A view of the controversial homestead of South African President Jacob Zuma in Nkandla on January 21, 2014. On January 11 South African police arrested 30 people near President Jacob Zuma's homestead in Nkandla, after violent clashes with supporters of a newly formed party led by Julius Malema. AFP PHOTO / MARCO LONGARI (Photo credit should read MARCO LONGARI/AFP/Getty Images)
President Zuma's controversial homestead at Nkandla

When the call came from a senior official at a state-owned company, the South African businessman was nervous.

His company had formed a joint venture with an international group and was seeking accreditation to bid for multimillion dollar contracts at the state enterprise and was told he should meet a group of people linked to the ruling African National Congress. He attended the meeting, only to discover that the politically connected officials wanted a 51 per cent stake of the joint venture transferred to a handpicked individual.

“They just tried to muscle their way in,” says the businessman, who did not want to be identified for fear of repercussions. They said “’even by diluting 51 per cent you will win so much of the work at profitable margins that you will be in the game. So don’t look at what you are giving up, rather concentrate on what we can offer you.’”

Ultimately, the officials backed off when the international group threatened to walk away from the deal.

The businessman is not sure whether they were a “rogue element” or part of a more sophisticated corruption network. Either way, his experience illustrates what many see as a worrying trend in Africa’s most developed economy — the rise of corruption, particularly involving the award of lucrative government contracts.

And one scandal overshadows all others, “Nkandlagate”, which involves allegations that President Jacob Zuma improperly benefited from $22m of taxpayers’ money spent on upgrades to his sprawling Nkandla private residence.

An investigation into the controversy by the Public Protector’s Office said the president unduly benefited from the upgrades and recommended that he pay back some of the cash. Mr Zuma vehemently denies any wrongdoing. But the controversy has damaged the credibility of his presidency and has come to symbolise the graft and patronage that Mr Zuma’s detractors say has flourished under his rule.

This month, opposition politicians lodged a complaint with the Public Protector’s Office after local media reports claimed a company with links to the ANC was “handpicked” for a R631m ($53.6m) contract to build 66,000 toilets in a district of Eastern Cape province.

The company that was awarded the contract, Siyenza Group, is linked to one of Mr Zuma’s son-in-laws — named in the Saturday Dispatch newspaper as Lonwabo Sambudla — and the son of one of his ministers, according to the paper, which initially published details of the contract.

The paper reported that company directors had allegedly splashed out on luxury cars, but little construction had been done.

Quoting anonymous sources, the newspaper, said Siyenza was “imposed” on the municipality, in spite of the contract having been previously awarded to four other companies.

Siyenza did not respond to questions from the Financial Times, but has previously denied any wrongdoing to the Saturday Dispatch.

The public protector confirmed to the FT that it had decided to investigate the allegations. Amathole district municipality described the media reports about the project as a “mischievous distortion of facts”. It insisted it followed the correct procedures.

Asked in parliament about his son-in-law’s alleged involvement, Mr Zuma said: “I am not a businessperson, I don’t deal in business.”

He added: “I can’t speculate on what the media writes.” Mr Zuma’s son-in-law could not be reached for comment.

Corruption in the tender process is “rife”, according to David Lewis, head of Corruption Watch, an independent South African anti-graft organisation.

“The whole tender system is a mess,” he says. “There are very serious levels of both grand corruption and petty corruption and in some instances petty corruption is becoming endemic.”

Since Corruption Watch launched three years ago it has received more than 8,000 complaints, ranging from petty corruption to tender corruption.

The latter is a phenomenon that has seen the word “tenderpreneur” added to the South African lexicon as a noun used to describe those who seek to make money through the questionable awarding of contracts. It generally involves kickbacks, overpricing and/or multiple invoicing — or in the businessman’s case demands for a share of a business.

Some blame the trend for damaging South Africa’s image as an investment destination and stymieing development at time when the economy is struggling in one of the world’s most unequal societies.

Mr Zuma used his State of the Union speech — ambushed by opposition

politicians who accused him of dodging questions on Nkandla — to note his government’s efforts in tackling corruption.

In the 2013/2014 financial year, 52 people were convicted in cases involving more than R5m.

Still the trend worries many South Africans. “There is a real sense that this thing is treated with more urgency now, but with notable exceptions — Zuma is a huge notable exception,” Mr Lewis says.

The businessman did eventually get the accreditation to bid for work at the parastatal. But he has been left scarred by the experience.

“What is happening on this tender fraud is an embarrassment for our country and it will take us down a road where we will not be able to compete with the world because of inflated costs,” he says.

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