include informaon on procurement processes and regulatory decision-making. This will enable
civil society to concentrate its limited resources on the analysis of informaon and engagement
with instuons rather than on court bales to obtain the underlying informaon.
The water sector already has extensive linkages with a variety of civil society organisaons at
naonal, provincial and local level and these must be encouraged and supported. The work
of these organisaons oen goes well beyond oversight of government performance and
includes parcipaon in water management and educaon acvies. This gives them important
operaonal insights that may not be available through formal government structures and makes
them a valuable ally in promong water security and achieving eecve performance of water
management funcons.
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CONCLUSIONS
Water is too important to allow its management to be undermined. Because of
corruption, fewer people have reliable water supplies and many, particularly young
children, old people, and those with compromised immune systems became ill as a
result of drinking unsafe water or because their parents could not keep their homes
and toilets clean and hygienic. It is safe to say that corruption in the water sector in
South Africa has resulted in deaths.
If the War on Leaks had been properly organised, there would have been temporary jobs for
thousands of youngsters that could have led some to useful, recognised training and possibly
permanent employment. The money saved by the municipalies could have been used to maintain
and operate their water infrastructure, perhaps even reducing the wastewater polluon that is
damaging South Africa’s rivers.
Providing more reliable supplies would also have helped to keep exisng jobs. There would not be
threats of company closures in Nelson Mandela Bay Metro or job losses on the chicken farms in
Lekwa municipality.
Given these arguments, most people will agree that corrupon in the water sector must be tackled.
Corrupt acvies cannot be allowed to undermine the country’s water security. Senior ocials must
not be allowed to appoint incompetent friends and family members to key jobs if it means that taps
run dry and toilets are not provided.
Much of the corrupon is driven by wider polical and economic challenges in society. Unless these
are also addressed, it is unlikely that eorts to improve and enforce procedures and transparency will
be enough to change the situaon.
A parcular focus is needed on the delicate queson of polical funding. This report has shown the
strong likelihood that polical pares and policians are using corrupt money taken from the water
sector to fund their polical acvies. There is evidence that, as a consequence, taps have run dry,
rivers have been polluted and South Africans’ water security is not being achieved and sustained.
Although many of the worst cases of corrupon have been well publicised, those responsible have
enjoyed impunity, apparently because of their polical status. This in turn is taken as a licence for
corrupon at lower levels, an infecon that spreads throughout the organisaons aected.
In this situaon, and because the parcularly acute impact of corrupon in the water sector can be
measured in dry taps, lost jobs and polluted rivers, the goal should be to mobilise public opinion to
protect society from water sector corrupon.
As part of this, the social and economic impacts of corrupon in the water sector must connue
to be highlighted as part of broader an-corrupon campaigns. The aim must be to promote social
values that discourage corrupon in order to meet society’s water needs.
Our framework recommendaon is that the water sector be designated a no-go zone for corrupon,
an untouchable island of integrity. This should be manifest in focusing the work of law enforcement
agencies and of deploying government’s community infrastructure to raise awareness of the dire
state of our water management system and the role of corrupon therein.
Those responsible for appointments to posions in the water management system – including the
appointment of the minister – should be seen to be making a parcular eort to ensure that only
people of unimpeachable integrity are put in charge of this vulnerable, life-giving resource.
Ending corrupon will, of course, not solve all the country’s water problems. Households will sll
have to be careful about how they use their water. In economic applicaons, there will connue to
be arguments about where the limited water could best be used, and environmentalists will try to
encourage all consumers of water to leave more in the river, to sustain the natural environment.
1. 76
But an eecve campaign to wash corrupon out of the water sector could create the environment
in which these larger problems can be tackled. It could ensure that water security for all becomes,
once again, the primary goal of the instuons of the water sector. And, in doing this, the water
sector could provide some guidance and inspiraon for the rest of the naon as it navigates through
the challenges of the present into a beer future.
1. 77
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