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SCOPA must get stuck into the PIC

The allegation that the Minister of Cooperative Government and Traditional Affairs, Dr Zweli Mkhize, received a R4.5 million “kickback” in return for facilitating a R210 million loan from the Public Investment Corporation must be probed by Parliament.

This is just one of several questionable investments made by the Public Investment Corporation, which up until now have included Ayo Technology Solutions Limited, Sagarmatha Technologies Limited, Steinhoff International Holdings N.V. and VBS Mutual Bank.

The fact is that hardly a day goes by without a new scandal surrounding questionable investments emerging at the Public Investment Corporation.

However, the finance committee has proved completely ineffective at probing the questionable investments made by the Public Investment Corporation.

We are prohibited from cross examining senior executives and simply do not receive straight answers to straight questions put to the Public Investment Corporation.

I will, therefore, as a last resort write to the Chairperson of the Standing Committee on Public Accounts, Themba Godi, requesting him to schedule a hearing probing allegations surrounding irregular payments and questionable investments at the Public Investment Corporation.

The hearing should probe the allegation that the Minister of Cooperative Government and Traditional Affairs, Dr Zweli Mkhize, received a R4.5 million “kickback” for facilitating a R210 million loan from the Public Investment Corporation.

However, it should also probe:

  • allegations of irregular payments made by the Chief Executive Officer, Dr Dan Matjila, which now appear not to have been investigated thoroughly, following the leaking of an “internal audit” report; and
  • questionable investments and loans in inter alia Ayo Technology Solutions Limited, Sagarmatha Technologies Limited, Steinhoff International Holdings N.V. and VBS Mutual Bank.
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Ace Magashule and his friends must be arrested for stealing R200 million from poor black farmers

I welcome the decision by the Hawks to finally take action against those responsible for stealing approximately R200 million from poor black farmers in Vrede, Free State.

Reports today confirm that the Hawks have begun a “search and seizure operation” relating to the Estina Dairy Farm project in Vrede – beginning with the office of Free State Premier, Ace Magashule. This is in order to find documents and information which would prove that Ace Magashule was involved in the siphoning of money away from the Vrede Dairy Farm project and into the pockets of ANC linked cadres, most notably the Guptas.

The question is – why haven’t the perpetrators been arrested? Comprehensive evidence proving wrongdoing already exists, and has been in the Hawks possession for over 6 months. Moreover, this evidence is enough to arrest the Guptas, Ace Magashule, Mosebenzi Zwane and other ANC-connected individuals.

In August last year I went to the Hawks Head Office in Tshwane to hand over a legal indictment containing over 200 pages of concrete prima facie evidence outlining in detail how this money was stolen from the poor black farmers, and provides sufficient evidence to support the criminal charges laid by the DA in this regard. DA Shadow Minister of Finance, David Maynier MP, laid criminal charges against several members of the Gupta family, their associates, and Minister Zwane. These charges include money laundering, racketeering, assisting another to benefit from the proceeds of unlawful activities, and acquiring, possessing or using the proceeds of unlawful activities in terms of the Prevention of Organized Crime Act 121 of 1998.

We now call on the Hawks to immediately seek warrants of arrest against the Guptas, Ace Magashule, Mosebenzi Zwane and all other implicated in this scandal.

It should make us all angry that instead of empowering those who are left out of the economy, the ANC government used black South Africans as a front for a calculated scheme of grand corruption and money laundering to benefit the Guptas and their friends in the ANC. Between the Guptas and the ANC government, economic opportunity was stolen from black South Africans.

The Vrede Dairy Farm project is a textbook case study of money laundering, collusion and corruption. We will not relent until those who stole money and opportunity from South Africans are brought to book.

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NPA must move with haste to arrest Gupta Family members and those responsible for Vrede scandal

The DA welcomes the announcement over the weekend that the Asset Forfeiture Unit had seized the Vrede dairy farm that was at the centre of the Gupta-wedding money laundering chain. We further welcome the news that there are plans afoot to have the bank accounts of Atul Gupta frozen.

This is however not enough – we believe that those involved should be charged in a court of law at the earliest opportunity. If there is enough evidence to seize assets, there surely must be enough to hold those implicated criminally liable.

Last year, my colleague DA Shadow Minister of Finance David Maynier MP and I laid formal complaints about the Vrede Dairy Farm with the South African Police Service. We will request meetings with the investigating officers as we will not rest until all who are implicated face consequences for their actions.

The DA also gathered enough evidence to put together an indictment, which we handed over to the Hawks on 24 August 2017, but we have yet to receive feedback regarding this. The National Prosecuting Authority(NPA) head, Shaun Abrahams, must now brief the nation on when they expect to make arrests in this and other state capture related matters.

Our democracy is founded on the rule of law and the public therefore needs to be confident that nobody is above the law and that heads will roll. If the NPA is truly committed to achieving justice for the people of Vrede who have been most affected by this corrupt scheme then Abrahams has to act without further delay. Anything less than this will cast a further blight on the NPA’s willingness and ability to deal with corruption where members of the ANC and their cronies are implicated. The time has come for Abrahams to put the people of South Africa first.

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Money stolen by Ace, Zwane and the Guptas must be given to the people of Vrede

The following remarks were made today by Democratic Alliance (DA) Leader, Mmusi Maimane, during the KwaZulu Natal leg of his People’s Forum Tour in Ntuzuma.

Fellow democrats,

The material living conditions of South Africans have got much worse in the last decade. When I go from community to community, I see poverty and hopelessness everywhere. We can change the leadership of a political party, but if that doesn’t lead to changing the lives of our people, then it is pointless.

Earlier this year I visited the Estina Dairy Farm in Vrede, Free State. This was a devious corrupt scheme thought up by those who represent the ANC – Ace Magashule, Mosebenzi Zwane and their fellow comrades – to steal public money to pay for a Gupta wedding in Sun City.

But the worse crime here is that those who thought up this evil plan are still in government today. One of them has just been elected to the Top 6 of the ANC. The other is still a Minister in President Zuma’s cabinet. They should both be fired from their positions in government. They should have been fired long, long ago. Every day they remain in government is an insult to the country. These are thugs and crooks. They belong in prison, not government.

The victims of this theft were over 80 local community members, who were the intended beneficiaries, who would have become part owners of this project, and who would have had an economic stake in the agricultural sector of our country. None of the beneficiaries have had any actual involvement in the project. Some of the beneficiaries told me that they had sold off their own livestock in anticipation of their participation in this project.

Instead of empowering those who are left out of the economy, black South Africans were used as a front for a calculated scheme of grand corruption and money laundering to benefit the Guptas and their friends in the ANC. Between the Guptas and the ANC government, economic opportunity was stolen from black South Africans.

I welcome the decision by the NPA’s Asset Forfeiture Unit to intervene and take control of the farm by placing it under its curatorship. This ought to have been done 4 years ago when we knew about this, not only now when it’s politically convenient. This must lead to reclaiming the stolen money, and returning it to the intended beneficiaries. And it must lead to legal accountability for Ace Magashule and Mosebenzi Zwane.

Our fight will always be for South Africans without opportunity and who have been left behind. It is the improvement of their lives that must be our primary goal. That is why from day one, the DA has been on this case.

We laid the Public Protector complaint in 2013, which is still yet to be released. Together with a group of the intended beneficiaries, I travelled to the Public Protector’s office last month to hold a meeting with her and representatives from Vrede.

In addition to this, in July last year, DA Shadow Minister of Finance, David Maynier MP, laid criminal charges against several members of the Gupta family, their associates, and Minister Zwane. These charges include money laundering, racketeering, assisting another to benefit from the proceeds of unlawful activities, and acquiring, possessing or using the proceeds of unlawful activities in terms of the Prevention of Organized Crime Act 121 of 1998.

The following month I went to the Hawks Head Office in Tshwane to hand over a legal indictment containing over 200 pages of prima facie evidence, allowing the Hawks to begin prosecution immediately.

I have also personally visited the farm in Vrede, and met with the community to establish ways in which we can seek justice for those who were robbed.

Under my leadership, the DA will relentlessly fight for those who have been left behind, robbed, and forgotten. When over 9 million remain unemployed and over half the nation is living in poverty, everything we do ought to be focused on bringing real change to our country and its people.

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FSB and others fail to respond to finance committee on the scandal surrounding Steinhoff

A copy of the correspondence between DA Shadow Minister of Finance, David Maynier MP, and the Chairperson of the Standing Committee on Finance, Yunus Carrim, is enclosed [here].

To his credit, the Chairperson of the Standing Committee on Finance, Yunus Carrim, wrote to a number of institutions on 14 December 2017 requesting them to provide information within seven days, or as soon as possible thereafter, on the scandal surrounding “accounting irregularities” at Steinhoff International Holdings N.V.

These institutions included the Financial Services Board, Government Employees Pension Fund, Independent Regulatory Board of Auditors, Johannesburg Stock Exchange, National Treasury, Public Investment Corporation and the South African Reserve Bank.

However, finance committee members have only received three responses, including responses from:

• Bernard Agulhas, the Chief Executive Officer of the Independent Regulatory Board of Auditors, on 14 December 2017;
• Lesetja Kganyago, Governor of the South African Reserve Bank, on 18 December 2017; and
• Linda Mateza, Acting Principle Executive Officer, Government Employees Pension Fund, on 19 December 2017.

This despite the fact that the scandal surrounding “accounting irregularities” at Steinhoff International Holdings N.V. is a matter of enormous public importance that has wiped out the savings of thousands of ordinary people in South Africa.

It is completely unacceptable for the Financial Services Board, Johannesburg Stock Exchange, National Treasury and Public Investment Corporation to be asleep at the wheel and fail to respond to the Standing Committee on Finance.

That is why I have written to the Chairperson of the Standing Committee on Finance, Yunus Carrim, requesting him to light a fire under the defaulters and demand that they immediately respond to the request for information on the scandal surrounding “accounting irregularities” at Steinhoff International Holdings N.V.

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Standing Committee on Finance must get stuck into Steinhoff International Holdings N.V.

David Maynier MP, DA Shadow Minister of Finance, correspondence with Yunus Carrim, Chairperson of the Standing Committee on Finance, is enclosed [here]
The scandal surrounding “accounting irregularities” at Steinhoff International Holdings N.V. may be one of the biggest corporate scandals in the history of South Africa.
That is why I have written to the Chairperson of the Standing Committee on Finance, Yunus Carrim, requesting him to consider scheduling public hearings on the scandal surrounding Steinhoff International Holdings N.V.
The public hearings should in my view be scheduled on or about 30/31 January 2018 and the following witnesses and/or institutions should be invited to appear:
• Overview & Impact: Mr Dondo Mogajane (National Treasury);
• Steinhoff International Holdings N.V. (Supervisory Board):
o Dr Christo Wiese (Steinhoff International Holdings N.V.), Mr Johan van Zyl (Steinhoff International Holdings N.V.) and Dr Steve Booysen (Steinhoff International Holdings N.V.);
• Steinhoff International Holdings N.V. (Management Board):
o Mr Markus Jooste (Steinhoff International Holdings N.V.) and Mr Ben Le Grange (Steinhoff International Holdings N.V.);
• Auditors: Mr Patrick Seinstra (Deloitte B.V.);
• Regulators: Advocate Dube Tshidi (Financial Services Board), Ms Nicky Newton-King (Johannesburg Stock Exchange), Mr Tom Moyane (South African Revenue Service), Mr Lesetja Kganyago (South African Reserve Bank) and Mr Bernard Agulhas (Independent Regulatory Board for Auditors);
• Pension Funds: Mr Abel Sithole (Government Employees Pension Fund); and
• Asset Managers: Dr Dan Matjila (Public Investment Corporation).
We need to be tough on crime in the public sector, and tough on crime in the private sector, and that is why we need to get stuck into what may be one of the biggest corporate scandals in the history of South Africa

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We need decisive action to save the economy in SA

The following declaration was delivered by the DA Shadow Minister of Finance, David Maynier MP, to the National Assembly following the Standing Committee on Finance’s Report on the Proposed Fiscal Framework 2017 in Parliament today.
1. Introduction
The Minister of Finance, Malusi Gigaba, introduced the proposed fiscal framework when he tabled the medium-term budget policy statement on 25 October 2017 in Parliament.
The proposed fiscal framework sets out projections of key fiscal metrics, including economic growth, revenue, expenditure, the fiscal deficit and national debt, over the medium term between 2018/19 and 2020/21.
2. Fiscal Metrics
The fact is that:
• economic growth is projected to increase over the medium term from 1.1% to 1.9%;
• revenue is projected to increase over the medium term from R1.47 trillion to R1.70 trillion;
• expenditure is projected to increase over the medium term from R1.67 trillion to R1.93 trillion;
• the fiscal deficit is expected to increase from R193.1 billion over the medium term to R225.8 billion; and
• national debt is projected to increase over the medium term from R2.82 trillion to R3.41 trillion.
This assumes:
• that there will be no increases in expenditure not matched by a permanent source of revenue; and
• that there will be no budget “blowups” at “zombie” state-owned enterprises such as Eskom.
3. Scary Facts
What the proposed fiscal framework reveals, terrifyingly, is that if government sits back and does nothing, national debt will “blow out” to R3.41 trillion, or nearly 60% of GDP, in 2020/21.
What this means is that debt service costs, which are the fastest growing item of expenditure, consuming R183.1 billion in 2018/19, R203.3 billion in 2019/20 and R223.4 billion in 2020/21, will squeeze out expenditure on education, health and housing.
We are in danger of becoming a “zombie state” with salaries of public servants, social grants and debt service costs consuming 69.2% of revenue in 2018/19, 69.1% of revenue in 2019/20 and R69.5% of revenue in 2020/21.
4. No Decision
However, despite the terrifying facts, the minister, who would normally announce the level of “fiscal effort” necessary to stabilise national debt, decided to do nothing because he would not, we were told, sugar-coat the state of the economy.
(Or, as he put it later, he would not “do a Comical Ali and tell people everything was fine”.)
Well, the fact is that nobody believes the minister’s explanation and the resignation of Michael Sachs confirms that there is something horribly wrong at National Treasury.
What is of so much concern is that the hard decisions about the level of “fiscal effort” required to stabilise national debt have been deferred to next year and will be taken by a new and mysterious “Presidential Fiscal Committee”.
The “decision not to take a decision” should never have been an option, because there is no reason to believe that, following a bruising governing party election, the executive will be any more capable, next year, of making the hard decisions necessary to stabilise national debt in South Africa.
Things have become so bad that we are now not even sure that government has not abandoned fiscal consolidation, and its central fiscal objective, which is to stabilise national debt, in favour of a populist “spend now, pay later” fiscal policy under President Jacob Zuma.
5. Conclusion
We face the biggest “fiscal crisis” since the global financial meltdown in 2007/08 and must now take decisive action to:
• boost economic growth by implementing a package of short, sharp structural reforms to build business confidence and stimulate private sector investment;
• stabilise public finances by implementing a Comprehensive Spending Review;
• support the independence of financial institutions by supporting the institutional independence of the South African Reserve Bank, Public Investment Corporation and National Treasury;
• reform “zombie” state-owned enterprises by putting the national airline into business rescue with a view to stabilising and then privatising South African Airways; and
• mitigate significant long-term fiscal risks by terminating the nuclear build programme.
This will give hope to the 9.4 million people who do not have jobs, or who have given up looking for jobs, in South Africa.

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President Jacob Zuma’s new “spend now, pay later” populism in South Africa

The following speech was delivered by the DA Shadow Minister of Finance, David Maynier MP, during the debate on the Division of Revenue Amendment Bill in the National Assembly today.
Before we debate the merits of the Division of Revenue Amendment Bill [B24-2017], we should pause to consider the chaos in the budget process, which appears to have been manufactured by President Jacob Zuma who now seems determined to “take out” National Treasury.
The Minister of Planning, Monitoring and Evaluation, Jeff Radebe, tried to reassure us that there was “nothing to fear” from the new “budget prioritisation framework” during his briefing following the medium-term budget policy statement, on 26 October 2017 in Parliament.
However, yesterday we heard of the shock resignation of budget office “Tsar”, Michael Sachs, who is one of the most experienced, and one of the most capable, senior officials at the apex of the system at National Treasury.
The fact is that his resignation is a huge blow to National Treasury and confirms our fears that decision-making about budget priorities, and the budget itself, has now been centralised under President Jacob Zuma.
The Constitution itself requires that “budgetary processes” promote transparency, accountability and sound financial management, and yet we now have:
• a “Presidential Fiscal Committee” making decisions about the budget, which undermines the Minister’s Committee on the Budget;
• a “Mandate Paper” setting out budget priorities in terms of a new budget prioritisation framework, compiled by the Department of Planning, Monitoring and Evaluation, which undermines National Treasury; and
• that is not to mention rogue elements, such a Morris Masutha, who is reportedly peddling a R40-billion budget-busting plan for higher education, with the support of President Jacob Zuma.
What this means in practice is that in the middle of a “fiscal crisis” – which Michael Sachs himself described as the most challenging since the global financial crisis – decision-making on the budget has been plunged into chaos.
We have to face the fact that National Treasury are being “defanged” and reduced to “bookkeepers” with declining influence over budget priorities, and the budget itself, under President Jacob Zuma.
Things have got so bad that we are now not even sure whether government has abandoned fiscal consolidation, and its central fiscal objective, which is to stabilise national debt, in favour of a populist “spend now, pay later” fiscal policy under President Jacob Zuma.
Whatever the case, we can be sure that the ratings agencies, which are circling us like sharks, will have taken note and the probability of further ratings downgrades to “junk status” is greater today than it was the day before yesterday in South Africa.

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Time for a Comprehensive Spending Review

The following speech was delivered by the DA Shadow Minister of Finance, David Maynier MP, during the debate on the 2017 Revised Fiscal Framework in the National Assembly today.
1. Introduction
The Minister of Finance, Malusi Gigaba, revealed the full horror of President Jacob Zuma’s disastrous mismanagement of the economy when he delivered his medium-term budget policy statement two weeks ago in Parliament.
2. Budget Blowout
The minister tabled the revised fiscal framework during his medium-term budget policy statement, which exposed a full-scale budget “blowout” in 2017/18.
The hard facts are as follows:
• economic growth: down by 0.6% from 1.3% to 0.7%;
• revenue: down by R50.8 billion from R1.41 trillion to R1.36 trillion;
• expenditure: up by R3.5 billion from R1.563 trillion to R1.566 trillion;
• fiscal deficit: up by R54 billion from R149 billion to R203 billion;
• national debt: up by R300 billion from R2.23 trillion to R2.53 trillion; and
• debt service costs: up by R900 million from R162.4 billion to R163.3 billion.
The budget blowout was caused principally by a R10 billion bailout of zombie state-owned enterprise, South African Airways.
The minister is now drowning in red ink and has been forced to sell the family silver to hold the fiscal line in 2017/18.
3. Scary Facts
The fact is:
• the R50.8 billion revenue shortfall is the biggest revenue shortfall since the global financial meltdown in 2008/09;
• to avoid a breach of the expenditure ceiling about R3.9 billion worth of Telkom shares will have to be sold;
• the R6 billion contingency reserve has been wiped out despite the fact that funds may well be required to assist with flood damage and drought relief;
• debt service costs are the fastest growing item of expenditure in the budget, consuming 13.7 cents of every rand collected in revenue; and
• we will spend more this year on debt service costs (R163.3 billion) than we will spend on police (R93.7 billion) and higher education (R76.7 billion).
These numbers are staggering and they are terrifying.
4. Full Horror
However, the full horror of the budget blowout is revealed when one considers the primary balance, which is the difference between total revenue and total non-interest expenditure.
The deficit in the primary balance is set to widen by R51.9 billion from R4.4 billion to R56.3 billion in 2017/18.
What this means is that we are now borrowing money to pay the interest on borrowed money.
Or, put simply: we are using our credit card to pay the interest on our overdraft in South Africa.
5. Comprehensive Spending Review
The situation we now confront is serious and is described as the biggest fiscal crisis since the global economic meltdown in 2008/09 hit South Africa.
We are going to have to take some big, bold, tough decisions to solve the fiscal equation, especially on the expenditure side of things.
That is why we have proposed a Comprehensive Spending Review aimed at reviewing the composition of spending, efficiency of spending and future spending priorities with a view to cutting spending, and changing the composition of spending.
A Comprehensive Spending Review would be geared towards making hard decisions about spending cuts that could be sustained by, for example:
• reducing the size of the executive to approximately 15 ministries, which could save an estimated R4.6 billion per year, or a total of R13.8 billion between 2018/19 and 2020/21; and
• running the provincial legislatures more efficiently, which could save an estimated R1.8 billion in 2018/19, R1.9 billion in 2019/20 and R2.0 billion in 2020/21, or a total of R R5.5 billion between 2018/19 and 2020/21.
However, in the end if we are going to get serious about cutting spending we will have to confront the ballooning cost of “compensation of employees”, which is projected to cost R1.9 trillion, and which is projected to grow at 7.3%, between 2018/19 and 2020/21.
Consider the following:
• a freeze on the salaries of senior management who earn more than R918 000 per year, and who are employed on salary levels 13 to 16 in general government, could save an estimated R1.2 billion in 2018/19, R2.0 billion in 2019/20 and R2.8 billion in 2020/21, or a total of R6 billion between 2018/19 and 2020/21; or
• a freeze on the salaries of all employees in general government could save an estimated R57.8 billion in 2018/19, R92.7 billion in 2019/20 and R129.1 billion in 2020/21, or a total of R279.7 billion between 2018/19 and 2020/21.
Whatever the case, savings identified as a result of a Comprehensive Spending Review could be allocated:
• to hold the fiscal line on social protection and to fund investment in infrastructure and skills development to support economic growth; and
• to cut the fiscal deficit in order to reduce national debt and debt-service costs over the medium term between 2018/19 and 2020/21.
6. Conclusion
The fact is that in the end Comprehensive Spending Reviews have proved to be successful in Australia (Comprehensive Spending Review 2010), Canada (Strategic and Operating Review 2011), and the United Kingdom (Comprehensive Spending Review 2010).
And if the minister is serious about dealing with the fiscal crisis, he would give serious consideration to implementing a Comprehensive Spending Review in South Africa.
But, in the end, let no one forget that President Jacob Zuma and his disastrous management of the economy is responsible for the fiscal crisis in South Africa.

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Secret budget prioritization document should be made public

The reply to DA Shadow Minister of Finance, David Maynier MP’s, request for access, in terms of the Promotion of Access to Information Act (No. 2 of 2000), to the document setting out the budget priorities, referred to as the “Mandate Paper”, can be found here.
The Minister of Planning, Monitoring and Evaluation, Jeff Radebe, who appears to be the new “budget tsar”, has refused my request for access to a document setting out government’s budget priorities, on the grounds that it is a “classified cabinet record”, just days before the medium-term budget policy statement is delivered in Parliament.
On 18 September 2017 I submitted a request for access to the so-called “Mandate Paper”, in terms of the Promotion of Access to Information Act (No. 2 of 2000), which sets out government’s budget priorities, in term of a new “budget prioritization framework”.
However, in a letter dated 17 October 2017, my request was refused on the grounds that the “Mandate Paper” was a “classified cabinet record”.
The fact that the document setting out government’s budget priorities is classified and cannot be made public is bizarre, especially when the Constitution specifically states that the “budgetary processes must promote transparency”.
Worse, the reply states that:
“…the Minister indicated that the Mandate Paper is an instrument for budget prioritisation, and the process through which it is developed will be strengthened as part of the process of institutionalizing planning, which includes the introduction of legislation. At this stage it is part of the process that will culminate into the engagement of all stakeholders towards institutionalisation of planning more broadly, which will kick-start during the Planning, Monitoring and Evaluation Forum hosted by DPME on 12 and 13 October 2017.”
What this really means is unclear but what it does suggest is that, when it comes to the budget prioritization process, chaos reigns in government just days before the medium-term budget policy statement is delivered in Parliament.
That is why I have requested the Chairperson of the Standing Committee on Finance, Yunus Carrim, to request the Minister of Planning, Monitoring and Evaluation, Jeff Radebe, to make a presentation on the budget prioritization process at the briefing on medium-term budget policy statement scheduled to take place on Thursday 26 October 2017 in Parliament.