Nkandla, The Finale: Treasury sets ‘reasonable’ R7.8m for Zuma to pay back
- Ranjeni Munusamy
- South Africa
- 28 Jun 2016 01:09 (South Africa)
The end of the Nkandla affair is in sight. In line with the Constitutional Court judgment that found the Public Protector’s report on Nkandla was binding, National Treasury determined a “reasonable percentage” of the non-security upgrades that President Jacob Zuma has to pay back to the state. After an extensive process, they set this amount at R7.8-million, which the Constitutional Court must now approve. Then the president must “personally” pay back the money within 45 days. After six-and-a-half years, the Nkandla scandal could finally be put to rest – with any luck without any further questionable conduct to settle the tab. By RANJENI MUNUSAMY.
A rigorous phase of the process of paying back the money has been completed. The National Treasury carried the onus to determine how much President Jacob Zuma should reimburse the state for non-security upgrades at his Nkandla home. Finance Minister Pravin Gordhan and the National Treasury were already under significant pressure, having to oversee the recovery of the economy after the shock firing of Nhlanhla Nene in December and fend off credit ratings downgrades at a time when the country’s economic performance has been on a downward trend.
Gordhan has had the additional pressure of the Hawks breathing down his neck in connection with their probe into the special investigations unit at the South African Revenue Service. Then there was the threat of a certain politically connected family trying to hijack the Treasury and replace senior staff with their lackeys.
But could there be a more unpleasant task than to determine how much your boss has to pay for benefits he received unduly? The Constitutional Court decided that the National Treasury should carry this burden, with no other criteria than that it should be a “reasonable percentage” of the cost of the non-security upgrades.
Public Protector Thuli Madonsela found in her report that there were five features at Zuma’s Nkandla home that could not be deemed to be security upgrades: the swimming pool, visitor’s centre, amphitheatre, chicken run and cattle kraal. She stated that as part of the remedial action, the president should pay a “reasonable percentage of the cost of the measures” determined with the assistance of National Treasury.
This was the main point of dispute in the Public Protector’s report, which resulted it being called into question by the parliamentary ad hoc committees on Nkandla and Police Minister Nkosinathi Nhleko. Nhleko produced a counter-report declaring that the five features were security upgrades and absolved the president from having to pay back a single cent. After a number of acrimonious battles in Parliament, the Economic Freedom Fighters (EFF) took the matter to the Constitutional Court.
Days before the matter was set down to be heard, the Presidency issued a statement stating that Zuma had proposed “an end to the drawn-out legal controversy”. It said that while Zuma remained “critical of a number of factual aspects and legal conclusions in the report”, he proposed to pay an amount that should be “independently and impartially determined”. Zuma wanted the auditor-general and Minister of Finance to determine the amount he should pay.
The Constitutional Court took a different route. After finding that both the president and the National Assembly had violated the Constitution in their handling of the Public Protector’s report, the court ordered that the National Treasury should determine how much Zuma should pay. “The National Treasury must determine a reasonable percentage of the costs of those measures which ought to be paid personally by the President,” Chief Justice Mogoeng Mogoeng ordered.
The Treasury undertook an extensive process to determine the costs, using two firms of quantity surveyors, and the assistance of the South African Institution of Civil Engineering (SAICE) and the Association Quantity Surveyors (ASAQS).
“The approach adopted was intended to ensure that any cost estimates used by the National Treasury in terms of the court orders would be within the limits of acceptable professional practice standards, as assessed by practitioners in the impacted industry,” the Treasury said in a report to the Constitutional Court on Monday.
A six-member panel comprising the chief executive officers of SAICE and ASAQS, two professional engineers and two professional quantity surveyors, concluded that the reasonable costs of the five items amounted to R8,884,364 (including VAT) as at June 2009 and R11,753,758 (including VAT) as at May 2016.
According to the Treasury report, the panel was of the view that the only element of the five components in question that could be considered to be of a security nature was the control centre on the ground floor of the visitors’ centre.
The final cost to be paid back by the president was determined as follows:
“In the premises, the National Treasury has taken into account the current use of the lower level of the visitors’ centre by the South African Police Services. As a consequence the reasonable percentage of the estimated costs of the five measures that the President would have to pay personally would be 87.94%. This percentage corresponds to R7,814,155 as at June 2009.”
No rounding off required. "Reasonable" was darted at 87.94%.
The presidency issued a statement on Monday evening saying they had received the Treasury report submitted to the Constitutional Court. “The Presidency is studying the report and will comment on it thereafter.”
Zuma has already given the court the undertaking that he would pay back the money. He does not have a say on the amount to be paid back or an avenue to contest the Treasury’s determination. It is not clear whether Gordhan or the Treasury informed Zuma of the amount before the report was submitted to the court.
Should the Constitutional Court confirm the amount, Zuma has 45 days to pay the debt. Had the matter not been dragged out until it reached the Constitutional Court, the president could probably have been assisted through donations to reimburse the state. Some ANC leaders, such as the Gauteng provincial chairman Paul Mashatile, had proposed over a year ago that the organisation assist to pay the money in order to close the Nkandla matter. Some Zuma sympathisers and business people had also proposed that a public fund be established to assist with the repayment. The Public Protector’s report did not prescribe how the money should be paid back or a time limit to settle the debt.
The Constitutional Court was however explicit that Zuma should pay back the money “personally” within 45 days of the court’s approval of the Treasury report. This rules out benefactors and “friends” stepping in to pay the money.
Questions will now be raised about how the president will settle the debt. The start of his problems with the law was his inability to pay for the first round of renovations at Nkandla, resulting in his former financial advisor Schabir Shaik having to settle the debt. This led to both Shaik and Zuma being charged with corruption, and Shaik being convicted. Zuma has repeatedly claimed, including in Parliament, that he has a bank bond for the renovations at his home, but he has not provided proof of this.
Madonsela said the following in her report:
“The President declined the opportunity to respond to the allegation that he misled Parliament by making a false statement about the financing of the private development at his private residence and referred me to Parliament in this regard. He also declined me the opportunity to have access to his bond documents.”
She said she was therefore unable to make a finding about whether the president had misled Parliament.
“Although having established through the Register of Financial Interests that the president has declared a mortgage bond in respect of his private residence at Nkandla since 2009, I am not able to establish if costs relating to his private renovations were separated from those of the state in the light of using the same contractors around the same time and the evidence of one invoice that had conflated the costs although with no proof of payment,” Madonsela said.
This statement by Madonsela raises questions as to whether the costs to the state were deliberately inflated to subsidise Zuma's private renovations at Nkandla. With the Nkandla saga now reaching its conclusion, such questions might never be answered.
Democratic Alliance leader Mmusi Maimane said in a statement that “the more than R250-million of public money wasted at Nkandla” should not be forgotten. “The DA will be pursuing a civil claim against Mr Minenhle Makhanya, the chief Nkandla architect, who ought to pay back the more than R155-million used to inflate the cost of the ‘security upgrades’ at Nkandla,” Maimane said.
“We are also of the opinion that there is a criminal case to be answered by President Zuma, as well as his Cabinet ministers who were involved in this matter.”
With the National Prosecuting Authority already seized with the reinstatement of corruption charges against the president in line with the “spy tapes” ruling, it is unlikely that another case will be pursued. The EFF has yet to comment on the Treasury report but the party leader Julius Malema has previously stated that he did not care how much Zuma paid back for the Nkandla upgrades as long as he did so.
With an annual salary of almost R2.9-million, Zuma could get a loan to settle his debt, with hefty repayments of roughly R80,000 a month for 20 years. Zuma also has the option of using his pension to pay back the money. Should he opt to go into business after his retirement, Zuma’s increased debt could easily be settled through dividends or other forms of income as he will not be subject to scrutiny through his declaration of interests to Parliament.
Zuma has already half-heartedly complied with another of the Constitutional Court orders, that he reprimand the ministers involved in the Nkandla project. Zuma simply wrote to the ministers informing them that he had been ordered to reprimand them. Complying with the order to pay back the money will not be that simple.
This will be the first time Zuma will be held properly accountable during his presidency and be forced to compensate for his actions. Perhaps it marks the end of his lucky streak of dodging accountability or perhaps there will be some innovative move to dupe the system to settle his debt.
The Nkandla scandal could have been closed years ago. Zuma’s ability to be his and the ANC’s own worst enemy kept the saga alive. We should never underestimate his ability to continue to do so. DM
Photo: South Africa's President Jacob Zuma attends a lunch during the Commonwealth Heads of Government Meeting (CHOGM) in Port-of-Spain November 28, 2009. REUTERS/Jorge Silva
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