It is time for government to admit that SAA can not be rescued and must be liquidated

The Democratic Alliance (DA) is not at all shocked to note reports that South African Airways (SAA) has run out of cash and as a dire, but foreseeable consequence, had to cancel as many as 19 domestic and international flights. We will now write to the business rescue practitioners, Les Matuson and Siviwe Dongwana, urging them to play open cards with South Africans and admit that SAA can not be turned around. They must urgently apply to the courts for SAA to be liquidated.

SAA is bankrupt and has been for a very long time. It is in debt to the extent of some R20 billion. It has no cash reserves, it is unable to meet its current liabilities (including salaries) and still requires more bailouts funded by taxpayers. National Treasury is simply not able to keep the failed public enterprise afloat and the current cash crisis was always inevitable.

This is not simply a result of unfortunate circumstances or bad luck. It is as a result of a frankly incompetent and corrupt ANC government that has grossly and irresponsibly mismanaged billions in taxpayer money, and it is inconceivable that to date nobody has been held accountable for this.

It is now up to Matuson and Dongwana to do the right thing by being honest with South Africans: without further massive taxpayer-funded cash bailouts, SAA cannot continue to trade. The R5.5 billion appropriated in the Adjustments Appropriation Bill that was signed into law on the 13th of January 2020 by President Cyril Ramaphosa is specifically set aside for “South African Airways SOC Ltd: Debt Obligations” and may not be used for continued working capital for SAA. Any attempt by SAA business rescue practitioners to use these funds to keep SAA in business will undoubtedly be illegal.

Matuson and Dongwana must ensure that SAA is put into liquidation without further delay, by applying to Court in terms of section 141 (2)(a)(ii) of the Companies Act No. 71 of 2008, for an order to discontinue the business rescue proceedings and to place the company into liquidation.

DA reveals salaries of Simelane and Shaik following leaks in Water Department

Please find attached the DPSA salary scales for 2019 here.

The Democratic Alliance (DA) can reveal that Menzi Simelane and Mo Shaik are currently earning an estimated R1 978 533 per annum as “Special Advisors” to the Minister of Human Settlements, Water and Sanitation, Lindiwe Sisulu.

This amount is at Notch A of a Level 16 DPSA Grading – the Grading given only to Director Generals of National Government Departments.

If, however, Shaik and Simelane’s positions have been benchmarked at a higher notch on the same scale, they could be earning in excess of R2.2 million per annum – which is double the remuneration received by Members of Parliament.

The DA can also reveal that Minister Sisulu’s “Special Advisors”, are – according to the Grading’s leaked – earning roughly R700 000 more than the Ministry’s Chief Director, who holds both an Honours Degree in Public Administration and a Masters Degree in Economic Policy.

The total annual cost of Sisulu’s Ministerial Office staff remuneration stands in excess of R13.9 million per year. This is excluding the costs of the additional 19 employees recently staffing her “National Rapid Response Task Team”.

By having yesterday attempted to re-issue her Office’s response to a Parliamentary Question originally replied to with full staff details on Friday, the Minister has done an excellent job revealing the cracks in her office, as well as the fact that she does not want taxpayers to know who she spends their money on – and just how much she is spending.

The DA is yet to understand how an optometrist and an ex-prosecutor are qualified to provide advice to a department whose focus is on water, sanitation and housing delivery. There is no doubt that gross mis-hiring has taken place – and the deck has been stacked with well-paid political cadres.

Sisulu’s staffing of a political war room in lieu of a capably staffed Ministry will not be allowed to continue unabated, while taps are running dry across our nation.

The DA will, in the coming days, reveal further information and action taken in regards to the Minister’s Office, and her National Rapid Response Task Team.

ANC finally takes first step towards adopting DA solutions to solving Eskom crisis

The Democratic Alliance (DA) is pleased to note that the ANC is taking the first step in adopting our solutions to solving the energy crisis. For years, we have been calling for independent power producers (IPPs) to sell power directly to municipalities and reports from the ANC lekgotla indicate that the ruling party is considering such a move.

An element in the drive for energy security has been the diversification of energy sources. The DA-led City of Cape Town has gone to court to secure the right to buy power directly IPPs. Just this past week the City announced that it is seeking permission for an expedited hearing in their case against the energy minister and the national energy regulator.

The ANC’s endorsement of municipalities’ right to procure their own energy, expand the independent power producer programme and free up regulations around self-generation by business is welcome as is the president’s statement that “we should avoid political interference in operational matters of our SOEs”.

The DA has been calling for these measures for many years. Since 2015 we have done the following:

  • 2015: The DA-led City of Cape Town asks then-Minister Tina Joematt-Peterson for the right to procure 150MW of solar energy and 280 MW of wind energy from independent power producers (IPPs)
  • August 2017: the DA-led City of Cape Town serves the Department of Energy and NERSA with court papers to demand the right to purchase power from independent power producers
  • October 2019: DA’s Cheaper Electricity Bill is tabled in Parliament
  • December 2019: DA presents its Cheaper Electricity Bill to the portfolio committee of Public Enterprises in Parliament
  • December 2019: the DA-led City of Cape Town asks for an expedited court date in its legal battle to win the right to procure power from IPPs

In addition to the ANC’s decision, the following still needs to be done:

  • Full transparency and accountability is required.
  • Cadre deployment must end.
  • Contractual arrangements require scrutiny.
  • Maintenance needs improvement and turnkey construction arrangements need to be implemented.
  • Bloated labour force must be addressed.
  • The baseload needs to be managed effectively and the role of coal quantified and clarified.
  • A diversified mix of energy needs to be explored and brought online over time.

Let’s hope this DA-inspired exhibition of common sense continues to prevail. We repeat our readiness to sit around a table and assist in addressing these pressing issues in a party-agnostic manner – the scale of the crisis in Eskom demands it.

 

Parliament must hold Minister Mantashe to account

The Democratic Alliance (DA) believes that Minister of Mineral Resources and Energy, Gwede Mantashe, must be held accountable for his failure to address the grave financial crises at the Nuclear Energy Corporation of South Africa (NECSA), and we will therefore write to the Chairperson of the Portfolio Committee, Mr. Sahlulele Luzipo, to request that he call Mantashe to appear before the committee urgently.

Reports note that acting NECSA CEO, Ayanda Myoli, announced at a staff meeting yesterday that NECSA will not be able to pay salaries in full for January 2020 and/or would be unable to pay deductions such as pensions and medical aid contributions. These reports are indicative of the extreme financial problems faced by this state-owned entity and reveals that NECSA is in deep distress.

The NECSA board had warned Minister Mantashe of this looming crisis. They had also made the Portfolio Committee of Mineral Resources and Energy aware of the defunct state of the entity during the BRRR process in Parliament.

Sadly, their input was characteristically ignored by Minister Mantashe, and as a result, the board resigned and the entity now finds itself in a dire situation.

Minister Mantashe must be held accountable for his failure to address the financial crisis at NECSA in a timeous manner, and he must be held responsible for his unwillingness to appoint new board members to fill the vacant positions.

Nearly a week after the remaining board members resigned, there is still no substantive leadership at NECSA, which remains without a Chairperson in sight. Without stable, permanent and reliable leadership, NECSA will continue to sail into further difficulties.

Furthermore, the Minister must accept responsibility for his lack of action in restoring the entity to financial stability. This is why the DA will immediately write to the Chairperson Luzipo to request that the committee summon Minister Mantashe to appear before it, to provide a comprehensive report on actions to be taken in the immediate short term to address the severely debilitating problems at NECSA.

South Africa relies on NECSA to provide a safe, reliable and competent nuclear industry. Unless there is capable management and leadership, and a willingness to act decisively (and if necessary, take the hard decisions), NECSA is doomed to become another failed SOE, circling the drain while Minister Mantashe ignores all calls for intervention and help.

Minister Sisulu tries to cover up appointment of Simelane and Shaik

The Democratic Alliance (DA) revealed last week Friday, 17 January 2020, that Minister of Human Settlements, Water and Sanitation, Lindiwe Sisulu, appointed Menzi Simelane and Mo Shaik as Special Advisors – amongst others – to her Ministerial Office. This information was revealed in a response to a DA Parliamentary Question.

Subsequent to the DA having revealed the names of Sisulu’s Ministerial Office and National Rapid Response Task Team (NRRTT) staffers, the Minister today re-issued an amended response to the Parliamentary Question.

Minister Sisulu’s revised response omits all names, gradings and positions of those working in both her office and those appointed to the NRRTT. As such, Simelane and Shaik’s names have been removed from information available to the public.

Minister Sisulu has gone to great lengths to try and cover up the information her office – seemingly erroneously – released.

Minister Sisulu sited in her revised response that “Posts in the Ministry have been filled as outlined in the Guide for Members of the Executive, otherwise commonly referred to as the Ministerial Hand Book”.

It is clear that Minister Sisulu takes the South African public for fools. Not only did the release of staff information on Friday indicate a potentially deliberate attempt to expose her – from within her own Ministry – but her attempts to today retract this information from the public space, exposes her predicament.

She was caught red-handed, employing and appointing individuals with numerous shadows hanging over their names, and now that the public has been made aware of it, she has rapidly attempted to remove access to this information from the public.

It is abundantly clear that Sisulu has staffed herself a political war room at the taxpayer’s expense – with a revolutionary in Chumane Maxwele, a lawyer in Simelane, an intelligence operative in Shaik, and an ex opposition party leader in Ka Plaatjie.

There is little left to be said about Minister Sisulu, her office and the NRRTT.

The Minister has now not only exposed herself, but also the evident cracks within her own office.

It is thus difficult to imagine Minister Sisulu being even remotely capable of handling the drought crisis, when she is clearly preoccupied with covering up the grossly inept appointments to both her office and the NRRTT.

To view the amended version released today, click here.

Stella Ndabeni-Abrahams’s attempt to pull Dina Pule 2.0 on South Africa will be stopped

Find attached soundbite by DA Shadow Minister of Communications and Digital Technologies, Phumzile Van Damme MP

Reports that the Minister of Communications, Stella Ndabeni-Abrahams went on baecation with her husband using public funds and that she allowed him to do her job are deeply concerning.

Her actions are akin to the former Minister of Communications Dina Pule, who also spent thousands of taxpayers’ money on an overseas trip with her boyfriend.

According to reports this weekend, Minister Ndabeni-Abrahams allegedly used thousands in taxpayers’ money to fund her wedding anniversary celebrations in the US and Switzerland by taking her husband, Thato Abrahams, along without permission of President Cyril Ramaphosa. She is also alleged to have allowed her husband to attend some department meetings including interviewing candidates for positions on the various boards for which she has political oversight.

The DA is of the view, that this is nothing more than a luxury vacation and a massive waste of public money and is an indictment on the communications Minister.

Although there is no set requirement in the Ministerial Handbook for the president to approve the inclusion of a spouse for official trips, the Democratic Alliance (DA) still wants her to come clean about her husband allegedly interviewing candidates and attending official meetings on her behalf.

Quite clearly, the frailties of the ministerial handbook are yet again being used to justify luxury expenses, at the expense of poor South Africans who are expected to continuously foot the bill.

The DA will, therefore, submit parliamentary questions to request the full details of Mr. Abrahams’ participation on this official overseas jaunt. The DA will remain resolute and vigilant in exposing ANC’s insatiable greed and will ensure the truth is uncovered in this regard.

The ANC government needs to reduce wasteful expenditure on ministers and follow the example of the DA-led Western Cape. Where we govern, business class flights are restricted to extended international trips, which exceed 8 hours of travel and no 5-star hotels are allowed.

The DA will not allow brazen attempts to fool the people of this country to go unchecked. In the current economic climate, austerity measures are a necessity.

DA pressure leads to probe into possible tender rigging in Ba-Phalaborwa

The Democratic Alliance (DA) welcomes the decision of the Limpopo MEC for local government, Mr. RB Makamu, to order a preliminary investigation into possible tender rigging in the Ba-Phalaborwa Local Municipality.

This follows the DA’s discovery that Ba-Phalaborwa had apparently circumvented competitive bidding processes in awarding two capital projects in June and July 2019. We wrote to the MEC on 3 January this year, and his decision was communicated to us on Friday. The original statement and letter can be accessed here.

Although tender rigging is not unusual in municipalities with big ANC majorities, what makes the Ba-Phalaborwa case exceptional is the availability of clear documentation pointing to wrongdoing. And so there should be no quick escape for the responsible officials and politicians.

In one instance a company was appointed to refurbish the Namakgale Stadium in June 2019, but no evidence exists that a tender for such a project was ever advertised or awarded. Two days after receiving its letter of appointment, the company invoiced Ba-Phalaborwa for nearly R500 000 of work. A day later, and despite its woeful cash position, the municipality paid the invoice in full.

We believe that the Mayor of Ba-Phalaborwa, Cllr Merriam Malatji, had prior knowledge of the information in the DA’s possession. Our information points to serious financial misconduct by the municipal manager, and prompts a further probe into possible corruption.

The mayor is required by the Municipal Systems Act to report such a matter to the municipal council within seven days of becoming aware of it. The council then has to decide whether the implicit allegations warrant the appointment of an independent investigator. But in this case, the material facts were not disclosed to councillors.

Instead, the matter was fobbed off to a committee of councillors that has no mandate to deal with allegations of serious misconduct or corruption. Ba-Phalaborwa being an ANC controlled council, the committee is also dominated by the ANC.

While we welcome the MEC’s response, we urge him not to succumb to internal ANC politics, and to ensure that the preliminary investigation is not manipulated to protect ANC cadres in Ba-Phalaborwa’s council or administration.

DA urges South Africans to make submissions en masse on Eskom tariff hikes

The Democratic Alliance (DA) notes that today is the deadline for South Africans to make submissions on Eskom’s proposed tariff hikes for the period of 2019-2022. The DA would like to urge that South Africans exercise their right to make their voices heard by submitting their objections to the tariff hike to the National Energy Regulator of South Africa (NERSA) as a matter of urgency.

Eskom is currently in the process of challenging the electricity tariff increases previously approved by the NERSA for the period of 2019 to 2022. Eskom wants consumers to initially pay 10-12% more for electricity, and thereafter the door will be open to a further four applications by Eskom, which will result in tariff increases by a whopping 50% over the next few years.

NERSA requested public comment and will then assess Eskom’s application following due regulatory processes. Mass public participation is essential to influence NERSA’s decision, with public comment opportunities closing on the 20th of January 2020.

In its court application, Eskom says the increase provided by NERSA is inadequate and presents a “material risk of potential catastrophic consequences”, not only for the power utility but for the country. But the real issue here is that Eskom has run out of money.

A 120-page report presented to Eskom by an independent specialist concludes that our National Treasury does not have the credit capacity or ability to borrow the required capital to fund Eskom’s significant day to day operational expenditures. Treasury can no longer assume financial responsibility for the rebuilding and maintenance of Eskom’s generation, transmission and distribution assets, nor can it pay for the significant off-balance sheet liabilities, especially not on a long term basis.

The DA has long maintained that government can not continue to fund Eskom and other state-owned entities that are no longer viable and are collapsing from within due to what reports indicate are rampant corruption and serious maladministration.

For any change to occur, sales volumes have to rise, not shrink. Eskom must be “ringfenced”, triaged, the books made transparent, top management given the degrees of freedom shielded from political interference and a chief restructuring officer with deep experience and credibility needs to be brought on-board to save this sinking ship.

Government must also give serious consideration to proposals that have long been DA policy, which inter alia means allowing independent power producers to supply electricity to local governments directly.

We cannot countenance this continued pouring of money into what has been and continues to be a sieve of unimaginable proportions.

South Africa has repeatedly bailed out Eskom and now, while on the brink of collapse, the utility is seeking to make consumers pay more. These blank cheques that follow failure and graft must stop – accountability and oversight is sorely required and as stated above, what is needed is for the entity to be “ring-fenced”, triaged and the books made public.

The public has until today’s deadline to make submissions on Eskom’s proposed increase, which could further hike up prices if approved – if you haven’t as yet, the time is now.

Alexkor: another SOE circling the drain

South Africa’s state-owned diamond mining enterprise Alexkor boasts an accumulated loss standing at R173.6 million (2018: R13.9 million). Alexkor is a joint venture between Alexkor and the Richtersveld community and the facts underpinning its losses are as follows:
  • The company’s employee costs of R68.6 million exceed the gross profit of R57 million despite having retrenched 150 employees in June 2019;
  • The environmental rehabilitation liability is R203.9 million;
  • R168 million in the rehabilitation trust earmarked for that purpose;
  • The total emoluments and remuneration for executive and non-executive directors is R9 471 330 per annum; and,
  • Despite carat sales having increased from 41 941 units to 70 061 in the year to end-March 2019, diamond sales only amounted to R209.9 million (2018: R208.7 million) – cost of sales was R152.9 million (2018: R126.8 million).
Alexkor currently does not even have enough money to cover the retrenchment packages of the 150 people who were let go at the diamond mine.
During the tenure of Minister Alec Erwin in 2006, Alexkor reported an operating loss of R38.2 million. During the same period, it produced 43 000 carats, the lowest production in its (then) recent history.
Currently, despite carat sales having increased from 41 941 units to 70 061 in the year to end-March 2019, diamond sales only amounted to R209.9 million. Cost of sales was R152.9 million. Seemingly, the more things change, the more they stay the same.
The independent auditor, Ngubane & Co, has issued a disclaimer of opinion and was unable to obtain sufficient appropriate audit evidence regarding Alexkor’s concerning financial status. They have also noted that Alexkor sought approval from Minister of Public Enterprises, Pravin Gordhan, to file for business rescue and noted that there were instances of the company trading recklessly.
As it stands, the company’s head office is in Sandton. Its business is in Richtersveld on the West Coast. Why it requires an office, costing some R3 million a year, located 1 388 km from the mine is mindboggling – it’s internal and external auditors are also located in Sandton. And, as stated above R9.5m goes to directors annually in fees and emoluments.
Undeterred, the company is now looking for “new business ventures”, and will approach the Department of Public Enterprises and National Treasury to reclassify Alexkor “from a PFMA [Public Finance Management Act] perspective” to permit borrowing.
The Minister of Public Enterprises, to his credit,  has placed a moratorium on all acquisitions and disposals, declined the request for authorisation to establish “Alexcoal” in Mpumalanga, and placed on hold the feasibility study on diamond beneficiation.
Is this part of the suite of reasons why he is being targeted by some in his own party?
This is yet another example of a failed State-Owned Enterprise burdening the fiscus with demands for expansion, without any prospect of return. The 2019 annual report is still not available on the Alexkor website and notes that the independent auditor was unable to obtain sufficient appropriate audit evidence regarding the going concern status.
The DA demands full disclosure of all relevant information and a halt to this profligacy. If ever there was a reason that mines should never be nationalized, Alexkor is it.

Minister Sisulu appoints Menzi Simelane and Mo Shaik as special advisors

The Democratic Alliance (DA) has learned that Minister of Human Settlements and Water and Sanitation, Lindiwe Sisulu, has appointed Menzi Simelane and Mo Shaik as special advisors to her office. This information was revealed in a response to a DA Parliamentary Question which can be accessed here.

The South African taxpayer is now officially paying the likely exorbitant salaries of Simelane and Shaik, who have both been implicated for their role in state capture.

The DA will file a complaint at the Public Service Commission to investigate the appointments of Simelane and Shaik. We will also file a Promotion of Access to Information Act (PAIA) application to request the salaries of these individuals, and others working in the Minister’s office – given her office’s refusal to disclose their price tags.

Even more worrying is the fact that the majority of Sisulu’s appointments to the National Department of Water and Sanitation’s National Rapid Response Team (NRRTT) would appear to be allies for her campaign run for ANC Deputy President. Media reports from November 2019 indicate claims that Minister Sisulu and one of her advisers, Mphumzi Mdekazi, allegedly pressured the Department of Human Settlements, Water and Sanitation (DHSWS) in September 2019 to employ people who were involved in her 2017 Presidential Campaign as members of the NRRTT.

This means that taxpayer money that could be used for South Africa’s drought relief programme, is now paying for the salaries of the likes of Simelane and Shaik, as well as alleged members of Minister Sisulu’s personal political campaign.

Simelane was former President Jacob Zuma’s appointment to the Director of Public Prosecutions (NDPP) at the National Prosecuting Authority (NPA) and is notoriously known for his ties and links to state capture. His appointment was later declared irrational by the Constitutional Court.  Shaik, on the other hand, played a lamentable role in the Bulelani Ngcuka “apartheid spy” debacle and is infamously known for being in a senior investigative capacity at the height of state capture, at which time he himself admitted that he declined to overtly advocate for an investigation into the Gupta family.

Furthermore, the members working for Minister Sisulu’s office and those on the NRRTT would appear to be grossly mis-hired for the roles they are meant to fill. This becomes evidently clear when we find individuals with degrees in optometry, such as Mo Shaik, have been provided with the executive position of Special Advisor, to a Department whose primary objective is to care for water and sanitation.

Worse still, there are at least 7 members appointed to the NRRTT who have yet to submit their CVs. It is a great disservice to all South Africans that a task team meant to aid the devastating drought crises faced by provinces is composed of individuals without any relevant qualifications in sight.

It is tantamount to lunacy to justify the expenditure of taxpayer’s money on the appointment of politically connected cadres without having even received a CV from them. Even more worrying is the fact that the Minister has refused to provide an indication of what the remuneration packages are for the individuals employed in her Ministerial Office and NRRTT.

The DA will continue to fulfill its role as South Africa’s official opposition party, ensuring that national government is prevented from misappropriating government funds at the expense of increasingly desperate South Africans in the midst of a crippling drought crisis.