The issue of how the state spends public money is not a new one but we need to consider it far more carefully looking through the lens of State Capture and the #GuptaLeaks.
State Capture has consumed our headlines for many months with the #GuptaLeaks revealing a fascinating web of questionable, illegal, criminal and unethical behaviour from the usual suspects that have featured during the Zuma years but have also highlighted the role that corporate interests often play in corrupt and questionable activities that have undermined the developmental agenda of the state.
There is no doubt that capture and looting in South Africa started long before democracy was negotiated, which has been highlighted in a series of Daily Maverick articles by Open Secrets. The issue of how the state spends public money is not a new one but we need to consider it far more carefully looking through the lens of State Capture and the Gupta Leaks. From 2008 to 2011, the Auditor-General noted with some concern that the South African Government spent more than R102-billion on public money on consultants and over the past two financial years has spent a further R56-billion.
With each passing day, the costs of these lost Zuma years are becoming more apparent, with the extent and scale of the rot revealing an encroaching stranglehold that has often been facilitated and supported by corporate interests and the self-interest of a few at the expense of all South Africans and our collective future. The reaction by various organisations (private and public) against KPMG may be reassuring to some but this is simply reactive conduct that does not deal with the underlying issue that the veneer of respectability of a number of major corporates has been used to launder the machinations of those that have been hell-bent on compromising the developmental agenda that South Africa should be serving.
The ongoing news cycle may continue to reveal the extent of State Capture, corruption and looting, which is estimated by some to already be in the region of more than R100-billion (public money that has been extracted for the benefit of the Gupta and Zuma families). There is no question of legality regarding improper awarding of contracts, corruption and malfeasance, but what should concern us all is whether the other contracts that are not in the public domain are actually serving the interest of the country. The underlying question that South Africans should be asking is whether the billions spent, which appears to be above board, on consultants and corporates each year is actually in the interest of the country.
Through the #GuptaLeaks we have had insight into the inner dealings of State Capture, which has revealed a great level of detail about how a corporate tendency to look the other way has often matched the need and desire of the looters. Sadly, this level of insight is not generally available when South Africans consider how the public purse is being used, especially when that spend is reflected as global line items on an overall expenditure report (that line item is often just referred to as “Consultants: Business and advisory services”).
Early this year, former Finance Minister Pravin Gordhan in the 2017 Budget Speech highlighted the importance and critical role that government procurement has to play in the South African economy with public procurement sitting at about R1.5-trillion over the next three years, which is linked to government’s new preferential procurement regulations. At the time, Gordhan remarked that “the law will catch up with you” where there were instances of corruption or unethical behaviour. However, what the #GuptaLeaks have proven is that procurement is often a murky world where R500-billion spent annually by our state on the procurement of goods and services could really be dependent on how well-connected those corporate interests are to those hell-bent on looting the public purse.
During that Budget speech, Gordhan spoke about the need for a single procurement authority. However, the scandals that have engulfed the South African arms of KPMG and McKinsey (and others) simply highlights the fact that a single procurement authority in itself will not be enough to police corporate malfeasance, politicians and corrupt government officials. The calls for stricter control measures by the Auditor-General have largely been ignored despite there being a need for better regulation and oversight over public procurement. In this vacuum, there is a definite need for an authorised watchdog and regulator to be established in order to do the work that the SAPS, the Hawks and the NPA should be doing.
We may have insight into the use of consultants at places like Eskom, Transnet, Prasa, the SABC and SAA. However, the line items and reporting on these issues often don’t allow us to scrutinise the underlying purpose of procuring these goods and services. The Auditor-General’s 2015/2016 report highlighted the fact that local government relies extensively on consultants and found that just 230 consultants had been used in South Africa’s 263 municipalities. The concerns have been well documented and publicised for a number of years where local and provincial governments continue to haphazardly spend public money with very few outcomes. For instance, it was reported in 2015 that the Kwazulu-Natal provincial government had spent close to R1-billion in one financial year on 38 consultants.
The rationale for relying on consultants may often be deeply problematic as it does not deal with the underlying issues of lack of skills, resources or under-capacity within government. The current approach to how we deal with solutions-orientated planning, thinking and implementation cannot be outsourced or contracted to consultants or corporates but rather there should be an approach by our government to be holistic with a focus to up-skill, empower and enable our civil service to deliver on the promises of our elected governments.
Later this year, the African National Congress will wrestle with its elective conference, the outcomes of which are intertwined with the future of our democracy and whether South Africa has a fighting chance to overcome corruption and State Capture. The outcomes of that leadership race within the ANC will be critical for the country especially as we try to navigate the way forward. However, what has become abundantly clear is that we must set our sights beyond the fallout from the work McKinsey and KPMG (and a number of other corporates) have rendered (often at the expense of the public purse) and consider how we can actually do something about the rot that has been allowed to set in.
The procurement of the goods and services from corporate South Africa (and from a number of other multinationals) may have followed a particular procurement process but even then the question should be whether those services and the use of public funds is sustainable and appropriate. Perhaps the only way to hold all the role players accountable is for a new watchdog to protect the public purse and the interest of the republic relentlessly, especially while factionalism, expediency and self-interest reign supreme. DM
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Andrew Ihsaan Gasnolar was born in Cape Town and raised by his determined mother, grandparents, aunt and the rest of his maternal family. He is an admitted attorney (formerly of the corporate hue), with recent exposure in the public sector, and is currently working on transport and infrastructure projects. He is a Mandela Washington Fellow, a Mandela Rhodes Scholar, and a WEF Global Shaper. He had a brief stint in the contemporary party politic environment working for Mamphela Ramphele as Agang CEO and chief-of-staff; he found the experience a deeply educational one.
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