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CORRUPTION IN THE PUBLIC HEALTH SECTOR: A COMPARATIVE

PERSPECTIVE OF SOUTH AFRICA AND BRAZIL

Prof E.A. Mantzaris and Prof P. Pillay

ACCERUS, School of Public Leadership, Stellenbosch University, South Africa

ABSTRACT

International conventions and agreements have declared that the right to health is a basic human

right.

Both South Africa and Brazil, partners in the BRICS alliance have an abundance of historical

similarities in terms of dictatorships and apartheid and the challenges of their transition to

democracy.

History has taught people that political will and praxis are fundamental for the welfare of all

humanity in relation to the right of access to healthcare services.

Such services cannot operate in a social, political or economic vacuum; in order to be successful

they need to be based on accountability, good governance, transparency, and a well -oiled,

functional and diligent public service.

The article will attempt through an interpretative methodologically- based strategy to identify

similarities and differences in the public healthcare systems in the two countries.

Some of the issues dealt with will the standard of professional ethics of all stakeholders, role

players and participants, the efficiency and effectiveness utilisation of resources, the

developmental essence and content in the planning and implantation phases, and their

organisational impartiality, fairness, and accountability.

Past and present research in both countries has shown that billions of dollars has been lost to

corruption in the health sector, meaning that if the scourge is not adequately addressed the costs

of all services will escalate significantly access will be limited and there will be negative

consequences in the quality of care.

There haven analysts and practitioners who have openly stated that corruption has been both

‘rampant’ (and has ‘reached uncontrollable levels’ and the article will attempt to qualify and

quantify existing realities.

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This will be done through the utilisation of primary and secondary sources including official

government documents, quantitative and qualitative research findings in the two countries and

internationally as well personal face to face interviews with experts, researchers, state officials

and health practitioners as well as service providers.

Key words: Brazil; South Africa; corruption; public health sector; BRICS.

INTRODUCTION AND CONTEXT

Corruption in the public sector healthcare especially in the developing world is the result of a

multiplicity of factors many of which take different forms.

Human and power relations within organisational structures, existing operational conditions

and circumstances, motives and opportunities, political realities , rationalisations and settings,

the existence or absence of transparency and accountability are important dimensions of the

phenomenon. (Vian 2008:84-85).

An understanding and thorough analysis of the causes, dynamics and dimensions of the

phenomenon can be instrumental in the decisive fight against it (European Commission

2013:4-5).

International research has shown that corruption in the public health sector especially in the

developing world involves a wide array of individuals and groups in the political sphere as

public servants operating at all professional and leadership levels, as well as private sector

operators , suppliers and professionals (Global Health 2011:2–4; Samuel & Frisancho

2015:126-128). It has been reported by the European Commission (2013:16-17) that at the time

the official calculations of WHO (the World Health Organisation) indicated that at least $ 415

million (or 7.29% of global health expenses) was lost due to corruption every year.

In many countries the existence of comprehensive legislation, rules and regulations and

independent, capable and multi-facet anti-corruption organisations against corruption

(De Jaegere and Finley 2009:14-15; Knox 2009:119) corruption has been considered as not

only a violation of a basic human right but also as a serious crime affecting negatively key

elements of society’s well- being.

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It is well established that healthcare corruption has serious negative consequences for the whole

population of a country, especially the poor and the vulnerable, such as increase in infant

mortality and life expectation (Global Health 2011:2–3). This is mainly because corruption

diverts substantial financial resources from national and regional state entities. (Vian 2008:87).

Corrupt individuals or groups operating within the public health sectors mainly take advantages

of collusion behaviour, weak organisational systems and processes as well as the lack of

political to fight the scourge on the part of governments.

These are key reasons behind the proliferation of ‘grand’ and ‘administration’ corruption,

bribes, theft, collusion between public servants and the private sector in terms of supply chain

and procurement, hospitals and suppliers , medicine distribution,

Theft, bribes, and pharmaceutical –related fraud and collusion. (Barr et al. 2009:226-227).

RESEARCH METHODS

The mixed method qualitative methodological paradigm was followed. It included content

analysis of primary and secondary (including government documents) as well as interviews

with a wide variety of government officials, business people, university and non-governmental

organisations’ researchers in both countries as well as content analysis of the print media.

The key documents that were scrutinised included the Auditor General’s Annual and other

Reports ; all Public Service Commission's relevant documents; Law Reports dealing with

public healthcare services ; the Department’s cases; the Annual Reports and relevant

documents of the South African Police Services; the Annual Reports and relevant documents

of the national and provincial Health Departments ; the Annual Reports and relevant

documents of the National Prosecuting Authority and the Special Investigation Unit; and the

Annual Reports and relevant documents of the Parliamentary Monitoring Group (PMA).

Content analysis of 150 reports that appeared in the print media over the past 5 years was an

important final leg of the research that focused on corruption, fraud, bribery, supply chain and

procurement as key concepts, amongst others.

The study, dissection and analysis of the official documents assessed in the institutions named

above were based on the methodological dictates of content analysis, followed by meticulous

categorisation.

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It was ensured that the carefully selected judgemental sample of interviewees had first -hand

information of the sectors under investigation. The person to person interviews conducted took

place in both countries and covered both specific and general corruption issues. Although it

concentrated on healthcare corruption in the public sector, the role of the private sector was

also examined because of its importance in the corruption process on many occasions.

Processes involved in the connection of the two sectors and the repercussions in the delivery

of healthcare were examined.

The categorisation and coding of data followed the interview thematically so commonalities

could be identified.

Anonymity and confidentiality were guaranteed to all participants.

THE SOUTH AFRICAN ANTI-CORRUPTION TERRAIN

Despite an extensive and comprehensive anti-corruption legislative and regulatory framework,

corruption in South Africa has reached unprecedented levels at all levels of the public sector

.Despite the fact that that the emphasis on the phenomenon has concentrated on ‘grand

corruption’, mainly involving two prominent families, the reality is that there is no state

institutions that has been immune to the scourge (Mantzaris 2018).

It is a reality that has relegated the country’s Constitution as well as Section 27 of the Bill of

Rights of the Constitution, promising that every citizen of the country has the fundamental right

to access health care and that the state must undertake the necessary step for the realisation of

this promise. The National Health Act of 2004 supplements these promises through the setting

up of initiatives and frameworks associated with a uniform healthcare system ‘for all’.

South African anti-corruption framework is wide-ranging and diversified and deals with

organised crime through POCA (Prevention of Organised Crime Act, 121 of 1998 , corruption

in its generic , multiple forms (PRECCA- the Prevention and Combating of Corrupt Activities

Act, 12 of 2004 , whistle-blowing (PDA- Protected Disclosure Act, 26 of 2000), administrative

justice (PAJA- Promotion of Administrative Justice Act, 3 of 2000 , local government (MFMA

- Local Government: Municipal Finance Management Act, 56 of 2003 , and financial

intelligence (FICA- Financial Intelligence Centre Act, 38 of 2001 (FICA).

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In addition South Africa has over the years signed all international anti-corruption

conventions and treaties such as the Convention on Bribery of Foreign Public Officials in

International Business Transactions (OECD), the SADC ( Southern African Development

Community Protocol against Corruption) , the AU (African Union Convention on Preventing

and Combating Corruption and UNCAC , the United Nations Convention against Corruption.

Every government layer (local, provincial and national) has introduced over the years a number

of anti-corruption “Codes of Conduct” related to both a holistic and organisationally-based

ethical behaviour patterns dealing with financial and organisational matters and disclosures.

These include issues are related to supply chain and procurement, financial management, as

well as accounting and internal audit.

There are also anti-corruption entities such as SAPS( the South African Police) FIC (Financial

Intelligence Centre) , the Multi-Agency Working Group on Procurement, Anti-Corruption

Task Team, SIU (the Special Investigating Unit SIU), NPA (National Prosecuting Authority ,

the Specialised Commercial Crimes Courts, Asset Forfeiture Unit, NACF(National Anti-

Corruption Forum, Inter-Ministerial Committee on Auditor-General, PSC (the Public Service

Commission), the Public Protector, Anti-ACCC ( Anti-Corruption Coordinating Committee)

and the Public Service Anti- Corruption Forum (Woods and Mantzaris 2012).

There have also been a number of legal innovations designed to deal with political interference

and widespread nepotism evident at all layers of government aimed at dealing with issues of

financial management, internal audit and supply chain weaknesses and challenges. (Mantzaris

2014a: 68; Mantzaris 2014b: 80).

Private and public sector healthcare organisations and entities fall into the ambit of the he

Companies Act, (71/2008), the Prevention of Combating of Corrupt Activities Act (12/2004)

and the Financial Intelligence Centre Act (38/ 2001). (Woods and Mantzaris 2012).

Despite the fact that the legislation is comprehensive albeit mainly generic corruption in the

public sector including public healthcare have become the norm in the last decade.

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THE BRAZIL ANTI-CORRUPTION LEGISLATION

Unlike the South African anti-corruption legislation that is primarily of a generic nature in

respect of public healthcare, the Brazilian framework combines the generic with the specific

and is widely diversified. Health care regulation in the country Brazil is complex, with a

number of laws, rules and regulations as well as legislative and infra-legal entities dealing

with complexities of both the public and the private sectors. It is a challenging regulatory

landscape with propensity to stringent bureaucracy that is open to corrupt practices.

Articles 37 and 74 of the country’s Constitution outline penalties for corrupt public servants

(Mantzaris and Munnik 2013:105) while the Bill on Liability of Legal Persons for Acts of

Corruption, the Federal Bill, the Access to Information Law , and the Official Misconduct

Law deal directly with public servant’s corrupt acts and misconduct. The Public Service

Corporation’s Regulation Law , the Fiscal Responsibility Law, and the Law on the Secrecy

of Financial Institutions complement the above in the public service landscape (Mantzaris and

Munnik 2013:103).

The country’s rulers have signed all anti-corruption international agreements and the

comprehensive Penal Code deals with corruption of public official at all levels and these are

supplemented by the work of the Office of the Comptroller General of Brazil Law, that

specifically targets senior politicians’ corruption and the Ficha Limpa (the “Clean Record

Law”) also targeting politicians (Business Anti-Corruption 2015:3).

Estratégia Brasileira Anticorrupção (the Brazilian Anti-Corruption Strategy was introduced in

2009, while ANVISA (the National Health Surveillance Agency was established as an

independent watchdog under the leadership of the Ministry of Health to research, regulate,

inspect, and control all services and products that can be described as illegal and posing risks

for the people within the public health domain (Atlantic 2014:3–4).

The Brazilian Anticorruption Law (Law No. 12,846/2013) cemented the already excessive

regulatory environment, but never became instrumental in the fight against corruption.

A number of anti-corruption agencies have been established to deal with corruption, such as

the Federal Police Department)(DPF) , the Brazilian Federal Revenue Secretariat, the

Prosecutor’s Office and the CGU(the Controller General) is the key supplemented by COAF

(the Council of Control of Financial Activities), the CPIs (Parliamentary Inquiry Commissions)

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and the Department of Asset Recovery and International Legal Cooperation (Martinez and

Kohler 2016:8–10).

Health is a fundamental human right in the Brazilian Constitution, (Article 6) and it is the duty

and obligation of the state to provide it (Article 196).

The Constitution, the Organic Health Law, Law No. 8,080/1990 and Law No. 8,142/1990 are

the legislation that determines the health system and all government layers of the Federal

Republic must become instrumental in their governance that needs to be transparent,

accountable and efficient. They comprise the SUS (Unified Health System), the foundation of

the country’s system.

Municipalities are instrumental in healthcare service delivery and public participation in it are

constitutionally compulsory (Constitution, Article 198, Section 3 and Law No. 8,142/1990)

(Constitution of Brazil 2010)

There are strict anti-corruption operational laws , rules and regulations that govern public

service institutions such as clinics , laboratories and hospitals, such as the Civil Code and CDC

(the Consumer Defence Code) (CDC) and Article 927, sole paragraph, of the Civil Code), that

stipulate penalties for the state service providers including physicians and pharmacists.

In order to fight corruption the increasing regularisation of the policy has led to strict licensing

laws and authorisations of service providers such as medical doctors, pharmacists and nurses.

There have been special licenses introduced by the tax, state and federal authorities that are all

monitored by specific legislation of each state and municipality. This process is under the

control of the National Healthcare Facility Enrolment and determined by Federal Law No.

3,268 and Decree No. 44,045 and Federal Law No. 2,604 Federal Law No. 4,324 and Federal

Law No. 3,820.(Mantzaris and Munnik 2013 :104)

Private healthcare is operational in the country in a complementary and supplementary manner

as do philanthropic entities and non-profit organisations which are basically given preference

by the state in comparison (Brazilian Constitution Article 199, Section 1). The legislation

promulgated by the Ignacio Lula governments opened widely the country’s healthcare terrain

to a very strong penetration of foreign investors that led into a serious increase of acquisitions

and mergers assisted by the introduction of Law No. 13,097/2015 that allowed entrance to

foreign capital in the sector. (Mantzaris and Munnik 20132016:105)

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THE ANALYSIS: SOUTH AFRICA

South Africa’s latest budget showed that healthcare accounts for 13.9% of government

spending. The National Budget shows that government will spend R191.6bn on health in

2017/18 and R205bn in 2018/19. By 2020/2021 this will increase to R240bn by 2020/21.

During the present financial year an additional R4.2bn has been allocated to the NHI initiative

(the National Health Insurance), an ambitious plan that has become one of the country’s major

priorities in the last few years. Other key priorities in the medium term include the

establishment of a regulatory authority for health products and the HIV/AIDS prevention and

antiretroviral provision. An extra R600m targeted the building of the new Nelson Mandela

Children’s Hospital .The three-year future plan envisaged the budget to be R606b with an

additional R59.5b as the HIV/AIDS conditional grant ( RSA 2017 ).

The fact that this budget is spent on the 85% of the populations who cannot afford private

medical aid coverage means that the service delivery should be accountable, based on good

governance rooted on transparency, accountability and effectiveness. It is not only one that is

ridden with corruption, governed by incompetent politicians and administrators, is seriously

under-resourced and year after year produces returns on health investment (Trading

Economics, 2016; Health Policy Project, 2016).

Mantzaris and Pillay (2017), in their comparative exploration of healthcare corruption in

general terms began the exploration of public service corruption by highlighting that it was in

most cases a complicated process where politicians, ‘middle persons’, administrators, service

providers, sales people and health care practitioners have been involved over the years; this

includes doctors, administrators, nurses, procurement personnel, provincial and municipal

officials at all levels, pharmaceutical companies and their sales and distribution staff.

Mantzaris (2014a: 68-69), Mantzaris (2014b: 82-83) and Mantzaris and Pillay (2014: 17-18),

in their dissection of corruption at different layers of South African government, have

identified social, economic, as well as key organisational weaknesses that play a key role in

the perpetration of corruption. These include weak financial systems, dysfunctional supply

chain and procurement processes, non-existent risk management systems and power

relationships.

It has been stated that over the years, South Africa’s Treasury in the realm of its duties produces

health budgets and informational instructions for their implementation that are difficult to

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comprehend. This fact leads to strategic, technical weaknesses and gaps in planning and

implementation of key organisational priorities and thus increases instead of controls

corruption (Rispel & Moorman, 2013: 243-4; Rispel et.al 2016).

Such realities leading to perpetration of high levels of corruption have been summarised by

internationally-based indicators, such as lack of organisational mechanisms to detect

corruption, a failure to sanction those involved in corrupt activities and ‘adverse agent

selection’ (WHO, 2000; WHO, 2007; World Bank, 2010: 23 and Vian, 2008: 85-86).

Mantzaris and Pillay (2017: 58) identified a wide range of weaknesses and gaps facing public

healthcare organisations that are instrumental in perpetrating corruption: conflict/s of interest;

nepotism; collusion; political and administrative fraud; medical practitioners’ absenteeism;

collusion between healthcare management and service providers; lack of adequate political

oversight; no coordination of anti-corruption agencies with healthcare stake-holders and role

players; neglect of anti-corruption policies, rules and regulations; dis-functioning governance

systems; lack institutional capacity; important skills gaps for implementation; no coordination

across institutional leadership; complicated policies leading to blockages; weak compliance

systems, and serious deficiencies, in risk management, SCM and procurement, internal audit

and financial management systems and operations, as well as in financial and risk management

systems.

Such findings are directly related and determined by economic, social, sociological, cultural,

institutional and organisational realities and dynamics and point directly and indirectly to the

fundamental strategies, tactics and priorities necessary in the fight against corruption, and the

creation and perpetration of good governance in state entities and institutions.

These necessities begin with a commitment to ethical and honest governance founded on a

political will determined to plan, design and implement existing laws, rules and regulations,

leading ultimately to corruption-free health services, rooted on appropriate law enforcement,

functional organisational systems and active public participation enabled to assess, monitor

and evaluate the governance levels and to hold politicians and public administrators

accountable (Integrated Support Teams, 2009; Holmberg & Rothstein, 2011: 530–32; Woods

and Mantzaris, 2012).

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Despite the efforts of the Ministry of Finance and the National Treasury, which is the heart of

the healthcare public system, fraud in the Provincial Departments of Health went from bad to

worse as the years passed with occasional improvement.

Thus in the years 2012 and 2013, over 6% of the expenditure incurred by Provincial Health

Departments was irregular, and the Auditor General’s calculations showed that between 2009

and 2013, the irregular expenditure of provincial departments reached R24 billion.

In the worst reported case, in the Northern Cape’s allocated budget of R1b one third was

deemed irregular in 2012-2013. In the case of the country’s ‘economic powerhouse’, Gauteng,

irregular expenditure reached R5.3b between 2009 and 2012.

An increase of 6.1% occurred in the period 2012/2013 (RSA Auditor General Reports, 2011-

2012; 2012-2013).

According to investigations of the Special Investigation Unit, extensive corruption led the

Northern Cape’s Health Department into the dire situation of not achieving a clean audit in the

past 12 years, with the worst cases of fraud and collusion occurring in the construction of a

mental hospital that took more than 11 years to build. Its initial budget was R290m and in 2015,

it had reached R1.8b (SIU 2015; 2016).

Taking Gauteng Department of Health as a case study because of its position as one of the few

provinces that has been considered of having plaid a pioneering role in anti-corruption

initiatives and attempts to achieve good governance is instrumental in understanding the

periodization of corruption over the years.

Historically, the Department has been aware of the rampant corruption as two random

proclamations show throughout the years. In 2008, a departmental final annual report

submitted foregrounded the following corruption cases in general:

Irregular salary payments, including overtime, allowances and leave pay

Payments to fictitious employees

Illegal extension and modification of contracts of service providers

Excessive payments to service providers leading to massive losses

Nepotism in filling of posts

Manipulation of supply chain management systems

Irregular procurement

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Faking of performance management outcomes

Illegal payments to service providers for incomplete work or work not started

(Gauteng Provincial Government, 2008).

In 2012, a final report was produced in a ‘summary form’ recording key corruption acts as

follows:

Contract management

Budget preparation and implementation

Supply Chain Management

Cash Management

(Gauteng Provincial Government, 2012).

The Department under investigation employs over 69 000 health workers and provides health

services to over 20 million patients for Primary Health Care (PHC) facilities. It receives 400

000 calls to emergency medical services, and 5 million patient visits to hospital outpatient

departments in addition to those trauma patients seen at the Accident and Emergencies

(Gauteng Provincial Department of Health, 2017).

A number of milestones have been achieved in the province through the expansion of the Ward

Based Primary Health Care Outreach Teams, with the number of teams increasing by over 38%

from the previous year and their coverage expanding by 39% from 316 to 439 wards.

It includes 3 Tertiary Hospitals, 3 District Hospitals, 9 Provincial Regional Hospitals, 4

National Central Hospitals, 373 Clinics, Nursing Training Colleges and Ambulances. Its

budget in the current financial year is R37b with the bulk going towards Tertiary and Central

Hospitals (R13 billion) and District Health Services (R12b).

In the previous financial year, it employed 56 314 staff members (Gauteng Provincial

Department of Health, 2017).

In an historical context, the perpetual corruption in the Department begins with the realities of

the Auditor General’s reports. In this case the description will detail all cases where open or

‘hidden’ corruption are evident.

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The 2013-2014 financial year was marked by a qualified audit .It was reported that goods and

services above the legally-bound R500 000 thresholds were procured without inviting

competitive bids. It was evident that deviations were approved by the accounting officer even

though it was not impractical to invite competitive bids. Evidently there was no appropriate

audit evidence obtained by the auditors because services and goods with a transaction value

below R500 000 were procured by means of not obtaining the required price quotations.

The Department authorities did not take the appropriate steps to prevent irregular, fruitless and

wasteful expenditure. These amounted to R493 155 000 and R7 433 000 respectively.

The same corrupt practices were evident in the supply chain and procurement terrain during

the next financial year where a series of deviations were approved by the accounting officer

even though it was not impractical to invite competitive bids (RSA Auditor General, 2016).

During the 2016-2017 financial year the same corrupt processes led to similar non-

compliance in terms procurement of goods and services totalled R16 620 630.

Massive non-compliance to supply chain and procurement rules and regulations resulted from

the splitting of the processes into smaller parts in respect of various contracts/projects

associated amongst other with security services, infrastructure and construction. The total

expenditure totalled R490 977 016 (RSA Auditor General, 2017).

There was no official audit evidence proving that all extensions or modifications to contracts

were rubber-stamped or signed by a properly delegated official. This practice is illegal in terms

of the Provincial Finance Management Act (PFMA) (Article 44).

The overall amount that supply chain management non-compliance realities totalled R597 098

045. During the same financial year there was increase of the budget for compensation of

employees. This was done without the approval of the Provincial Treasury. The non-

compliance was due to over payment of employee costs by R724 923 000.

In case the amounts due been paid in a timely manner R3 534 340 000 would have constituted

unauthorised expenditure.

In 2017 the Department’s funding gap R10.9 billion, meaning that the current budget (R40.2

billion) is inadequate to cover organisation, functional and financial requirements. This is

mainly due to money owed to suppliers totalling R4.2billion, (R 569 million in 2016)

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Commitments to long-term contracts took up R2.95b, while possible payments for medical

negligence amounted to R3.78b. (RSA Auditor General, 2017).

Amongst those owed money were SANBS (the South African National Blood Services) and

pharmaceutical companies, while serious medico-legal liabilities stemming from an avalanche

of legal actions is a continuous threat for the Departmental budget, especially in respect of

essential services. In between these dire realities the continuous over-spending for unbudgeted

staff has been detrimental in the process of appointing key staff for critical clinical posts. This

despite the fact that the Department has over the years has warned service delivery points’

management and leadership that over-spending on staff budget is detrimental for the medical

consumables budget .( Interview 1 )

Existing corruption due to poor and dysfunctional internal, financial and management and

controls of inevitably led to irregular expenditure (R1.9billion) and R6.9b of accruals in the

2016/2017 financial year.

As indicated earlier the reports indicated that most of the irregular expenditure was caused by

procurement without inviting competitive bids. (RSA Auditor General, 2017).

Corruption was declared by the Provincial MEC as a key factor in the dire situation within the

Department and a direct result of weak organisational structures and processes.

BRAZIL

There is a general acknowledgement that despite the fact that the 4% of the national budget

expenditure on public health in Brazil is very low by international standards and the dictates of

the international health ‘watchdogs’ , there have been significant steps forward for the

fulfilment of health care as a constitutionally-bounding basic human right. This has been rooted

in the existence until recently of the free distribution of affordable medication for a wide

diversity of diseases (known as Farmácia Popular, as well free dedication against asthma,

diabetes and hypertension (Atlantic 2014:3).

There have been significant achievements throughout the years due to such progressive steps

forward as Brazil has 13 per 1,000 live births, down from about 27 in 2000 infant mortality

rate. Life expectancy stands at 74 as opposed to 66 in 1990.

Empirical research has shown conclusively the vulnerability of the health sector to corrupt

practices especially in a country like Brazil. This is due to a number of political, economic and

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social reasons such as the massive amount of financial resources involved in the sector, the

financial and power relations amongst key stakeholders and role players such as

pharmaceutical companies, politicians, administrators, trade unions, mediators. It has been said

another key reason for vulnerability to corruption is the information asymmetry and

asymmetric information found in the relations amongst health professionals and their patients

(Savedoff and Hussmann 2006: 5-6).

The rampant corruption in all spheres of health care service delivery has led to a worsening of

the already deteriorating situation in hospitals throughout the country , as pharmaceutical

companies , medical practitioners of all hues , social and private entrepreneurs , are involved

in direct , indirect and ‘mediator –driven’ fraud. This led to a serious cuts in the health budget,

especially in respect of municipalities that led to no new infrastructure undertakings, lack of

pharmaceuticals and cutbacks on new employees. On many occasions’ hospital and clinic

emergency services have been shut down in both urban and rural municipalities, theft of

medicines have led to serious shortages of medication, staff receive salaries late or not at all,

transplants of all types have been delayed, whole hospital sections have closed down. (Cesar

et al. 2011:2043-2044). (Berg and Asher 2017:2-3).

The 2016 case in Rio de Janeiro where it was established that that the State Health Ministry

had purchased 1000 tonnes of expired pharmaceuticals that following the exposure had to be

immediately incinerated exposed the continuous expansion of the fraudulent relations among

private sector pharmaceutical companies politicians and administrators . The exposed massive

fraud case took place at a time that large numbers of clinics and healthcare centers were

depleted of drugs. The state authorities were obligated to face the massive costs of incineration.

(Dorcadie 2016).

Politicians and state bureaucrats in the Lula government overturned its pro-poor policies as in

the last few years they utilised private companies as key service providers responsible for the

functionality of public hospital networks, which they led into extremely high costs,

ineffectiveness and dis-functionality.

Misappropriation of public funds became a daily event, but only a few made national headlines

because of the secrecy prevailing amongst the culprits. However one of the many was exposed

nationally when in 2016 a shady network was caught and convicted for producing false medical

bills. The case took place São in Gonçalo and the proceeds were directed to local politicians.

(Dorcadie 2016).

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Bossert’s important work of the decentralisation in health systems in development countries in

respect of innovation, performance and space as well as governance (Bossert 1998; 2008)

pinpoint the importance of the municipalities as the key political authority in Brazil as they

hold the jurisdiction in terms of health. The municipality’s Mayor has a leading role in

decision-making, planning and implementation of social and public policies through the

utilisation of resources provided by federal grants.

One of the key issues that all municipalities and mayors have to face in their duties and

responsibilities is their relations with the municipal health councils that are legally the

‘guardians of accountability at local level. These are to be established in all municipalities that

receive grants from the federal government for healthcare (Interview 2 University of Sao Paulo)

Such councils have a number of duties and responsibilities such as defining, researching

planning and implementing the sector’s basic priorities and to oversee local provision of health

services in the area. Particularly important is their approval of the health budget for the entity

as well its assessment, monitoring and evaluation functions. Rules and regulations demand

that the councils as permanent state bodies are obligated to meet regularly. All elected members

of the councils enrich these meetings with the presence of organs of civil society and social

movements, health care professionals as well as health service providers.

Although the vast majority of municipalities have operational councils as they are a legal pre-

condition for receiving grants, the mere fact that a number of these bodies were established

immediately , the quality of their regulatory service lacks experience and ‘on the job’

experience , a reality that opens the path for corrupt practices as the councils are unable and

not sufficiently equipped to hold municipalities to account and defend citizens from corruption

in the delivery of healthcare services(Nishijima et.al 2016) .

Most, if not all, academics and research debates that deal with health governance in Brazil

have focused on two issues that are the considered the foundations of focused on the

relationships among corruption, the accountability of health officials’ at all institutional and

organisational levels and the decentralization of services. Decentralization I has been described

a key element in the enhancement of transparent accountable and democratic government

determined to fight corruption (Fisman and Gatti 2002). This because there is the belief that

the key elements of such a decentralised health system , comprising of local politicians,

administrators, citizens , non-governmental organisations and organs of civil society would

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provide not only honest but also greater efficiencies in terms of researching, when decision-

making , planning and managing effective implementation.

Such assumptions , however, have been not been fulfilled on many occasions as the ‘ public

space’ that allows decisions to taken and implemented is filled with basically unqualified or

half-qualified local bureaucrats who are expected to perform their designated duties with very

limited supervision from the central state organs . Such realities evident in many rural and

semi-rural municipalities make corruption easier.

The accountability and transparency of local municipalities have their roots on their

communication with citizens and key stakeholders and role players in terms of keep them

abreast with valuable information in regard to healthcare realities in the local terrain. Existing

research has shown that this does not happen on most occasions and health systems have

serious information problems (Lewis 2006; Savedoff and Hussmann 2006; Savedoff 2007). In

a number of Latin American and other developing countries, the lack or the weakness of such

accountability and transparency in terms of communication and information sharing has been

a serious threat to the fight against corruption and the realization of representative democracy

(O’Donnell et.al. 2003).

An analysis from an extensive sample of 1077 (later decreased to 980) cases of audit

programmes implemented by the CGU, (the Office of the Comptroller General) has provided

a comprehensive view of the realities of how federal grants are managed by local governments.

Such audits are managed in similar ways as the South African Auditor General as visits of

teams of trained officials who thoroughly scrutinises the ways federal public funds are utilised,

their correspondence with the approved budgets, the developments of local infrastructure

undertakings and the quality of the services provided .Such programmes were initiated by the

anti-corruption agency in 2003 and is still operational.

The health audits concentrate on detection of irregularities that are related to a number of

elements, including issues related to documentation ( such as existence or absence of records,

payment , resources, supply chain and procurement forms, amongst others); infrastructure

conditions and their relationship to decisions and project plans (including completed or

unfinished public works and unaccomplished goals); the municipal health council functionality

( in terms of existing plans and projects, composition, regularity of meetings , transparency,

accountability , efficiency and effectiveness); budgetary assessment, evaluation and

17

monitoring; staff accountability and behaviour in terms of health care delivery ( hiring

procedures, talent management and retention , payment, trade unions behaviour, hiring and

training); medicine stocks (control, storage situation and conditions, staff behaviour, absence,

and inventory control) . (Avelino et al 2014:695)

The multi-variable based study attempted to escape ‘generalities’ and shortcomings ‘evident in

existing literature on the issue’ in an effort to advance the real essence of accountability and

‘how it works’ in a decentralized setting. Hence the findings, it is claimed are not based on the

‘subjectivity’ of corruption measures that on occasions conflate the actual incidence of

corruption. Such findings, it is claimed is based on informants’ perceptions, especially in

relation to studies of health systems that exist within ‘complex environments’. Hence the data

are based on ‘objective evidence’ that is included in expenditure audits of Brazilian local

government entities.

The key findings pinpoint a number of similarities with the problems faced in the South African

public service. The difference (a positive one according to the researchers) is the existence of

the health councils. The research findings indicate that despite the existence of corruption

aspects throughout the 10 year period under investigation, the more experience the health

council’s gain throughout their service period the more the reduction of incidents of corruption

in terms of healthcare expenditure in a municipality. (Avelino et.al. 2014: 698)

Another important ingredient in the fight against corruption is the importance of further

knowledge injection amongst the members of the health councils (but interestingly the elected

politicians and administrators are not mentioned). This is deemed important as it is claimed by

the researchers that the literature on local accountability has not really paid serious attention

direct relationship between ‘action and knowledge’. This connection, it is said will become

instrumental in increasing effectiveness and efficiency amongst the health councils in order for

them to deal directly with problems and challenges related to a number of key issues such the

complexities of the budgetary requirements, assessing and monitoring health expenditures, lack

of communication and accountability and asymmetry in the sphere of information. (Avelino

et.al. 2014: 699)

Interestingly the second key finding in respect of accountability concentrates on the

conventional suggestion that the state authorities at national level need to continue working

hard in order to guarantee that local elections are open, transparent, competitive and fair and

18

competitive. The opinion is advanced that the open and democratic electoral process and an

active opposition, could be helpful in in the effort to deter corruption in municipalities.

The findings are clear on the fact that municipalities that are highly dependent upon federal

and state resources and grants are most likely to face higher levels of corruption. The findings

simultaneously indicate that higher levels mainly on the part of the municipal health council

could play a key role in the fight against corruption. This means that while the audits performed

by the central state authorities ought to supplement these effort and perform a may serve as a

counter-balancing act. This means that their duties responsibilities and actions as locally-based

anti-corruption tool, will complement the central state actions. This because they will act as

an efficient local oversight on the efforts to increase anti-corruption and install accountability

amongst municipal officials who will held to account (Avelino 2014:700).

Empirical work by Ferraz and Finan (2008, 2011), has identified key corrupt behaviours in the

Brazilian public service delivery in health care , diversion of public funds for private gain fraud

in supply chain and procurement and over-invoicing for goods and services.

These are founded on a number of everyday realities such as the shortfall in public health care

investments in the country and their resultant negative outcomes such as the unsatisfactory

remuneration healthcare professionals, especially medical doctors, a situation that has led to a

serious shortage of general practitioners in the public sector. The massive movement of medical

doctors in the country to the private sector has led the federal government to import hundreds

of medical practitioner’s professionals from Cuba.

The situation has led to lack of specialists, creating major gaps and bottleneck in infrastructure,

moving forward service delivery in terms of treatments, lack of equipment, and supplies as

well as excessive bureaucracy leading to low efficiency.

The latest budget freeze undertaken following the political and social turbulence of the

corruption conundrum of the Workers’ Party was instrumental in cutting off additional funds

for than 150 million patients whose public service healthcare is the only source of treatment.

The country has lately recorded one of the lowest investments in healthcare in comparative

terms in the Latin American landscape and its existing resources fail to meet national demand

The latest public survey by a reputable research company (Datafolha) has showed that three in

10 Brazilians declared healthcare as the most important public concern and 10% listed

education as their number one concern. The survey revealed that corruption and unemployment

19

were the country’s most important public concern. Inevitably corruption that has been

instrumental in budget cuts has been instrumental in the healthcare and education conundrum.

The federal budget cuts called by the present government ‘economic reforms’ has serious

negative effects on the health and wellbeing of the majority of the country’s population

especially the poor and the vulnerable.

CONCLUSION

The similarities and differences in the public sector healthcare corruption in South Africa and

Brazil are evident in the article as is the reality that they are rooted on existing policy, social,

political, economic and organisational relationships and dynamics associated with fairness,

transparency, accountability and accountability, the key ingredients of good governance.

These point to the fundamental significance of political and administrative oversight at all

levels from decision-making planning and implementation in an perpetually changing ,

interlinked and technologically advanced environment that needs not only honesty , fairness

and accountability as key human and professional characteristics , but also skills and capacity

that will allow public servants to be efficient and effective in an ever-changing , complex

organisational and systemic environment.

There has been evidence that the complex nature of a number of key characteristics of the

systems and processes associated with the overall healthcare system might increase its

vulnerability to corruption, especially in terms of the proliferation of the public/private sector

relations in both countries.

It has become a necessity for both countries to strengthen existing legislation that despite their

comprehensive nature have been unable to decrease the levels of corruption because of existing

gaps and to guarantee the independence of the justice system that is more challenged in terms

of corruption in Brazil.

The multiplicity of anti-corruption agencies in both countries has led to a number of logistical,

organisational and political problems as well as leadership challenges mainly in South Africa’s

higher echelons.

In both countries lack of direct, rich and effective communication with the citizens has suffered

over the last few years as the struggle against corruption in both countries seems to move

20

from the street protests to the corridors of anti-corruption agencies, national and international

television and press and very scarcely the courts of law.

In the meantime corruption in the sphere of public health care continues to be a perpetrator of

acts that are a direct violation of the human rights of billions of people, especially of the most

vulnerable.

As hundreds of thousands of adults and children have their basic human rights violated

because of corruption , the collusion between the private and the public sectors, the greed of

the politicians, administrators, mediators and syndicates continue their path of fraud , greed ,

bribes , extortion , collusions continues.

21

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F.I. 2011. “Health conditions and health-policy innovations in Brazil: the way forward. The

Lancet 377, No. 9782: 2042–2053

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of Public Economics, 83(2): 325-45)

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2016).

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23

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involvement. Public Administration and Development, 29:117-132.

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Washington D.C Human Development Sector Unit, World Bank

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2006Washington D.C Centre for Global Development

Mantzaris, E. 2014a. Procurement, tendering and corruption: Realities, challenges and tangible

solutions. African Journal of Public Affairs, Volume 7 (2): 67-79.

Mantzaris, E. 2014 b. Municipal Financial Management against Corruption: A South African

Case Study. African Journal of Public Affairs, Volume 7(2):80-91

Mantzaris, E. and Pillay, P. 2014. Navigating through the political/administrative corruption

conundrum: South African Case studies. African Journal of Public Affairs, Volume 7(2): 17-

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Mantzaris E and Pillay S 2017 Corruption in the Health Sector in South Africa and India: Some

Considerations and Reflections, African Journal of Public Affairs 9 (8): 49-62

Mantzaris E.A. 2017 Corruption and Ethics: The South African Case, STIAS Presentation,

October

Mantzaris, E. and Munnik, L. 2013. Can a Society Get Rid of Corruption through Legislation

Alone? The Case of Brazil, 2013, ICPA Conference Proceedings, Volume 1:101–107.

24

Martinez, M.G and Kohler, J.C. 2016. Civil society participation in the health system: the case

of Brazil. Health Councils Globalization and Health.

Nishijima, M .Rodrigues, L.M. Randall P. Ellis R.P., Cati R.C 2016. Evaluating the impact of

Brazil’s central audit program on municipal provision of health services

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Rispel, L. & Moorman, J. 2013. Health policy reforms and policy implementation in South

Africa: A paradox? In: Daniel J, Naidoo P, Pillay D, Southall R (Eds). New South African

Review 3: The Second Phase-Tragedy or Farce? Johannesburg: Wits University Press, 239–

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sector. Health Policy Plan, 31 (2): 239-249. DOI: http://doi.org/10.1093/heapol/czv047

(Accessed 18 /6/2016)

Samuel, J. & Frisancho, A. Rights-based citizen monitoring in Peru: Evidence of impact from

the field. Health and Human Rights, 2015. 17(2):123-34.

RSA Auditor General Reports, 2011-2012, Auditor General

RSA Auditor General Reports, 2012-2013, Auditor General

RSA Auditor General Reports, 2016, Auditor General

RSA Auditor General Reports, 2017, Auditor General

RSA 2017 National Budget 2017-2018, Pretoria: National Printers

Savedoff WD. 2007 Transparency and corruption in the health sector: a conceptual framework

and ideas for action in Latin American and the Caribbean, 2007Washington D.CInter-

American Development Bank

Savedoff WD, and Hussmann K. 2006 Why are health systems prone to corruption?, In:

Transparency International. Global Corruption Report 2006. London: Pluto Press, pp. 4–16

SIU Special Investigation Unit 2015 Annual Report, Johannesburg

25

SIU Special Investigation Unit 2016 Annual Report, Johannesburg

Trading Economics. 2016. http://www.tradingeconomics.com/south-africa/health-

expenditure-total-percent-of-gdp-wb. (Accessed 13/6/2016)

Vian, T. 2008. Review of corruption in the health sector: theory, methods and interventions.

Health Policy and Planning, 23: 83–94.

Woods G and Mantzaris EA 2012 Anti-Corruption Reader, ACCERUS, School of Public

Leasership, Stellenbosch University

WHO. 2000. World Health Report 2000: Health Systems: Improving Performance. Geneva:

World Health Organization. p. 877–87.

WHO. 2007. Everybody's Business. Strengthening Health Systems to Improve Health

Outcomes: WHO's Framework for Action. Geneva: World Health Organization.

World Bank. 2010. Africa Development Indicators 2010: Silent and Lethal, How Quiet

Corruption Undermines Africa’s Development Efforts. Washington, D.C.: The World Bank.

REFERENCES

Atlantic. 2014. The Struggle for Universal HealthCare. [Online] Available at:

https://www.theatlantic.com/health/archive/2014/05/the-struggle-for-universal-

healthcare/361854 (Accessed 16 March 2016)

Avellino G, Barberia L.G. Biderman V 2014 Governance in managing public health resources

in Brazilian municipalities Health Policy and Planning, 29, ( 6) , : 694–702 September

https://doi.org/10.1093/heapol/czt003

Barr, A., Lindelow, M. & Serneels, P. Corruption in public service delivery: An experimental

analysis. Journal of Economic Behavior & Organization, 2009, 72(1):225–39

26

Berg, N. and Asher, J. 2017. How Brazil’s Corruption Crackdown Affects Health Care, May

17https://www.law360.com/articles/925103/how-brazil-s-corruption-crackdown-affects-

healthcare (Accessed 19 March 2016)

Bossert T. 1998 Analyzing the decentralization of health systems in developing countries:

decision space, innovation and performance, Social Science & Medicine, 1998, 47: 1513-27

Bossert T. 2008 Decentralization and governance in health, HealthSystems 20/20 Project,

2008Washington D.C The United States Agency for International Development

Business Anti-Corruption Report 2016 Brazil. [Online] Available at: http://www.business-anti-

corruption.Com/country-profiles/brazil (Accessed 17 August 2016)

Constitution of the Federative Republic of Brazil 2010: Constitutional text of October 5, 1988,

with the alterations introduced by Constitutional Amendments No. 1/1992 through 64/2010

and by Revision Constitutional Amendments No. 1/1994 through 6/1994. Documentation and

Information Center Publishing Coordination Brasília – 2010

De Jaegere, S. & Finley, S. Mapping accountability in the health sector and developing a

sectoral assessment framework. UNDP Mission Report 2009

Dorcadie M 2016 Rio de Janeiro’s public health system on verge of collapse

https://www.equaltimes.org/rio-de-janeiro-s-public-health?lang=en#.WuhQ7PlubIU

European Commission, 2013. Study on corruption in the healthcare sector.

HOME/2011/ISEC/PR/047-A2 October 2013. Available at: http://ec.europa.eu/dgs/home-

affairs/what-is-

new/news/news/docs/20131219_study_on_corruption_in_the_healthcare_sector_en.pdf

(Accessed July 28 2016)

Ferraz C, Finan F. 2008 Exposing corrupt politicians: the effects of Brazil's publicly released

audits on electoral outcomes, Quarterly Journal of Economics, vol. 123: 703-45)

Ferraz C, Finan F. 2011 Electoral accountability and corruption: evidence from the audit

reports of local governments, American Economic Review, 2011, vol. 101 (pg. 1274-311)

27

F.I. 2011. “Health conditions and health-policy innovations in Brazil: the way forward. The

Lancet 377, No. 9782: 2042–2053

Fisman R, Gatti R. 2002 Decentralization and corruption: evidence across countries, Journal

of Public Economics, 83(2): 325-45)

Global Health Intelligence 2016 Corruption in healthcare poses main cause of concern for

Brazil, December 20, 2016

http://globalhealthintelligence.com/news/corruption-healthcare-poses-main-cause-concern-

brazil/

Gauteng Provincial Government, 2008, Annual Report, Johannesburg

Gauteng Provincial Government, 2012 Annual Report, Johannesburg

Gauteng Provincial Government, 2017, Annual Report, Johannesburg

Health Policy Project 2016. Trends in National and Provincial Health and HIV/AIDS

Budgeting and Spending in South Africa. Available at:

http://www.healthpolicyproject.com/pubs/7887/SouthAfrica_HFP.pdf (Accessed: June 17,

2016)

Holmberg S, and Rothstein, B. 2011. Dying of corruption. Health Economics, Policy and Law,

6: 529–47

Integrated Support Teams. 2009. Review of Health Over-Spending and Macro-Assessment of

the Public Health System in South Africa: Consolidated Report. Pretoria: ISTs

Interview 1 Senior Official of the Gauteng Health Department, October 2017

Interview 2 Senior Member Professor Commission for International Cooperation at the

Institute of International Relations, University of Sao Paolo

Knox, C. 2009. Dealing with sectoral corruption in Bangladesh: Developing citizen

involvement. Public Administration and Development, 29:117-132

Lewis M. 2006 a Who is Paying for Health Care in Eastern Europe and Central Asia?,

Washington D.C Human Development Sector Unit, World Bank

28

Lewis M. 2006 b Governance and corruption in public health systems, Working Paper #78 ,

2006Washington D.C Center for Global Development

Mantzaris, E. 2014a. Procurement, tendering and corruption: Realities, challenges and tangible

solutions. African Journal of Public Affairs, Volume 7 (2): 67-79

Mantzaris, E. 2014 b. Municipal Financial Management against Corruption: A South African

Case Study. African Journal of Public Affairs, Volume 7(2):80-91

Mantzaris, E. and Pillay, P. 2014. Navigating through the political/administrative corruption

conundrum: South African Case studies. African Journal of Public Affairs, Volume 7(2): 17-

26

Mantzaris, E and Pillay S 2017 Corruption in the Health Sector in South Africa and India:

Some Considerations and Reflections, African Journal of Public Affairs 9 (8): 49-62

Mantzaris, E.A. 2017 Corruption and Ethics: The South African Case, STIAS Presentation,

October

Mantzaris, E. and Munnik, L. 2013. Can a Society Get Rid of Corruption through Legislation

Alone? The Case of Brazil, 2013, ICPA Conference Proceedings, Volume 1:101–107

Martinez, M.G and Kohler, J.C. 2016. Civil society participation in the health system: the case

of Brazil. Health Councils Globalization and Health

Nishijima, M .Rodrigues, L.M. Randall P. Ellis R.P., Cati R.C 2016. Evaluating the impact of

Brazil’s central audit program on municipal provision of health services

https://blogs.bu.edu/ellisrp/files/2016/06/NEC_public_choice_20160526.pdf

Rispel, L. & Moorman, J. 2013. Health policy reforms and policy implementation in South

Africa: A paradox? In: Daniel J, Naidoo P, Pillay D, Southall R (Eds). New South African

Review 3: The Second Phase-Tragedy or Farce? Johannesburg: Wits University Press, 239–60

29

Rispel, L.C., de Jager, P. & Fonn, S. 2016. Exploring corruption in the South African health

sector. Health Policy Plan, 31 (2): 239-249. DOI: http://doi.org/10.1093/heapol/czv047

(Accessed 18 /6/2016)

Samuel, J. & Frisancho, A. Rights-based citizen monitoring in Peru: Evidence of impact from

the field. Health and Human Rights, 2015. 17(2):123-34

RSA Auditor General Reports, 2011-2012, Auditor General

RSA Auditor General Reports, 2012-2013, Auditor General

RSA Auditor General Reports, 2016, Auditor General

RSA Auditor General Reports, 2017, Auditor General

RSA 2017 National Budget 2017-2018, Pretoria: National Printers

Savedoff, WD. 2007 Transparency and corruption in the health sector: a conceptual framework

and ideas for action in Latin American and the Caribbean, 2007Washington D.CInter-

American Development Bank

Savedoff, WD, and Hussmann K. 2006 Why are health systems prone to corruption? In:

Transparency International. Global Corruption Report 2006. London: Pluto Press, pp. 4–16

SIU Special Investigation Unit 2015 Annual Report, Johannesburg

SIU Special Investigation Unit 2016 Annual Report, Johannesburg

Trading Economics. 2016. http://www.tradingeconomics.com/south-africa/health-

expenditure-total-percent-of-gdp-wb. (Accessed 13/6/2016)

Vian, T. 2008. Review of corruption in the health sector: theory, methods and interventions.

Health Policy and Planning, 23: 83–94.

Woods G and Mantzaris EA 2012 Anti-Corruption Reader, ACCERUS, School of Public

Leadership, Stellenbosch University

30

WHO. 2000. World Health Report 2000: Health Systems: Improving Performance. Geneva:

World Health Organization. p. 877–87

WHO. 2007. Everybody's Business. Strengthening Health Systems to Improve Health

Outcomes: WHO's Framework for Action. Geneva: World Health Organization

World Bank. 2010. Africa Development Indicators 2010: Silent and Lethal, How Quiet

Corruption Undermines Africa’s Development Efforts. Washington, D.C.: The World Bank