Vendor Blacklisting or Corruption Whitewashing?
Call me Mr Glass Half Full, but I feel the new SOE policy to blacklist corrupt vendors is a bit like rearranging deckchairs on the Titanic.
Don’t get me wrong – I applaud the thinking behind the National Treasury’s efforts to flag companies implicated in kickbacks and tender collusion, and agree that a crackdown on corruption, fraud and non-performance in public procurement is way overdue.
However, I’m struggling to get too excited about Minister of Finance Enoch Godongwana’s revelation that hundreds of companies have been flagged for blacklisting by the government because most are still under review, with only a handful formally restricted so far.
There are, of course, positives: Dean Macpherson, Minister of Public Works & Infrastructure, told Parliament in his 2026/27 budget vote that only two contractors were blacklisted in 22 years, while 52 have been removed from the Register of Contractors for fraudulent activity in the last 22 months. So, there is undoubtedly forward movement, albeit at very slow speed.
One of the main bottlenecks appears, once again, to be the unnecessarily lengthy and complicated blacklisting process.
Minister Godongwana said that the National Treasury cannot blacklist suppliers on its own, and can only act once the affected government departments submit complete and legally compliant requests. Which means things fall at the very first hurdle, with many of those departments submitting information that is either incomplete, legally non-compliant, or both.
And of course, if certain people within those departments receive attractive incentives from certain suppliers, the motivation to report them to National Treasury in the first place is notably lacking.
Another significant issue is that the Treasury’s role is limited to administering the process and not actioning it.
“It should be noted that National Treasury does not initiate the restriction but facilitates the process of loading the restriction on the database of restricted suppliers,” said Minister Godongwana. Translation: blacklisting procedural red tape is restricting the Treasury to the role of a glorified data capturer.
It’s an age-old and frustrating problem. South Africa loves to over-engineer solutions to problems, to the point where processes are so lengthy and laborious that many lose the will to even start. Which, of course, is what the bad guys count on.
Over and above this, back-end punitive actions fail for several reasons:
Delayed responses: disciplinary hearings, asset freezes, and criminal trials usually only happen months or years after corruption occurs. The proverbial shutting the barn door after the horse has already bolted doesn’t help anyone, and in the time it takes to resolve deficiencies, the implicated vendors are free to continue bidding on new tenders and drawing down public funds.
Draining resources: Investigating and prosecuting corruption after the fact costs millions and clogs up forensic processes.
Low success rates: It’s almost impossible to successfully trace and recover monies that have been siphoned off through shell companies or irregular procurement.
It’s just another reason why we, the law-abiding South Africa public, are losing faith in the government’s ability to effectively and decisively act against corruption. The constant introduction of new initiatives that subsequently fail to be effectively implemented and enforced is exhausting to watch. There is systemic public fatigue and cynicism and, more concerningly, an increasingly pervasive attitude that non-compliance is the norm.
The problem is that formal vendor blacklisting is a blunt instrument, acting like a static filter against an increasingly fluid enemy. Corrupt supply networks rarely collapse when one tentacle is blacklisted; they quite simply, like an octopus, grow another one.
It’s frighteningly easy to do; blacklisting applies to a specific corporate registration number, tax identifier and legal name. Bypassing this is child’s play for corrupt suppliers that thrive on finding ways to bypass legal processes.
As forensic investigators, we see it all the time. Traditional blacklist checks rely heavily on basic verifications such as checking named directors against a registry or validating a company’s active tax compliance status.
Corrupt organisations routinely list junior employees, relatives or shell nominees as the “on paper” directors while the true orchestrators, like modern-day Wizards of Oz, retain full control of all the lights and levers behind the scenes. It’s worryingly easy to secure clean tax and other records despite sharing the exact infrastructure, banking branches and digital submission footprints of the blacklisted parent firm.
And even if, by some miracle, a primary company is successfully banned from bidding, corrupt networks can easily bypass standard checks through back-door channels:
Subcontracting loops: Hidden shell companies are placed as secondary subcontractors under a completely clean primary contractor. Because official blacklists usually only track the main bidder, these banned operators quietly extract profits downstream without ever being flagged.
Emergency procurement exploits: In times of crisis, such as catastrophic storm damage or a widespread power outage, government institutions often bypass standard competitive bidding rules to speed up purchases. Corrupt networks deliberately exploit these rushed approval windows to push unvetted entities through before compliance teams have time to run proper background checks.
As always, there is a solution, and it’s a hill I’m prepared to die on (metaphorically speaking, of course!) To quote another old saying, a gram of prevention is worth a kilo of cure.
Back-end punishment is too slow, too expensive, and too-easily circumvented. To prevent corrupt vendors from taking advantage of loop-holes, procurement systems must shift to front-end forensic vetting, building in these essential safeguards before a single contract is ever signed:
Real ownership transparency: Companies must be legally compelled to reveal who controls and profits from the business.
Automated data matching: Smart digital systems must automatically cross-check a bidder’s info against national IDs, bank records, tax files, and government employee lists to flag hidden connections, shared addresses, or any other conflicts of interest.
Ongoing post-contract tracking: Background checks mustn’t stop when the contract is signed. Automated systems should regularly monitor vendors for any sudden changes in business structure, unexpected bank account updates, or unusual financial shifts.
There’s no doubt that blacklisting corrupt vendors will always play an important role, but viewing it as a primary anti-corruption solution is a dangerous illusion. As long as the process remains crippled by administrative delays, legal technicalities, and reactive post-award investigations, corrupt networks will continue to treat blacklists as an acceptable part of doing business.
True procurement integrity means stopping corruption at the front door. By embedding real-time forensic vetting, beneficial ownership transparency, and automated network analytics directly into the initial evaluation stages, public institutions can protect valuable public resources before they are siphoned away.