Posted on

Eskom fails to publicise China loan terms and conditions within 30-day PAIA period

The DA will not allow China’s model of “debt trap diplomacy” to take root in South Africa, and we will approach the courts if necessary to ensure that government is transparent with the public about the terms and conditions of loans received from China.

On the 10th of September, I submitted a Promotion of Access to Information Act (PAIA) request for the terms and conditions of the R33 billion loan from the China Development Bank (CDB) to Eskom to be made public. In terms of the Act, Eskom had 30 days to answer to my request for this information. This deadline has passed, and the terms and conditions of the loan remain suspiciously secret.

I have therefore submitted a Notice of Internal Appeal to Eskom in terms of section Section 75 of PAIA for not granting my request for access to the terms and conditions of the loan. If Eskom fails to honour the further 10-day deadline set by this Notice of Appeal, the DA will not hesitate to take the necessary legal action and approach the courts for relief.

In addition, I have formally approached President Cyril Ramaphosa, Eskom Chairperson, Jabu Mabuza, and CDB Liaison in South Africa, Jiangtao Cao, none of whom have been willing to play open cards and disclose the terms and conditions of this R33 billion loan. South Africans need to be assured that this loan does not tie our country and taxpayers to unaffordable and unfair terms and conditions. We will not allow China’s model of “debt trap diplomacy” to take root in South Africa.

President Ramaphosa has committed his administration to greater transparency and accountability. However, when pressed with a real example like this loan, he has chosen to follow the path of secrecy that was entrenched under President Zuma. This is an opportunity for President Ramaphosa to play open cards with the public about what this loan commits us to, and we expect him to do so.

Finance Minister, Tito Mboweni’s, maiden Medium-Term Budget Policy Statement (MTBPS) this week confirmed that ‘Eskom’s weak financial position remains a risk that could lead to a call on guarantees.’ After Eskom made a R2.3 billion loss with R41.5 billion gross finance costs and over R20 billion in irregular expenditure in the last financial year, there is reasonable doubt as to Eskom’s ability to pay back this R33 billion loan to the CDB.

If Eskom and the failing ANC government refuse to open the books on this loan, the DA will not hesitate to take the appropriate legal action.

Posted on

Congratulations to Tito Mboweni on his appointment as new Finance Minister

We congratulate the former Governor of the South African Reserve Bank, Tito Mboweni, who has been plucked from political obscurity and appointed as the new Finance Minister in South Africa.

With his experience, the new Finance Minister will have the advantage of being able to hit the ground running and is, at least, known to market participants, ratings agencies and international financial institutions, who closely follow events in South Africa.

However, we are concerned that during the years that he was out in the political cold, he often came over on social media, at least, as a little looney posting content that seemed to be at odds with government policy like this:

We hope that the minister will clarify his view in the run up to the Medium-Term Budget Policy Statement which is scheduled to take place in two weeks time in Parliament.

Posted on

Nuclear Deal: Is it off or on?

The DA challenges new Energy Minister Jeff Radebe to give the South African public an unequivocal and unambiguous statement on the nuclear deal.
Yesterday, new Finance Minister Nhlanla Nene said that nuclear plans are still on the table, before adding that this would be subject to affordability.
Today, in Parliament’s Energy Portfolio Committee, the Director-General of the Department of Energy, Thabane Zulu, said that the Department of Energy is preparing a road-map to deal with nuclear.
The Director-General added that he wouldn’t be surprised if nuclear is part of the new Integrated Resource Plan (IRP) since nuclear is part of the Department’s energy policy.
We had hoped that President Ramaphosa’s election, and his appointment of Minister Radebe in place of Minister Mahlobo, signalled the death knell of the R1 trillion nuclear deal.
It now seems the door has been left open to go ahead with the nuclear deal. This would be a slap in the face for every South African who believed President Ramaphosa when he promised a ‘new dawn’ for our country.
It also gives credence to allegations in the public domain that it wasn’t just ‘Zupta’ politicians who benefited from illegal kickbacks in return for a nuclear deal.
In the ‘Betrayal of the Promise’ report authored by a number of respected academics, allegations are made that the ANC received R1 billion for its 2016 local election campaign in return for a nuclear deal. As the report says, on page 17:
“There are allegations that one set of transactions involved Russian funding for the local government elections, which may explain where the ANC managed to find R1 billion for this campaign.”
If the ANC as a whole benefited from illegal kickbacks, then it will be much more difficult for President Ramaphosa to renege on whatever promises have been made.
Indeed, the continued prevarication from ANC Ministers and government officials does nothing to quell the rumours that continue to swirl around nuclear procurement.
The new Energy Minister, Jeff Radebe, has been very quiet since assuming office last week. The time has come for him to break his silence by unequivocally and unambiguously rejecting the nuclear deal.
We call on him to do so without any further delay.

Posted on

Cut the fat, don’t tax the poor

The following remarks were delivered by the Leader of the Democratic Alliance (DA), Mmusi Maimane, during a march to National Treasury in Tshwane today. Attached please find the Memorandum that was handed over by the Leader to Treasury on behalf of the DA. 
Fellow South Africans
We have come here today to say: we reject the increase in VAT to 15%. We reject it outright.
We reject this government’s plans to make up for their waste and their greed by taxing the poor even more.
We reject the argument that the only way to dig us out of our financial hole is by making poor South Africans pay through a higher VAT rate and higher fuel taxes.
We reject any solution that says “make the people who already can’t afford the basics, pay even more so that we can keep on looking after loyal cadres”.
Because that’s exactly what this VAT increase, along with the 52 cents per litre hike in the fuel levy, will do. It will target the people who spend by far the biggest part of their income on food and transport.
It will target the poor while the real reasons for the R50bn hole in our budget – the wasteful spending, the populist policies and our massively bloated government – remain off-limits to the Finance Minister.
And remember, that R50bn hole is projected to become a R70bn hole next year, and a R90bn hole the year after that.
So what are we going to do? Are we going to push up VAT every time we can’t balance the books?
To those who say a VAT increase was the only way to make up the shortfall, I say: Rubbish! You haven’t even tried to look for ways to save enough.
I know this, because we have looked and we have found a way to save the money and prevent the VAT increase, without hurting the poor and without putting our country deeper into debt. It absolutely can be done.
But it can only be done if you are prepared to make decisions that put the interests of poor South Africans above the interests of those who earn a living off one of the world’s most bloated governments.
The answer lies in trimming the fat – in cutting spending where we can afford it and, very importantly, where it won’t hurt service delivery.
The bitter irony of the ANC government’s budget is that the only significant cuts in spending were all made in areas that directly affect poor communities.
By slashing the funding to provinces and municipalities for school infrastructure projects and human settlements programmes, and by cutting 2000 personnel from the police service, it is only the poorest communities who will pay.
So if not through a VAT hike and cuts in pro-poor spending, where should the former Finance Minister have found the missing money?
Well, we gave him the answer to this question. We told him before his Budget Speech, and again in the wake of his disastrous budget, where he could find R112bn that would not punish poor South Africans.
We have one of the largest cabinets in the world, and we have just about the most foreign missions in the world. Why? Because that’s how the ANC rewards cadres. Ministers, Deputy Ministers, Ambassadors and all the other positions created by this enormous government – these are all part of an elaborate loyalty reward scheme.
The fact is, we don’t need half of them. We can start by firing the leftover Gupta Ministers that the President failed to fire, like Malusi Gigaba and Bathabile Dlamini. We can trim our cabinet down to 15 ministries and we can cut our foreign missions by 69. That alone will save us close on R18bn.
Then we need to have a serious look at our public sector wage bill. By implementing a one-year wage freeze for public service office bearers, including local and general government employees, and by forgoing performance bonuses in government, we can save over R60bn.
We can save a further R17bn over the medium term by withdrawing from the New Development Bank.
And finally, we need to take stock of our SOEs and the parcels of government land that aren’t suitable for housing development. Whatever is not strategic and whatever we don’t need, we must sell off or lease out.
There is R112bn to be saved in our budget, but it requires a shift in thinking. It requires taking on the patronage system on which the ANC was built.
Fellow South Africans, we have been hearing a lot recently about a new dawn. We have a new President who has made all sorts of promises about doing things differently. That’s good. But the time for promises has come and gone.
I hope President Ramaphosa enjoyed his honeymoon, because it is over. He is back at work now and he needs to start acting on all his promises.
But he’s not the only new member of this government. We also have a new Finance Minister, who brings with him high expectations. I am sure he’s glad to have this opportunity to prove himself.
Minister Nene, you’ll never have a better chance to make an impression than with your first big decision in cabinet. You know the facts around this budget and the VAT hike, and you know what you can do to fix it.
I call on you, on behalf of millions of poor South Africans, to reverse this VAT increase, and to find the necessary money in the budget items we have outlined for you.
The question is not whether it can be done. We have shown that the money is there. The question is whether you and President Ramaphosa and your colleagues in this “New Dawn” government have the courage and the will to do the right thing.
The ball is now in your court.
Thank you.

Posted on

Delays and doubts: Gigaba adds to the confusion on actual funding for free Higher Education

In a Press Conference yesterday Finance Minister, Malusi Gigaba broke the news that free higher education will not be rolled out over the promised five years, but over eight. Just two weeks ago Higher Education Minister, Hlengiwe Mkhize, said free education would be phased in over five years. It is time that the two ministers spoke to one another about this.

Even eight years seems an inordinately short time for him to find the roughly R40bn to R50bn per annum that will be required once students in all years are funded. He himself acknowledged that our national budget is inadequate even without this requirement. So which other Departments will this money be taken from? Social Development? Basic Education? Human Settlements?

With registration ongoing during January, students and their parents are not sure what exactly is happening.

Minister Gigaba also cast further doubt on the ANC’s grasp of the issues when he said that “the Government had now established how much free higher education would cost”, but at the same time that “nobody can be very certain about the actual quantum of the figures required for the funding of the system”. He admitted that there “was still a lot of uncertainty” including how many students would actually need financial assistance. Students must be wondering what on earth all of this means.

And on Sunday we suddenly heard that the Ministry will be requiring students to do 80 hours community service a year and participating in the economy after studies have been completed, as a condition of the free education.

This is a serious matter for students. A student who registers this year for a free first year will do so on the expectation that his or her second and third year will be funded. But the Minister clearly has doubts about this. And will community service and ‘participating in the economy”, whatever that may mean, be required or not?

Adding fuel to this fire are opportunists like the EFF who are inciting violence by calling for walk-in registrations, and blaming Universities and Colleges when they cannot provide places for students once they are full. Minister Mkhize has not helped by calling upon Colleges to “be creative” in admitting extra students. Is she totally unaware of how enrolment planning in her Department actually works? Between her populism and the EFF’s opportunism, educational institutions are being hung out to dry.

We have called on Parliament to address this crisis urgently, but our call has been rejected.

Whoever delivers the State of Nation Address must clearly state how, when and even whether the plan for free education will come to fruition. When Cyril Ramaphosa becomes President will he stretch the number of years it will take to ten? Or even fifteen?

Like all ANC policies, this plan is incoherent and is causing confusion and anxiety among the country’s youth.

The DA has long held that free education for the poor is possible, that a tiered system of student funding would be feasible and that this needs careful planning in advance. The effects of the reckless Zuma announcement will affect our educational system for a long time to come, and may still have consequences we cannot yet predict. But they will be serious.

Posted on

Disgraced Dudu Myeni must keep away from SAA

The DA finds it incomprehensible that the hard-won steps towards saving SAA can be so recklessly undermined by the proposal to move the embattled airline from the Finance ministry to the Transport Ministry– a ministry that has so fouled up the e-toll saga.
What makes such a proposal even worse is the news that disgraced Dudu Myeni has been appointed as a “special” advisor to Transport Minister, Joe Maswanganyi, a close ally of President Jacob Zuma. Despite any rules that may preclude her from interfering in SAA affairs, Ms Myeni will likely ignore these and meddle in the affairs of the airline.
The DA will now write to all South African banks that are owed the R13.8 billion guaranteed by the poor people of South Africa. We will request that they immediately inform Finance Minister, Malusi Gigaba, that they will recall their loans to SAA with immediate effect should the proposal to move SAA away from National Treasury be effected and if there is any pressure put on the SAA board and CEO to run the airline as anything but a commercial enterprise.
Given the mess that SAA has become under the “rule” of Myeni, she surely must be ranked as the most unsuitable person to appoint as an aviation advisor.
The removal of Myeni from the SAA board, the appointment of a new board (including an aviation expert) and, most importantly, the appointment of experienced executives like Vuyani Jarana and Peter Davies signalled the start of a process to attempt to save SAA and most of the more than 10 000 jobs. This would be in vain if the airline is once again treated as a cadre enrichment vehicle and moved back under the influence of corporate warlord Dudu Myeni.
South African banks must ensure that SAA is run on purely commercial lines. They cannot allow SAA to once again become Myeni’s plaything as poor South Africans will suffer the effects of billions of rands in losses as vital services will be forfeited in order to fund the failing airline.

Posted on

“Oilgate”: DA requests Mahlobo to halt R2.1 million gratuity to Joemat-Pettersson

The DA has today written to Energy Minister, David Mahlobo, requesting him to suspend his Department’s R2.1 million “once-off-gratuity” to former Minister Tina Joemat-Pettersson.
[Details of the R2.1 million payout in the adjusted budget of the Department of Energy can be found here]
We believe that this R2.1 million payment should not proceed at least until such a time that Ms. Joemat-Pettersson is cleared of wrongdoing for the sale of South Africa’s strategic oil reserves in December 2015.
It would be wrong to give former Minister Joemat-Pettersson a R2.1 million golden handshake when she personally authorised the unlawful sale of our oil stocks at bargain basement prices.
The cost of this dodgy deal is estimated to have cost the public purse in the region of R2 billion.
Joemat-Pettersson authorised the sale of the oil reserves without the concurrence of then Finance Minister, Pravin Gordhan, as required by the Central Energy Fund Act.
What is more, Minister Joemat-Pettersson appeared to have lied to Parliament about the sale in 2016, claiming it was a mere “rotation of stock”.
Minister Mahlobo recently admitted that the sale of our oil stocks is going to cost the government a great deal of money, and appears committed to investigating the illegality of the sale by the end of December this year.
There is a chance that Joemat-Pettersson will be criminally and financially liable for this unlawful deal. It would therefore be prudent for Minister Mahlobo to place a moratorium on any gratuity to Joemat-Pettersson until the investigation is concluded.

Posted on

DA welcomes confirmation of Commission of Inquiry into tax administration

The DA welcomes Finance Minister, Malusi Gigaba’s, announcement today that a Commission of Inquiry will be established to look into issues at the South African Revenue Service (SARS).
These are not new issues, but have been plaguing the SARS for some time now, and include:
• The mass exodus of Senior and effective employees;
• Reports of unlawful (according to the Auditor-General) bonuses paid out to SARS executives;
• Undue delays and wrongful obstructions to tax refunds;
• As well as factually incorrect communication surrounding people’s tax returns.
The problems are clearly not new and have only worsened through the course of this year. The latest estimates, announced in the Medium Term Budget Policy Statement, pencil in a staggering revenue shortfall in excess of R50 billion for the current financial year.
In light of the continuing deterioration of the situation at SARS, the terms of reference that will guide the inquiry need to be defined and must be made public as soon as possible.
With the wide range of issues plaguing the SARS, the leadership of the institution must be thoroughly investigated, and the scope of the inquiry must extend at least as far back as when Tom Moyane was first appointed as the Commissioner of SARS.
This is imperative in ensuring transparency and openness over an issue that has to date been mired in a cloud of confidentiality.
The deterioration of the public’s trust in SARS must be halted to avoid further shortfalls in revenue collections.

Posted on

Finance Minister must clarify if raiding the PIC is Treasury’s ‘Plan B’

The DA calls on Finance Minister, Malusi Gigaba, to clarify if National Treasury’s ‘Plan B’ is to raid the Public Investment Corporation (PIC) in order to save South African Airways (SAA).
National Treasury revealed in Parliament’s Standing Committee on Finance yesterday that the sale of the government’s shares in Telkom might not be the source of the proposed R10 billion bailout for SAA.
For this bailout to go ahead, Mogajane confirmed that National Treasury requires a special Parliamentary sitting before the end of this month to deal with a Special Appropriations Bill.
Mogajane confirmed this in Committee yesterday when he said that National Treasury will urgently approach Parliament to vote on the Bill. He was quoted saying that ‘We will have to appeal to Parliament for the possibility. If there is no possibility, we will have to look to Plan B.’
However, Mogajane’s comments beg the question as to what Plan B in fact is.
SAA’s Corporate Plan for 2017-2022, tabled in August, indicates that it would be securing external funding from the PIC and with less than a fortnight until the end of the month, it seems inevitable that SAA will have little option but to resort to raiding the PIC through a direct loan in order to meet their funding requirements.
This suspect transaction could happen without the PIC first seeking the Government Employees Pension Fund’s (GEPF) approval in terms of the PIC’s extremely broad investment mandate.
This massive R10 billion bailout will only be a short term solution and will not fix the underlying issues at SAA. The airline ultimately needs to be placed under business rescue so that it can be stabilised and private participation can be expanded.

Posted on

Gigaba must assure Parliament that R70 billion contract with Chinese is above board

The DA calls on Finance Minister, Malusi Gigaba, to assure Parliament and the South African public that two mega-contracts between government and Chinese parastatals will not go ahead without the procurement laws being adhered to.
According to media reports, the Water and Sanitation Department as well as the Passanger Rail Agency of South Africa (Prasa) are in the process of handing contracts worth R70 billion to Chinese parastatals without a public tender or permission from Treasury to bypass tender laws.
Minister Gigaba must urgently account for Treasury’s alleged planned deviation in the competitive tendering process  and make an assurance that due procedure will be followed before handing over these R70 billion contacts to Chinese companies without the proper tendering process.
The last thing that South Africa can afford right now is another corrupt multi-billion rand intergovernmental tender deal. Earlier this year the Western Cape High Court ruled that the process leading to government signing agreements with Russia for a nuclear contract was “flawed, unconstitutional and not in line with sound decision making”.
The DA will not allow an attempt at grand corruption of this sort to transpire again and we will use all available avenues to challenge the lack of due process in these deals. Treasury must account to parliament on its involvement in these negotiations and provide a full disclosure on whether the legal tender process is being followed.
The DA will pose these questions to Treasury when it appears before the Standing Committee on Finance on Wednesday next week. Minister Gigaba must act in an open and accountable manner to the South African public on this massive deal that currently seems to be flouting all competitive tender processes.