Mthuli Ncube bans third-party middlemen in govt payment deals

The Ministry of Finance has moved to shut down a deeply entrenched rent-seeking practice in which influential individuals allegedly use their connections within Government to act as intermediaries for companies and suppliers seeking payment for outstanding invoices.

The practice involved third parties or so-called consultancy firms approaching Government creditors and offering to pursue or fast-track outstanding payments in exchange for fees, commissions or a percentage of the contract value.

In some cases, corrupt middlemen allegedly exploited political and Treasury connections to deliberately delay legitimate invoices before approaching contractors with offers to secure payment in return for a substantial cut.

Finance Minister Mthuli Ncube has now banned the use of such third-party negotiators, warning that Government will not recognise or pay fees arising from arrangements between creditors and intermediaries.

In a statement, Ncube said Treasury had become aware that some suppliers and contractors owed money by Government for goods and services provided to Ministries, Departments and Agencies (MDAs) were engaging third parties to pursue payment claims on their behalf.

"Treasury wishes to clearly advise all Government creditors that they should not engage any third-party intermediaries or so-called consultancy firms to pursue Government outstanding payments," Ncube said.

He said Government would not entertain claims or obligations arising from arrangements between creditors and consulting firms or other third parties seeking to recover or facilitate payment of Government arrears.

"Government will not assume responsibility for any fees, commissions, percentages, or other costs arising from such arrangements," he said.

Ncube has directed all MDAs not to entertain claims submitted by consultancy firms or other third parties purporting to represent Government creditors in the recovery or facilitation of outstanding payments.

The minister also warned MDAs against delegating their responsibilities to suppliers and contractors by instructing them to follow up on payments directly with Treasury.

He said such practices were contrary to established Government systems and procedures.

"Treasury would like to unconditionally advise that officials will not entertain or engage any such suppliers or contractors who visit or call on them," Ncube said.

The crackdown also extends to holders of Treasury Bills.

Ncube said TB holders should not engage third parties to follow up on matured Treasury Bills or their liquidation, as Treasury would not entertain intermediaries in such matters.

He further ruled out requests for the discounting of Treasury Bills, saying their maturity profiles had been structured strictly in line with Government cashflows.

The Treasury directive effectively seeks to eliminate an informal payment-facilitation market that creates an additional cost for businesses already waiting for Government to settle legitimate obligations.

Under the new position, creditors must use established Government procedures and official channels when following up on outstanding payments.

Ncube said arrears should be pursued through the relevant MDA that contracted the supplier or service provider and to which the payment obligation relates.

"The business community is further advised that no consultancy firm, agent or other third party has the authority or mandate to facilitate, guarantee or secure payment of funds owed by Government," he said.

He warned that creditors who choose to engage such intermediaries would do so at their own risk and should not expect Government to recognise or settle any resulting fees, commissions or associated costs.

The minister urged all Government creditors to deal directly with the respective contracting ministries, departments and agencies and follow established procedures for the verification, processing and settlement of legitimate payment claims.

The directive is expected to put pressure on a system in which access to Government officials and political connections could allegedly be exploited to extract fees from companies seeking payment for work already completed.

It also places responsibility firmly on Government institutions to process legitimate claims through official channels rather than relying on suppliers or politically connected intermediaries to facilitate payments.