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SOE Review: R100bn lost in two-years

On Wednesday the Democratic Alliance (DA) wrote to the Minister of Public Enterprises, Pravin Gordhan, requesting a full-scale review of our failing and debt-ridden state-owned entities (SOEs), which have cumulative losses amounting to almost R100 billion. According to the National Treasury’s 2019 Consolidated Financial Statement report, loss making public entities raked up a consolidated loss of R50.65 billion in 2016/17 and R45.82 billion in 2017/18.

These financial losses increase on a daily basis and are proof that the status quo is no longer feasible. South Africa’s SOEs must, as a matter of urgency, be completely overhauled. Their insurmountable debt poses great risks to our economy and the functioning of our societies, as many of them are bankrupt and completely unable to provide the services they are mandated to deliver. Furthermore, several of these hundreds of SOEs duplicate functions and should not even exist in the first place.

The DA will continue to fight for this comprehensive review, which should be conducted to evaluate which SOEs are necessary, which SOEs need to be dissolved, which should be partially privatised, and which should be privatised in their entirety.

It is time to be pragmatic, and to stop playing politics. SOEs represent some of the biggest monopolies in the South African economy, and by conducting a comprehensive review, government would be providing citizens with a clear indication that they are willing to start the process of structural change to protect our economy from further financial losses.

We cannot be sentimental about SOEs when they add little to no value to the people of South Africa and the economy. The country’s is in crisis, it therefore requires urgent reforms, starting with Eskom.

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DA calls on ANC politicians and executives to testify before Zondo Commission over Transnet revelations

The revelations of the gross abuse of the people’s money at Transnet by the entity’s Acting GCE, Mohammed Mahomedy, before the Zondo Commission of Inquiry on Thursday is just the tip of a corruption iceberg which will expose the real rot at Transnet.

The amounts of money now being discussed relating to Transnet will dwarf that of Eskom.

Over the past decade, the Democratic Alliance (DA) has laid several criminal charges against the chief architects of capture at Transnet including Executives, officials and board members. However, more needs to be done.

Whether at Eskom, Transnet, Denel or any other State Owner Entity, when it came to State Capture the modus operandi was the same, the players the same, and the mission the same.

It can however not be that senior officials are the only ones who account before the commission. ANC politicians and members of Cabinet must also account, especially those under the previous administration.

The revelations at the commission cannot continue without testimony from the Executives who were responsible for these parastatals.

The Executive had to have known as board appointments are discussed at Cabinet level.

Unlike the ANC, the DA takes corruption and allegations of corruption serious, whether its externally or internally. It is for this reason the DA proposes that those found guilty of corruption face a 15 years jail sentence

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DA calls for terms of Public Enterprises DG’s settlement to be made public

The DA will write to President Cyril Ramaphosa to ask that the terms of the settlement, reportedly between public enterprises director-general, Richard Seleke, and the Presidency, to be made public.

It has now been confirmed that Mr. Seleke has left the department, but nothing has been said of the exact reasons or the terms of the settlement.

Mr. Seleke’s name has been linked to State Capture and is contained in the Gupta leaked emails. Specifically, that he gave key information on Denel to the Guptas’.

It is well known that the state capture project, headed up by the Gupta’s and with the help of the ANC, stole billions from South Africans and has directly compromised the future of the country.

It is very important that those who had a hand in giving the Gupta’s access to the public purse are exposed, fully investigated, and face the full might of the law for their actions.

Allowing Mr. Seleke to leave, without letting the public know why would compromise this critical objective and cannot be allowed to stand.

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DA welcomes Gordhan’s interventions at SOEs

The DA welcomes Public Enterprises Minister, Pravin Gordhan’s announcement today of the interventions he has made at struggling state-owned entities (SOE).

The Minister announced that Mr Phakamani Hadebe has been appointed as the permanent CEO of Eskom, that a new board has been appointed at SA Express as well as Cabinet’s approval of the new interim board appointments at Transnet and Denel.

The Minister has had a great opportunity serving on the Public Enterprises Portfolio himself and seeing first hand, the many issues that arise.  We are pleased that the Minister has worked closely with the DA and other opposition parties.

We would like to commend the Minister on the speed in which he has implemented interventions at SOEs, especially the good work that has been done by his intervention team at SA Express.

It was revealed today that the Minister’s intervention team discovered that the airline entered into a R5.7 million deal with Gupta-linked, Trillian, for advisory services and capital raising without following due process. Furthermore, the team also discovered a dubious fuel contract worth R67 million at SA Express.

One point of concern is the appointment of Mr Ronald Lamola on the SA Express board as he is an ANC NEC member which presents a possible conflict of interest. It is for the same reason he resigned as Chairperson of the Media Development and Diversity Agency.

Despite these interventions, the DA maintains that our SOEs require a complete turnaround strategy to restore good governance, public trust and most importantly service delivery

The DA has a six-point rescue plan for SOEs which is centred on revitalising our parastatals and restoring good governance. This plan focusses on:

  1. De-politicalising SOEs by doing away with the ANC’s cadre deployment policy. We need to introduce a Code of Good Practice, stringent vetting processes and lifestyle audits to attract skilled and knowledgeable candidates;
  2. Introducing professional expertise in order to create environments in which decisions are made with profitability or sustainability in mind, by revamping employee-compensation systems;
  3. A focus on becoming competitive as SOEs have become bloated and inefficient. SOEs need to have clear mandates that set financial objectives and sustainability as primary goals;
  4. Good governance based on transparency in order to minimise the opportunity for corruption. This can be done by making tenders of a certain value, performance agreements with executives and monthly progress reports public;
  5. Accelerating the introduction of private equity partners. This requires the government to look at the partial or full privatisation of a number of SOEs by bringing in private equity partners and disinvesting from non-core SOEs urgently; and
  6. Streamlining government oversight by dissolving the ineffective Department of Public Enterprises and manage the SOEs under their rightful Departments.

The DA will continue to monitor the progress of SOEs and we will not shy away from holding Minister Gordhan accountable.

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DA lays corruption charges against Supra over R1m Denel bursary for son

Please find attached an English soundbite by the DA Shadow Minister of Public Enterprises, Natasha Mazzone MP. Also attached are pictures here and here. 

The DA has today laid criminal charges of fraud and corruption against North West Premier, Supra Mahumapelo, and Denel CEO, Zwelakhe Ntshepe, in terms of Sections 50 and 51 of the Public Finance Management Act (PMFA).

Over the weekend, reports emerged that Ntshepe signed off on a R1.1 million Denel bursary for Mahumapelo’s son without following due procedure. Mahumapelo’s son is currently studying at a Port Alfred aviation school which do not form part of Denel’s list of accredited schools. Furthermore, Denel bursaries have generally only covered the fields of IT, engineering, finances, and business management.

This seems to point towards a breach of Section 50 of the PMFA which reads that the accounting authority may not “(b) use the position or privileges … for personal gain or to improperly benefit another person” and Section 51 states that the accounting authority must “take effective and appropriate steps to … prevent expenditure not complying with the operational policies of the public entity.”

It is now time for Supra and Ntshepe to face the music. We urge SAPS to investigate these charges and ensure that the truth comes to light.

If there was any wrongdoing on the part of Supra and Ntshepe, they must be held accountable.

Section 86 of the PMFA states that in the event the accounting officer is found guilty of an offence, they are liable to a fine or possible imprisonment.

The DA will continue to fight against those who abuse state funds at the expense of the poor. It is unacceptable that those in powerful positions abuse their positions to unduly access money meant to empower underprivileged young people.

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DA to lay charges against Supra over dodgy R1m Denel bursary for his son

The DA will lay criminal charges of fraud and corruption against North West Premier, Supra Mahumapelo, and Denel CEO, Zwelakhe Ntshepe, following reports at the weekend that Denel gave Mahumapelo’s son a R1.1 million bursary without following due process.

On Sunday, reports emerged that Ntshepe signed off on a bursary of more than R1 million for Mahumapelo’s son to study at a prestigious Port Alfred aviation school. This, despite the school not being part of a list of accredited schools that Denel funding covers and that Denel bursaries have historically been allocated to the fields of IT, engineering, finances, and business management.

These allegations may point to a clear violation of the Public Finance Management Act (PMFA). And the DA will lay criminal charges against Mahumapelo and Ntshepe in terms of Sections 50 and 51 of the PMFA.

Section 50 states that the accounting authority may not “ (b)use the position or privileges of… for personal gain or to improperly benefit another person” and Section 51 states that the accounting authority must “take effective and appropriate steps to … prevent expenditure not complying with the operational policies of the public entity.”

The DA welcomes Public Enterprises Minister, Pravin Gordhan’s, request for the Denel board to institute an internal investigation into this matter. However, an internal probe is not enough. There must be a criminal investigation into this possible abuse public money.

The reality is that these monies could have benefitted underprivileged students who dream of obtaining tertiary qualifications.

Tomorrow, Mahumapelo will face a motion of no confidence as the Premier of the North West province, a motion which the DA supports. He has a long track record of allegations of fraud and corruption against him and has been identified as one of the individuals in the Guptas’ pockets. It is high time he is removed as he does not serve the people.

The DA will not sit by and watch as corrupt officials steal the public’s money at the expense of the poor. We urge the SAPS investigate these allegations thoroughly and should they prove true,  to ensure that Mahumapelo and Ntshepe are brought to book.

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DA cautiously welcomes the appointment of new Denel interim Board

The DA cautiously welcomes the appointment of a new interim Board at Denel by the Minister of Public Enterprises, Pravin Gordhan, subject to approval by Cabinet. The DA finds it unhelpful that Minister Gordhan has chosen to retain some individuals who served on the previous Board.

Denel’s previous board and management still needs to account before the Commission of Inquiry into state capture to be headed by Justice Raymond Zondo. South Africans need a full account of the circumstances that saw the Gupta brothers gain undue influence on some of the company’s high level business decisions.

Denel had fallen prey to gross mismanagement and a carefully orchestrated plan of ‘state capture’ that saw the state armaments company fail to pay its employees and suppliers, forcing government to shore it up with a R580 million guarantee.

The new interim board has to ensure that it extricates Denel from undue political influence, as an essential first step in restoring the company’s tattered corporate image.

The DA hopes the new interim board will be open, transparent and accountable to Parliament and the people of South Africa on whose behalf they execute their mandate.

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DA requests urgent update from Denel regarding financial woes

The revelations this week that state-owned arms manufacturer, Denel, has run out of money is a damning indictment on its leadership and floundering executives.
The DA has written to Denel to request an urgent update on the true status of its financial affairs.
Denel must come clean and give an urgent response as the DA has received numerous requests for intervention. It is clear that the executives can no longer be trusted to solve this impending emergency. So much so that the DA has been asked to assess the situation.
It is clear that the Denel management is completely inept and unable to handle any emergency.
It has been reported that Denel is running so low on cash that it will not be able to pay their suppliers and their 4 000 employees December salaries. It is disheartening to imagine that during the festive season, Denel employees could potentially not receive their salaries after a long year of hard work and dedication.
Our state-owned enterprises (SOE) are in crisis and the fault must be placed squarely at the feet of the Minister of Public Enterprises, Lynne Brown. Under her watch our SOE’s have disintegrated due to corruption and gross mismanagement.
The DA expects a comprehensive and swift response from Denel. We need to get to the bottom of this financial mess to ensure that Denel employees and suppliers are paid.

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Denel tables flawed financial reports

Today, in Parliament the Public Enterprises Committee was presented with a letter from the Auditor-General, Kimi Makwetu, in which he expressed concerns regarding the financial audit the firm, SNG, did of Denel.
The A-G found that SNG failed to properly account for irregular expenditure in its report of Denel’s financials.
SNG requested that Denel amend the flawed reports, but according to the A-G, Denel resisted this request and proceeded to table the incorrect financials.
It is completely unacceptable that a Board and the executives of a public entity would see it fit to not only submit incorrect financials but also deliberately refuse to follow an instruction by an auditing firm.
By doing so, Denel also possibly breached Section 55 of the Public Finance Management Act (PFMA), which states that “[t]he accounting authority for a public entity (a) must keep full and proper records of the financial affairs of the public entity [and that financial reports] fairly present the state of affairs of the public entity, its business, its financial results, its performance against predetermined objectives and its financial position as at the end of the financial year concerned”.
The DA will now write to the Chairperson of the Public Enterprises Committee, Ms Zukiswa Rantho, to request that Denel be urgently brought before the Committee to account for this transgression.
The DA shares the A-G’s concerns, considering that SNG has also done financial audits on Transnet and Eskom.
Given the fallout from the KPMG scandal and credibility concerns with the audit profession in general, we trust that the A-G needs will go over the audit outcomes of Eskom and Transnet with a fine tooth comb to check for similar errors.
Corruption is rife within our state-owned enterprises, and we need to ensure that auditors are transparent.