22 March 2019

South Africa: Small Business Development Suspends Officials On Allegations of Corruption

press release

Several officials of the National Department of Small Business Development have been suspended with immediate effect upon serious allegations of corruption within the unit responsible for incentive scheme administration.

Minister of Small Business Development, Ms Lindiwe Zulu said "the people of South Africa deserve a professional service dispersed equitably without fear or favour. Access to finance remains a critical challenge for SMME's and Cooperatives and so, we had to act decisively on this matter in order to prevent the possible perpetuation of corruption and further prejudice to SMME's and Cooperatives".

In August 2017, the Department commenced an investigation into incentive schemes, namely; Cooperatives Incentives Scheme (CIS) and Black Business Supplier Development Programme (BBSDP) following the indicators of fraud identified through the Auditor General of South Africa (AGSA) 2016/17 regulatory audit, the Portfolio Committee on Small Business Development Oversight visits and observations.

BBSDP is a cost-sharing grant offered to black-owned small enterprises to assist them to improve their competitiveness and sustainability whilst the CIS is a 100% grant for registered primary co-operatives.

The forensic report implicates officials in maladministration, misrepresentation of facts, collusion and contravening the Programme Guidelines and Standard Operating Procedures. The Department will be laying criminal charges in cases of possible fraudulent activities against these officials, grant applicants and service providers with SAPS.

"It is unbelievable that the very same foot soldiers that we have entrusted with the responsibility to provide services to our people, are the ones sabotaging our mission. Our vision is to radically transform the economy through integrated and effective enterprise development and entrepreneurship promotion and not corruption. This cannot be tolerated, explains Zulu.

So far the Department has issued nine (9) precautionary suspension letters against BBSDP(7) and CIS (2) officials yesterday, 19th March 2019 who have been alleged to have committed serious misconduct in the carrying out of their duties relating to non - compliance and the fraudulent administration (application, adjudication and inspection processes) of the Schemes.

Issued by: Department of Small Business Development

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