SARS’ record breaking revenue shortfall due to ANC mismanagement

The Democratic Alliance (DA) notes with great concern the under-collection of R57.4 billion in revenue for the 2018/19 financial year. Finance Minister, Tito Mboweni, must give a clear plan of action to address the chronic revenue under-collection of the last couple of years.

The revenue under-collection is partly due to the inefficiencies that swept into SARS under the Moyane regime and which have started to be reversed by the acting SARS Commissioner, Mark Kingon, and his team. However, the real and substantive reasons for revenue shortfalls emanate from a struggling South African economy that is hamstrung by the ANC’s mismanagement, and continuing ANC corruption.

On the 28th of March 2019, the South African Reserve Bank (SARB) revised their 2019 growth rates for the South African economy down from 1.7% to 1.3%, a massive 23.5% reduction in growth. This implies a reduction in growth of approximately R21 billion. Even this reduced growth forecast is very optimistic given the very real probability of ongoing and extensive Eskom electricity rolling blackouts that are likely to continue immediately after the elections on the 8th of May 2019. Which makes the likelihood of yet another revenue shortfall very likely for 2019.

Minister Mboweni must inform South Africans what robust action he has taken and intends to take in order to prevent more under collection, and how expenditure will be curbed to adjust to lower revenue levels.

The DA has therefore written to Minister Mboweni to request that he urgently take South Africans into his confidence and to inform them whether there are urgent action steps taken to address the chronic revenue under-collection to ensure that there isn’t a shortfall in 2019.

ANC intent on driving investment away

The Democratic Alliance (DA) will write to the Minister of Finance to obtain details of the ANC election manifesto statements that the party intends to change the mandate of the South African Reserve Bank (SARB) as well as to prescribe to financial institutions where they must invest the money they hold in trust on behalf of bank depositors, pension and retirement fund contributors, pensioners and insurance policyholders.

The imposition of prescribed assets is exactly what the apartheid regime resorted to in desperation when they could not raise capital in the international markets. Now the ANC is to resort to the same annexation of private funds as international markets hold back on making capital available to South Africa.

Instead of announcing bold new initiatives to stimulate economic growth and job creation, the ANC has decided to simply “expropriate” ordinary South Africans’ savings to try to save bloated and corrupt State-Owned Entities such as SAA and ESKOM.

Clearly President Cyril Ramaphosa has not had the backbone to stand up to the SACP/COSATU and has capitulated to their demands for these changes to the SARB mandate and to imposing a prescribed asset regime.

What these changes will undoubtedly bring about will be to:

  • Make the South African Reserve Bank a battleground as the destructive forces in the ANC and its ally the EFF push the agenda to change the SARB mandate. We urge the SARB Governor to withstand the coming onslaught and to continue to focus on the existing SARB mandate.
  • Result in further downgrades by international ratings agencies no matter how much charm and spin President Cyril Ramaphosa puts on these economically destructive changes.
  • Drive away foreign direct investment,

The losers as a result of these very foolish moves by the ANC is the will be to create more unemployment and misery for the majority of South Africans. There can be little doubt that unemployment numbers in 2019 will sky rocket way beyond the 10 million mark.

VBS liquidation was unavoidable

The Democratic Alliance (DA) notes the North Gauteng High Court order to have VBS Mutual Bank liquidated.

We have long expected this decision given the dire state of affairs at the bank and have been of the view that no further public money should be spent on bailing out privately-owned companies.

This liquidation is long overdue, and the DA welcomes the fact that the public will not have to pay for the ANC and EFF’s looting of VBS.

The Prudential Authority – which operates under the auspices of the South African Reserve Bank (SARB) and is responsible for regulating banks, insurers, cooperative financial institutions, financial conglomerates, and certain market infrastructures – is legally obligated to apply for liquidation when it has evidence that a bank is insolvent.

Brian Shivambu, brother of the EFF’s Floyd Shivambu, is said to have received R16 million from the bank “without an apparent cause” and it was further alleged in media reports that evidence existed of Floyd receiving R10 million of that money.

The EFF also allegedly received a R1.3 million donation from the bank whilst the ANC confirmed it received R2 million from VBS.

The DA has called on both parties to pay back all the money they allegedly received from VBS. These transactions were not victimless – they were made at the expense of the poor.

Municipalities, burial societies and indeed clients are the biggest casualties of the looting of VBS and many will not see their money again.

Following the release of The Great Bank Heist report by SARB, the DA acted swiftly to ensure that individuals implicated in the report were investigated for their role in the ransacking of the bank.

Parliament’s Joint Committee on Ethics and Members’ Interests confirmed it would investigate EFF Deputy President Floyd Shivambu for possible conflict of interest regarding payments he received from his brother, Brian, following a request by the DA.

The EFF and ANC’s coalition of corruption has caused suffering among the poorest South Africans. Our citizens have the power to ensure these parties account for what they have done by voting for the party that fights for them.

EFF confirms that money was exchanged between the Shivambu brothers – Hawks must investigate

The Economic Freedom Fighters’ press conference on the VBS looting was all sound and fury and fell short on clarifying Floyd Shivambu’s involvement in the VBS scandal. Instead, it was a flimsy attempt to divert attention by launching veiled attacks on the National Treasury, the South Africa Reserve Bank (SARB) and journalists on unverified allegations.

The Democratic Alliance calls on the Hawks to launch an official investigation into allegations against Shivambu on the role that he, and his brother, may have played in the VBS heist.

The SARB’s report implicates Brian Shivambu as a major beneficiary of the VBS heist to the tune of R 16 million. Julius Malema confirmed that as brothers, there were numerous transactions between Floyd and Brian. He could not rule out the possibility that proceeds of crime may have funded functions of the organisation. As such a full forensic investigation is necessary.

It is simply not enough for the EFF to claim they have satisfied themselves by looking at Floyd’s bank statements. The Hawks must now conduct a full investigation to establish definitively whether the money that was sent from Brian to Floyd was through the proceeds of the VBS Heist.

The EFF has not been forthcoming about whether they have as a party received any funding from any proceeds of the VBS Heist. We have, for months, challenged them to come clean about this. When asked, they simply obfuscate and detract from the question as they did during today’s press conference.

If they truly have nothing to hide, Shivambu and the party should submit their books for forensic investigation by the Hawks with immediate effect.

The DA has already submitted a complaint to the Parliamentary Ethics committee to probe Floyd Shivambu on his possible conflict of interest with his brother Brian. During today’s press conference Malema admitted that money was transferred between Brian and Floyd Shivambu. Clause 5.2 of the Parliamentary Code of Conduct “makes provision for a member, or their immediate family member to not accept any reward, benefit or gift from any person or body that creates a direct conflict or business interest for such Member”. This is evidence that Floyd Shivambu failed to disclose his conflict of interest in Parliament when the VBS matter was discussed.

The VBS heist has cost poor South Africans and struggling municipalities millions of rands and it is incumbent upon on the Hawks to ensure that those implicated are held to account.

This scandal proves that the ANC and the EFF are in the same coalition of corruption. The South African people deserve better than this.

New VBS report: Tito Mboweni’s first test

Finance Minister, Tito Mboweni, needs to take swift actions action against all those implicated in the VBS Mutual Bank scandal.

Earlier this year the Democratic Alliance (DA) laid criminal charges against individuals who were allegedly involved in the VBS fraud, corruption and racketeering scandal. The forensic investigation report, “VBS Mutual Bank – The Great Bank Heist”, released by the South African Reserve Bank (SARB) today, implies that there were even more people involved than originally thought. These include politicians and officials.

The report recommends that more than 50 individuals be criminally charged and held liable in civil proceeding.

The DA supports this recommendation and calls on the newly appointed Minister of Finance, Tito Mboweni, to move swiftly with authorities to take action against all those implicated, especially the politicians and those close to politicians, such as Brian Shivambu, brother of the EFF’s Floyd Shivambu, who is implicated in the scandal. It is no surprise why the EFF has been vocal about defending the corruption that took place at VBS which saw many South Africans in danger of losing their hard earned money and municipal funds wasted.

It is paramount that the Minister takes a strong stance against corruption.

The VBS scandal has severe consequences on South Africans as multiple municipalities are at risk of losing revenue which directly affects their ability to provide basic services and compromises access to jobs.

DA plans to fight hostile takeover of the Reserve Bank

The nationalising of the South African Reserve Bank (SARB)is a hostile move in a long game of EFF political maneuvers to influence the mandate and operations of the Reserve Bank and ultimately South Africa’s banking system as a whole.

This is also an electoral game for the EFF. Whether or not the Bill is passed, the EFF hopes to dominate the ANC’s radical agenda, and position itself as the authentic party of the left.

In a statement released on the 6th of March 2018, the EFF is unreserved about its ambitious plans for the SARB, including: influencing prudential oversight, deconcentrating bank ownership, expediting the licensing of state owned banks, and using the SARB to create a preferential environment for certain banks including state-owned development finance institutions.

At present, private shareholders are limited to holding 10 000 shares and to electing a minority of the non-executive Board members. The provision of a fixed dividend means that shareholders do not invest with the motive of making profits. In addition, shareholders play no role in the formulation and implementation of monetary policy and are excluded from core functions.

There can be no meaningful public interest motive in nationalising the Reserve Bank, only the furtherance of private political interests.

Nationalisation will mean that Finance Minister will have the ability to appoint every board member from a list of nominees that are confirmed by a panel also largely appointed by the Minister. The conflict of interests doesn’t stop there; this Bill has to be interpreted in conjunction with the EFF’s Bank’s Amendment Bill enabling the state to own banks. Coupled with greater ministerial involvement in the Reserve Bank, this will give the government enhanced ability to influence the rules in a market in which it also competes.

As South Africa confronts the public losses due to state capture, another likely avenue for corruption should not be opened up.

Financial prudence and stability do not go in hand with the EFF’s tendency towards recklessness. The memorandum to the Bill is meant to provide detail about its financial implications. In the relevant section Julius Malema has indicated ‘none’. This Bill has recklessly been submitted without the necessary due diligence. The shares cannot just be written out of existence.

The EFF will need to propose a mechanism of expropriation, compensation and determination of the shares’ value. In addition, the potential impact on investor sentiment must be considered. The DA opposes threats to Reserve Bank independence and will ensure that the true costs of the Bill are tabled and debated.

DA welcomes SARB’s decision to place VBS under curatorship

The DA welcomes the announcement today by the South African Reserve Bank (SARB) Governor, Lesetja Kganyago, that the VBS Mutual Bank has been placed under curatorship.
This action was triggered by VBS’s inability to find sufficient funding following National Treasury instructing municipalities to stop investing with the bank and withdraw their funds.
Section 7 of Municipal Finance Management Act (MFMA) states that a municipality may not open a bank account with an institution not registered in terms of the Banks Act and mutual banks, such as VBS, are not registered in terms of the Act.
The DA had been concerned for the safety of municipal deposits for some time and therefore submitted a Parliamentary Question to the former Minister of Finance, Malusi Gigaba, probing the extent of exposure of municipal deposits with VBS.
Minister Gigaba responded saying that only 2 municipalities had investments with VBS, as at 30 June 2016. The municipalities being West Rand District Municipality and Capricorn  District Municipality.
According to Governor Kganyago, this has subsequently increased to 21 municipalities and deposits in excess of R1.5 billion.
The DA, therefore, supports the actions taken by Treasury and SARB to safeguard the funds of municipalities and other depositors with VBS Mutual Bank.
We will submit further questions to determine the true extent of municipal exposure, why and how this issue arose, and whether municipal officials will be held responsible for their illegal actions.

SARB should look into allegations surrounding Capitec Bank

The South African Reserve Bank (SARB) is satisfied, on the information currently available to them, that Capitec Bank is well capitalized, has adequate liquidity and meets all prudential requirements. However, the allegations made by Viceroy Research, which Capitec Bank have dismissed as factually incorrect, are serious and should be investigated by the SARB. We have to be absolutely certain that there is no risk to depositors and that the banking system is safe and sound in South Africa.

Public Protector agrees to meet DA on a number of pressing issues

The Democratic Alliance (DA) is pleased that the Public Protector, Advocate Busisiwe Mkhwebane, has acceded to a request for a formal meeting to discuss a number of pressing matters linked to her office, and the performance of her constitutional mandate to investigate misconduct by government departments and entities and to protect the public’s interest. The meeting has been set down for Monday, 13 November 2017.
DA Leader, Mmusi Maimane, will be raising the followings matters, among others:

  • Why she has not yet released the report into the Vrede Dairy Farm, which has been sitting on her desk for almost six months.
  • Whether she has ever met with any members of the Gupta family, in any capacity whatsoever, and if so, what circumstances necessitated such a meeting;
  • The latest developments with regards to the new “preliminary investigation” into State Capture, which was announced on 15 June 2017. The investigation aims to determine the merits of several allegations of corruption and unlawful enrichment emanating from the infamous “Gupta Leaks”;
  • The progress on a number of ongoing investigations following complaints by the DA over the past 12 months. These include the following:

o   Investigation into Cooperative Governance and Traditional Affairs Minister, Des Van Rooyen, for allegedly misleading Parliament and the public regarding his visit to the Gupta’s family home in Saxonwold;
o   Investigation into former acting Eskom CEO, Mr Matshela Koko, for allegedly awarding a R1 billion contract to his step-daughter while at Eskom;
o   Investigation into the R30 million pension payout to former Eskom CEO Brain Molefe, allegedly authorised by Public Enterprises Minister, Lynne Brown;
o   Investigation into Public Enterprises Minister, Lynne Brown, for allegedly misleading Parliament when she failed to disclose if there had been any contracts of engagement between Eskom and Gupta-linked company Trillian Capital Partners;
o   Investigation into former Home Affairs Minister, Malusi Gigaba and the naturalisation of, and issuing of visas to, members of the Gupta family;
o   Investigation into Police Minister, Fikile Mbalula, and former Acting National Police Commissioner Kgomotso Phahlane for the misuse of state resources in providing VIP protection to Nkosazana Dlamini Zuma; and
o   Investigation into the alleged breach of the Ethics Code and the Power, Privileges and Immunities Act by Mineral Resources Minister, Mosebenzi Zwane, for willfully misleading Parliament by failing to disclose his personal interests pertaining to the Guptas;
o   Clarity regarding the allegation that she concealed submissions received from Black First Land First about her investigation into the apartheid-era bailout of Bankorp by the South African Reserve Bank (SARB); and
o   What her plan of action is regarding those who are actually pulling the strings when it comes to State Capture – including President Zuma, several of his cabinet ministers, and the Gupta family. To date, the real architects and technicians of State Capture have escaped unscathed, while board members, senior executives, and government officials have been used as scapegoats.
We look forward to engaging the Public Protector on the above matters and trust that she will make available all necessary information.
The role of the Public Protector is integral to the proper functioning of our democracy, and now more than ever, we desperately need a Public Protector who is wholly committed to fighting for the people of South Africa – by tackling State Capture and corruption in all its forms.
 

Parliament to push ahead with removal of Public Protector proceedings

The DA notes that our request for Parliament to initiate proceedings to remove the Public Protector, Adv. Busisiwe Mkhwebane, in terms of Section 194 of the Constitution, has been tabled and referred to the Portfolio Committee on Justice and Correctional Services for consideration.
We now call on the Minister of Finance, Malusi Gigaba, and the Governor of the South African Reserve Bank (SARB), Lesetja Kganyago, to appear before the committee to detail their objections to the Public Protector’s deeply flawed ABSA/Bankorp report.
An affidavit filed by Gigaba, in the North Gauteng High Court this week, describes the report as “manifestly lacking in logic” and notes that Mkhwebane “reached conclusions of fact and law without any proper appreciation and sound analysis of the documents that were before her.” Kganyago previously noted, in the SARB court application to have the report’s recommendations set aside, that “[t]he only explanation that the Public Protector has offered for her clearly unlawful conduct exposes her own lack of competency.”
The DA contends that the conduct of Adv. Mkhwebane over the past ten months has demonstrated that she is not fit to occupy the important position of Public Protector. Her conduct includes but is certainly not limited to:

  • Grossly over-reaching her powers by recommending that the Constitution be amended to alter the mandate of the SARB;
  • Grossly over-reaching her powers by dictating to Parliament how and when legislation should be amended;
  • Showing a poor understanding both of the law as well as her own powers in relation thereto; and
  • Sacrificing her independence and impartiality by consulting with the Presidency and the State Security Agency on remedial action to be recommended in her report

Indeed, the North Gauteng High Court found, on 15 August 2017, that the Public protector had “unconstitutionally and irrationally” intruded on Parliament’s exclusive authority and that she had gone about crafting her recommendations in the ABSA/Bankorp report in a “procedurally unfair” manner.
The DA was the only party that opposed Mkhwebane’s appointment as Public Protector. We hope that this time around the ANC and other opposition parties will listen carefully to our reasons for having her removed.