Government employee fraud in the B&B sector

Dear Editor

The South African Public Protector, Adv Thuli Madonsela is quite right to be deeply concerned about ‘false billing’ – making the state pay for goods and services that were never supplied. Her statement* that the system of away-from-home accommodation for state employees needs a total overhaul is certainly very valid.

In our little Free State dorp we’ve seen any number of illegal practices. And it’s not just here: people who do the books of accommodation establishments in other parts of South Africa tell me that some B&B owners, gradually drawn into corrupt deals, now find they can’t escape.

There are long-established practices for guest-management transactions, whether the person comes directly or through a travel agent, that ensure everything is above-board. But when guests don’t stay as private individuals – when someone else is paying the bill – it’s incredibly easy to ‘fix’ the system, and the problem is most acute when government employees are involved.

Smithfield, where I live, often hosts people on official short contracts. I first became aware of the problems that could arise from the story of my neighbour who had a few such guests staying with her. Meals had become an issue: she’s a good cook but the guests constantly moaned. She realised it might be a scam when they demanded she hand over the ‘food money’ she would otherwise spend on their meals. By then she’d had such a rough time that she was happy to deliver the cash so the problem would go away.

Next on the slippery slope are guests whose employer specifies a meal allowance: they will pay accommodation plus a certain amount for meals. Now some guests are routinely demanding this cash be handed over in full. It’s common, virtually standard, practice for such guests to buy bread and chips for meals and pocket the balance.

Other times guests whose employers stipulate a restaurant meal allowance to a certain amount, insist on bringing a friend along to meals. They ensure their combined bill is no less than the daily allowance.

A colleague in the Eastern Cape tells of a common practice there: the relevant department covers her accommodation rate plus a R200 ‘meal allowance’ that’s way out of line. A couple of cold drinks plus a three course meal cannot possibly come to more than R130, even at the best eatery in town. The guests then buy cigarettes, cold drinks, take-aways, hamburgers – I kid you not, even though they have just eaten a full meal – to the value of whatever remains so that the money is all used.

My worst experience concerned a group of young professionals who came to ‘get a quote’ for an upcoming tour of duty in the town. Half way through the negotiations it became clear that there was a subtext. They seemed to be suggesting that my rate was ‘too low’ – a novel problem.

Turned out they knew the highest amount payable for accommodation by their department. They had already obtained a quote from the most expensive places in town where the bill would be almost exactly the accommodation allowance. But they specifically wanted to stay at a place with a significant gap between the bill and the maximum allowed.

Don’t think they wanted to save tax payers’ money: their plan was to be billed for the utmost the department would pay and for the difference between my ‘genuine’ bill and the ‘false bill’ to be split between them and me.
One of the guys said he chose where his team stayed when they were away on a job. If we could do this deal and make it an on-going arrangement, he would make sure they always stayed with me in the future. At this crucial point he had to leave, but he said he’d be back for my answer.

So much money was involved that I expect he thought it a done deal. I would have loved to see his face when he read my SMS saying he should immediately stop his illegal deal-making or I would report him.

As he and his group were in town next week on their assignment I presume he found a place more amenable to his proposals. What irked me most was this, however: they were employees of the Department of Justice – accountants, no less, – in town to ensure that the books of the local department were in order.

Our message to you, Madam Public Protector is this: get cracking, find a way to stop these practices. We’ll all be in your debt.

Carmel Rickard
Trading Places Guest House
Smithfield, Freestate

* The statement from the Public Protector’s office that Carmel refers to is published below for your information – Ed

Public Protector decries conduct of unscrupulous business people
Wednesday, 07 November 2012
Public Protector Adv. Thuli Madonsela on Wednesday addressed members of the Durban Chamber for Commerce and Industry, decrying the conduct of unscrupulous business people who engage in trade with the state.

The Public Protector spoke of emerging worrying trends in business dealings between the state and the private sector, saying such conduct could have adverse consequences for constitutional democracy and economic advancement.

Though she noted that the majority of business people hankered for a level playing field marked by clean state contracting practices and worked hard to earn what they have while adding value to people’s lives, the Public Protector spoke strongly against the few who gave the business sector a bad name.

Giving examples of overcharging, double billing, price inflation and conflict of interest as revealed in some of her investigation reports, the Public Protector said these emerging trends were threatening to erode public confidence in the state.

With public confidence eroded, the Public Protector said, taking to the streets, as seen in the “Arab spring” and local public protests, became attractive to sections of the population, particularly those marginalized in a socio-economic sense.

She called on players in both business and the public sector to exercise ethical governance through traits of ethical leadership, emphasising that leaders at any level should be in a position to distinguish between wrong and right.

Leaders did not need her office, the Auditor General, the Special Investigating Unit or the Public Service Commission to tell them that they had crossed the line, the Public Protector said.

“When you cross the line, which is possible because human beings do make mistakes, you correct those mistakes on your own and if an oversight body red-cards you, you accept accountability without being grumpy or vilifying the oversight body concerned,” she said.

Turning to leaders within the public sector, the Public Protector said she had been amazed by the differences in ethical standards between leaders who accepted accountability for ethical violations relating to the abuse of executive privileges and those who told her it was their right “to be pampered.”

She also took aim at those within state affairs who failed to implement findings of expensively sourced forensic reports and reports of her office, the Auditor General and the Special Investigating Unit.

“That too erodes public confidence while missing an opportunity to exact accountability and restore controls. The key factor eroding public confidence is a sense of impunity, particularly for the so called ‘untouchables’,” the Public Protector said.

She commended the Chamber on its plan to establish an ethical leadership institute, adding that other sections of the business world in the country had also shown to be pro-good governance. These included South African Property Owners Association and the Business Unity South Africa, which had become a member of the good governance forum pioneered by her office.

Issued by:
Oupa Segalwe
Manager: Communication
Public Protector SA
Tel: (012) 366 7035
Email: [email protected]

Congratulations, Carmel.

Your letter has been chosen as the winning letter for the December edition. A copy of National Geographic’s ‘Rhino Rescue’ DVD will be delivered to you with the compliments of Livingstones Supply Co – suppliers of the finest products to the hospitality Industry.



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Letters should be sent by 17 December 2012 to [email protected].

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