South Africa

South Africa

Reporter’s Parliamentary Notebook: Call to nationalise banks amid State Capture and procurement ‘deviations’

Reporter’s Parliamentary Notebook: Call to nationalise banks amid State Capture and procurement ‘deviations’

In the National Assembly on Tuesday, EFF leader Julius Malema argued for the nationalisation of banks without compensation, just hours after governance turmoil and financial haemorrhaging emerged at the parliamentary Eskom State Capture inquiry. The public enterprises committee is not alone – other committees from finance and Scopa to environmental affairs also have heard of, and looked into, departments and state entities sidestepping rules and prescripts. Whether this represents a crisis or a hiccough seems to depend on ideological belief and party-political affiliation. Or maybe just the political moment. By MARIANNE MERTEN.

The Auditor-General yet again last week highlighted failure to comply with legislation and institutional leadership troubles as key concerns in the audits of the national and provincial departments alongside 25 State-owned Entities (SoEs). Irregular expenditure overall rose to R45.5-billion, up from R29.4-billion in the 2015/16 financial year, with SoEs doubling their share of irregular expenditure to R2.884-billion in the 2016/17 financial year from R1.439-billion the previous year.

National Treasury also last week raised with MPs concerns that deviations in procurement are becoming the new normal, often replacing planning and implementation. Deviations are meant to happen only in emergencies that constitute an imminent threat to life and property or when only one service provider is available, the “sole provider” thus making competitive bidding impossible.

Eskom, for example, applied for a deviation of R163-million, citing “continuation of service” related to a project management unit, and R289-million for “provision of construction execution and commission of Kusile (power station) project” in the 2016/17 financial year. Neither deviation request was granted, according to National Treasury documents seen by Daily Maverick, but Eskom was approved for a deviation of R100-million for security guard services, citing again “continuation of service”.

The SAPS was approved for its deviation to procure and install blue lights on 33 BMWs at a cost of R4.125-million. Police crime intelligence received approval for a deviation of R2.9-million for the “supply and fitment of surveillance systems on vehicles” as well as three deviations totaling just over R1.44-million for two “Oculus Plug & Play”, two “Oculus NXTGEN External Power WIFI + Memory Kit” and “Nano Raven Video & Audio” on the back of there only being a sole provider.

PetroSA’s R21.3-million deviation for the “provision of bulk liquid storage facilities in Europe” was conditionally approved, as was the Co-operative Governance Department R2.96-million deviation to host the third presidential local government summit at Gallagher Estate in April 2017.

The South African Revenue Service (SARS) was approved, among other things, for two deviations totalling just over R62-million relating to two service providers to the “panel of debt collection” and another conditionally approved R65-million deviation for a panel of legal advisers. The reason? “Deferment period not included in contract.”

Deviations totalled R37.67-billion in the 2016/17 financial year, the Office of the Chief Procurement Officer told the finance committee last month. Eskom topped the list with R31.3-billion in deviations, with SARS second with R1.2-billion. Of the 793 requested deviations 450 were approved, and another 198 given conditional go-ahead.

And so it was perhaps not a surprise that former Eskom CEO Tshediso Matona, who left after five months in March 2015 after controversially being suspended, told the public enterprises committee the power utility’s procurement of diesel to keep the lights on was a “big problem at the time” as questions were also raised around the signing off of a R43-million business breakfast contract with The New Age.

That contract was initiated just after the appointment of Eskom interim CEO Colin Matjila in April 2014 – and changed from a once a month breakfast at a cost of R1.2-million over a year to a three-year contract without the standard exit clause, former Eskom Group Executive for Enterprise Development Erica Johnson told MPs. But as the amount involved for the three-year contract, R43-million, needed two signatures, and the other qualified official refused to sign, this was picked up as irregular expenditure by October 2014.

Johnson added that Eskom could have saved R1-billion in 2013 if the procurement process for IT systems had been completed. At the time, due to concerns about changing IT providers during times of load shedding, the procurement was stopped by Matjila and the contract of the then service provider was extended.

Matona earlier told MPs that by the time he arrived at Eskom “there was significant tension, you could call it turmoil, but there was serious infighting on the board… over a range of issues, largely over procurement”.

The director-general of public enterprises and, before that, trade and industry pointed out that the departments during his tenure scored clean audits. “I’m a stickler for matters of governance.” And so he was surprised to be served with a letter of suspension pending an investigation shortly after a new board was appointed in late 2014. “The problems at the power utility were not new and were being dealt with,” he told MPs. Although he challenged the suspension in the courts and before the Commission for Conciliation, Arbitration and Mediation (CCMA), it became clear there could be no return.

I could have challenged the issue further expect I realised I would have bankrupted myself. I chose to walk away. I chose to leave that sordid and sorry episode behind,” said Matona.

What he also left behind were claims of bugging in the Eskom boardroom that on one occasion was raised even by Public Enterprises Minister Lynne Brown. Matona confirmed he had the Eskom boardroom swept for bugs twice.

On bugs and bugging, the annual report of the Joint Standing Committee on Intelligence (JSCI), Parliament’s statutorily established oversight committee, showed 530 applications for telephonic wiretaps between 1 October 2016 and 31 May 2017.

With the barest of details, the report includes the report by the judge for interception of communications. In some previous years there was more detail, but this report was simply a table. It showed most wiretap requests came from the SAPS (422), 11 from the Financial Intelligence Centre and 97 from what is listed as “NIA”, the forerunner of today’s State Security Agency (SSA).

The table shows 244 new applications, again the majority from the SAPS, 179 applications for “extensions and amendments” and 19 re-applications, but it does not emerge how many of these applications were granted or refused.

The Auditor-General’s report, attached as a redacted annexure to the JSCI annual report, shows that the SSA, military intelligence and SAPS crime intelligence all received qualified audit opinions. And so it emerges that the Special Defence Account was “a defendant in a certain lawsuit”, whose ultimate outcome could not be determined. The SAPS crime intelligence Secret Service Account appears to have missed some of its planned targets, but no details were given beyond “refer to the annual performance report on pages x to x; x to xx for information of the achievement of planned targets for the year”. The SSA, aside from losing R16.9-million “as a result of theft that occurred at the head office of the department in December 2015”, has also not provided for any liabilities that may be incurred as it is “the defendant in a number of claims instituted against it (and) is opposing these claims as it believes the claims to be invalid and/or overstated”.

But the report, published last week in Parliament’s Announcements, Tablings and Committee Reports (ATC), is a rare glimpse into the intelligence world provided by the JSCI which as a rule sits behind closed doors.

Clearly not so behind closed doors is the role of South Africa’s financial sector, details of which emerged earlier this year during the public hearings on the sector’s transformation by Parliament’s finance and trade and industry committees.

On Thursday EFF leader Julius Malema opened his party-sponsored debate by rattling off the numbers: the financial sector employs 2,500,000 people, is the largest contributor to the economy and controls about R12-trillion in assets. Yet there was “no bank in South Africa that has meaningful ownership by black people” nor which played a transformational role in people’s lives. Hence the need through a bank ownership act to nationalise banks without compensation.

In these times of State Capture, it’s a tricky argument to make. But it comes at a time of increasing frustration that 23 years into democracy the face of poverty remains black and overwhelmingly female, according to Statistics South Africa, amid lingering structural inequalities.

And so Malema proposed a minimum 51% state ownership of banks, with the remainder made up of individuals, co-operatives and pension funds, and listing such entities on security exchanges to prevent their capture. “Combined ownership ensures the banks are fully democratised and ensures security against State Capture,” he said, adding that state-owned did not mean owned by a political party.

While it is politically convenient to finger the governing ANC for the woes not only of State Capture, but South Africa’s dire financial straits as outlined in the Medium-Term Budget Policy Statement, evidence of widespread systemic manipulations and machinations within the public service are emerging. And not only in the #GuptaLeaks, the Eskom State Capture parliamentary inquiry or other such probes.

And therein lies the catch. DM

Photo: EFF leader Julius Malema speaks prior to a motion of no confidence vote against President Jacob Zuma in a sitting of Parliament in Cape Town, 08 August 2017. Photo: Mark Wessels/(EPA).


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