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.

It cannot be business as usual for the 6th Parliament while the Eskom threat continues to loom large

The Democratic Alliance (DA) has received a letter from the Speaker of the National Assembly, Ms Thandi Modise, in which she declined our request for a debate of national importance on Eskom’s financial crisis.

It cannot be business as usual for this 6th Parliament while the debt-ridden Eskom, continues to be engulfed in corruption and mismanagement, posing the biggest single threat to our country’s economy.

South Africans are already burdened with rising electricity costs and a flatlining economy, and is now expected to pay for years of state capture, corruption and poor management that have led to Eskom being over R400 billion in debt.

Eskom has kept our economy down on its knees – with unacceptably high levels of unemployment and job losses due to episodes of rolling blackouts, we cannot let the Eskom threat to our economy continue unabated.

The utility is the single biggest threat to our economy, therefore, Parliament must use its mandate to perform oversight and debate the true extent of rot at the entity.

The DA has long called for Eskom’s anticompetitive throttlehold on electricity production and distribution to be broken. We have a plan to stabilise and secure South Africa’s power supply and that is contained in our Cheaper Energy Bill, which seeks to break Eskom into two separate entities – a generation and distribution entity.

This would reduce the cost of electricity, bring about much-needed competition and ensure that South Africa will shed a big chunk of Eskom’s debt.

There is no straightforward or easy way of dealing with the Eskom crisis, however a debate on solutions that will rescue the power utility cannot wait for a time of our convenience or else it will be too late.

Failing ANC’s R100 billion irregular, fruitless and wasteful expenditure could fund job-seekers

The total balance of irregular, fruitless and wasteful expenditure by ANC national departments and state entities has increased to R100.9 billion.

This is a staggering sum of money. To put it in perspective, the R100.9 billion that was wasted would be enough to provide a jobseeker grant of R875 a month to every single unemployed person. Or a once-off cash grant of R10 500 for each unemployed person in the country. That is not to say the money could or should be used for these purposes. But it does put in perspective the scale of the loss, to consider how this sum could have improved the lives of all 10 million unemployed people.

The R4.1 billion that was lost to fruitless and wasteful expenditure in 2017/8 is enough to fund the salaries of over 22 000 police officers or 21 000 nurses.

It should be a national scandal that wanton waste on this scale has been allowed to take place by this failed ANC government.

Earlier this month, the DA analysed the annual reports of national departments and selected entities that had been tabled in Parliament. This revealed irregular expenditure of R72.6 billion and fruitless and wasteful expenditure of another R3 billion. However, serial mismanagement offenders SAA, SA Express and Denel had not tabled their reports at the time. The DA cautioned that the total was likely to increase substantially.

Prasa has now tabled their annual report, and the financial results are truly shocking:

  • Irregular expenditure: R24.2 billion
  • Fruitless and wasteful expenditure: R1 billion
  • Net loss for the year: R925 million

The Auditor-General (A-G) issued the entity with a qualified audit opinion, due to the large amount of dodgy spending, and the unclear accounting of passenger fares. Despite spending all this money, the entity achieved only 21% of its performance targets.

Prasa also joins the list of departments and entities that the A-G has expressed serious uncertainty over their ability to remain a going concern. There are now eight entities and one department at risk of financial collapse, in addition to the commercially insolvent SABC.

There is no excuse for this massive maladministration, particularly in fruitless and wasteful spending – this money is spent with absolutely no gain for the public. The ANC continues to pour vast sums of money down the drain at State-Owned Enterprises (SOEs).

Prasa’s results are a slap in the face to all those commuters who queue for hours attempting to catch trains that never arrive. With fuel prices sky-rocketing and 9.6 million unemployed, the neglect of the train system that provides vital links to jobs clearly shows that the ANC does not care about the daily struggles of South Africans.

The DA has shown that whenever we take over failing ANC governments, we clean up the administration and improve service delivery. South Africans have an opportunity in 2019 to choose a party that stands for One South Africa for All – not just the cronies of the ANC elite.

DA to add Transnet ‘Traingate’ scandal report to criminal charges against Molefe & Gupta associates

The latest forensic report by law firm Mncedisi Ndlovu & Sedumedi (MNS) attorneys on the R15,4 billion price inflation on Transnet locomotives procurement will form part of the affidavit of the criminal charges that the DA will be laying against former CEO Brian Molefe, former Chief Financial Officer Anoj Singh, board sub-committee Chairperson Iqbal Sharma and Gupta lieutenant Salim Essa.

The MNS report recommends that corruption charges be brought against the four individuals and steps taken by Transnet to recover the money lost from Molefe.

This latest report follows a Werkmans Attorney’s report which found out that Brian Molefe, Gupta associates and current Transnet CEO, Siyabonga Gama, may have breached the Public Finance Management Act (PFMA) for “…serious breaches of statutes, regulations, corporate governance and unlawful conduct in relation to the transaction – involving billions of rand”.

That two reports from different law firms have reached the same conclusion on the magnitude of the criminal enterprise that Molefe and the Gupta associates presided over for the benefit Gupta-linked firms, provides enough evidence for a criminal investigation to be instituted without delay.

Transnet is a vital cog in South Africa’s economic infrastructure and the financial pilferage it endured at the hands of corrupt ANC deployees like Molefe may have cost thousands of jobs that could have been created had the money been put to good use.

It is therefore essential that, while criminal charges are pursued, the current Transnet Board must act on the MNS recommendation to recover money lost by Molefe through his deliberate acts of economic espionage.

Failure to do so will render the entire Board complicit in violating good corporate governance practices which enjoins them to act against any perceived threats to Transnet’s financial health.

President Ramaphosa must understand the collapse in governance has not only taken place in ANC run provinces but had also become pervasive in State Owned Enterprises (SOEs). Taking stern action against Gupta lieutenants is an essential first step in fixing the culture of corruption in SOEs.

Hawks must now prioritise an investigation into the Guptas R70 million tax refund

The DA notes the move by the Hawks and the South African Revenue Services (SARS) on arresting nine suspects linked to a VAT scam that has cost the economy R90 million.

We are encouraged by this move and hopeful that more similar arrests will take place soon.

The Hawks must do everything that is within their power in order to investigate and prosecute with equal diligence the Gupta proceeds, implicating them in a suspicious R70 million tax pay-out from SARS last year.

This includes obtaining the necessary court orders to gain access to information that is with SARS.

The DA urges Police Minister, Fikile Mbalula, to ensure that the Hawks have all the necessary support that they need in this regard.

SARS paid this money into the bank account of Oakbay Investments. Normally, pay-outs are only paid into the account of the taxpayer and not into the account of the third party or proxy.

This was after South Africa’s major banks closed Gupta-linked accounts.

The DA finds the personal involvement by SARS Commissioner, Tom Moyane, in intervening and securing the payment into the Gupta account far from regular.

SARS cannot be used to advance certain agendas for politicians and those who are politically connected such as the Gupta family.

The extent of corruption and State Capture by the Guptas has collapsed institutions and State-Owned-Enterprises, which has adversely impacted on the country’s economy and jobs.

That is why the Guptas must fully account for every cent that they have unduly benefitted by stealing the fruits of the hard labour of innocent South Africans.

Mbalula must show decisive leadership and offer both the Hawks and SARS all the necessary support needed to establish and expedite the investigation into R70 million Gupta tax refund.

We are making history as we plot our country’s new beginning

My fellow Democrats,
The best gift South Africans can receive this festive season is an assurance that 2018 will be better than 2017. That our country is headed for a better future, and that those responsible for the looting of the state are brought to book.
We now have a reason for precisely such news. On Thursday the deadline came and went for Jacob Zuma to make representations to the NPA regarding his 783 counts of corruption, fraud, money laundering and racketeering.
Now there can be no more delaying. The NPA has to announce the date of his first court appearance.
Like any charged criminal, Jacob Zuma must appear in court to have his charges formally put to him. I am calling on Shaun Abrahams to schedule this initial appearance to take place before Christmas this year. There is no reason why this should not happen.
In fact, any ordinary criminal would have had their charges presented in court before making any representations to the NPA. Why Jacob Zuma should be regarded as an extraordinary criminal still needs to be explained.
What we do know is that, according to Abrahams, all the evidence is still available for trial, and the witnesses would have been contacted by this week. So we are good to go. Let’s have that court date then, and let’s have it within the next three weeks.
South Africans deserve to head into the new year with some straight answers and a promise of swift justice.
Yesterday was great day for democracy in our country, but it was a truly awful day for the ruling party. Two separate Motions of No Confidence and one municipal-wide by-election later, and it has become clear that the political tide in South Africa has shifted a great deal.
In Johannesburg, the members of the Metro council said an emphatic No to the ANC’s attempts to remove Mayor Mashaba from office.
In Nelson Mandela Bay, the members of the Metro council said an emphatic No to attempts to remove Mayor Athol Trollip from office.
And in Metsimaholo in the Free State, the people of Sasolburg, Kragbron and Deneysville said an emphatic No to the idea of going back to an ANC government.
We are seeing a new chapter unfolding for our country – a chapter in which the ANC will play no role. It will be written by those who want what’s best for South Africa and can work together to make it happen.
In this new chapter, there will be no place for the corrupt and the dishonest. There will be no place for Presidents who serve the Guptas or for ministers who push through nuclear deals. There will be no place for fat cats in blue light convoys, like the Premier of this province.
There will be no place for public servants who run their towns into the ground, but still live it up like Hollywood celebrities. People like the Mayor of Madibeng, who just blew R100,000 in six months renting a luxury BMW while her municipality can’t even pay for water.
What we saw yesterday in Joburg, in Nelson Mandela Bay and in Metsimaholo were signs of this new post-ANC South Africa. It’s taken a long time to get here, but the movement for change will quickly gather momentum.
Democrats, you have an important role to play in writing this new chapter for our country. What you do, over the next 18 months, to bring our message of change to the people of the North-West will be of critical importance to our campaign.
Your job begins with the proceedings here at this Provincial Congress today. You are tasked with electing leadership that will not serve individuals or factions, or even the party. Your job is to choose leaders who will serve ordinary South Africans, and particularly the poor.
Once we have accomplished this, then the real work begins – then we must take our message into every community and convince the people that we have a plan that can pull South Africa back from the brink.
I am often asked what this plan is. People want to know what we will do differently from the ANC. Apart from not stealing and not wasting public funds, what steps will we take to boost the economy and create jobs?
There are many parts of our plan that will require time to be implemented and to bear fruit, like overhauling education and reducing the size of our bloated state. But there are a number of key interventions we can make straight away that will have a profound effect on our economy. And I’d like to mention six of them:
Number one: we must sort out our State-Owned Enterprises. And by sort out, I mean make a decision on which ones are strategic to us and which ones are not. Then we must sell the non-strategic ones, and appoint qualified, uncaptured boards to the strategic ones.
Number two: We have to reform our labour legislation so that it does not get in the way of job creation. Small and medium enterprises must create the bulk of the new jobs we need. To do so, they must be able to compete with big businesses and cannot be held to the same restrictive regulations.
Number three: We must change our approach to redress and empowerment. To be of any value, BEE has to be truly broad-based – it has to serve the 99%, not the 1%. One way to achieve this is through a redress fund – what I call a Jobs and Justice Fund – which will incentivise companies to fund new entrants into key sectors of the economy.
Number four: We have to fling our doors open to the rest of the world when it comes to trade and investment. This means reducing corporate taxes, abolishing exchange controls, removing trade barriers and establishing export processing zones. It also means better regional integration into Africa.
Number five: While we’re opening our doors to trade and investment, we must also do so for tourists. Yes, our country already does well from tourism, but we can do so much more if we made it easier for people to travel here. And we can start by issuing travel visas upon arrival.
And number six: We must immediately appoint a real head to the NPA. Not a puppet of the Presidency whose only job it is to shield his boss from the law. Someone who stands independent and who treats every citizen as equal before the law. Going forward, the power to make this appointment must be taken away from the President and handed to Parliament.
There are many more things we could do in the medium to long term, but these six steps can give an immediate boost to our country’s economy and help provide a new beginning for millions of South Africans.
It is clear that none of these steps will be implemented by the ANC, and so it will fall to a new government in 2019 to do so.
If anyone still thought 2019 was too ambitious a goal for a DA-led government in the Union Buildings, then yesterday’s developments in Joburg, Nelson Mandela Bay and Metsimaholo would have gone a long way towards erasing those doubts.
People are turning their backs on the ANC in great numbers. Whatever happens later this month at Nasrec – whoever they elect to replace Jacob Zuma – will make no difference at all. The ANC is already dead.
Our future lies in a post-ANC South Africa. A South Africa served by an honest, accountable and selfless DA-led government.
We are making history, and each of you in this room is part of this remarkable effort.
Thank you.

Transnet to be hauled before a parliamentary inquiry into localisation

The Democratic Alliance welcomes an agreement today by the Portfolio Committee on Trade and Industry for a Parliamentary Committee Inquiry, in terms of National Assembly Rule 227, 1 (c), into the Transnet acquisition of 1064 locomotives at a cost of R50 billion.
After two failed attempts at extracting answers from a clearly belligerent Transnet CEO, Siyabonga Gama, who appeared before the committee to answer for the many allegations that have dogged this program including:
• The involvement of the Gupta’s through associate Salem Essa’s Tequesta Group which received R5.3 billion in kickbacks from China South Rail
• The incredible revelations that there are no measures in place to validate local content provisions in each locomotive as well as no penalty clauses for failure to meet a 55%-60% target for local content
• The blanket refusal to provide me with the shareholders of original equipment manufacturers (OEM’s) and suppliers related to this contract
• What the relationship between Mr. Gama and Salem Essa is in relation to these contracts
• What effect the price inflation by the Gupta’s has had on the contract, with up to R10 million per locomotive added on
• Why Transnet has ignored government department instructions to adhere to local content and designation provisions without consequence
We know that State Owned Enterprises like Transnet have become ground zero for the Gupta’s to rob and loot South Africa of its resources. It simply cannot be that Transnet is allowed to get away with protecting one family at the expense of good governance and fighting corruption.
That’s why only a committee inquiry can finally get to the bottom of this mess and finally bring accountability to this incredible theatrical act which is costing South Africans billions.
The Democratic Alliance will fight hard to ensure that the veil of secrecy around these contracts is finally lifted and those that have stolen money are held accountable.

DA calls for a debate of national importance on SAA’s financial position

The DA will call for a debate of national importance on the financial position of South African Airways (SAA).
SAA recorded a loss of R1.5 billion in 2015/16 which spiked to R4.7 billion in 2016/17. At the current rate, it seems almost certain that the airline will record an even higher loss in 2017/18 than in the previous financial year.
Investors are already not willing to invest because of the poor state of SAA. In June, Standard and Chartered’s unwillingness to roll over their loan to SAA caused a R2.203 billion bailout and recent revelations confirm that Citibank will not extend a R1.8 billion loan due at the end of September.
The total loan amount maturing at the end of September amounts to R6.785 billion. There is next to no hope that any of the lenders will roll the debt over.
Finance Minister, Malusi Gigaba, has therefore approved a R10 billion bailout for 2017/18 which does not even take in to account the R23.3 billion in bailouts and guarantees to SAA over the past decade. However, given that the corporate plan and memo indicate that there will be a R13 billion bailout from 2017/18 to 2019/20, it can be assumed that there is a R3 billion bailout planned for either next year or the year thereafter.
The airline has R7.8 billion in debt maturing between 2019 and 2022. Assuming that the R13 billion will be the last bailout would mean that the airline could pay its debt that matures between 2019 and 2022 which is entirely untenable. Therefore, another bailout beyond 2019 is highly likely.
SAA is a colossal drag on the fiscus and highlights the drain that State Owned Enterprises (SOEs) present to our country, with a staggering R780 billion in guarantees already extended to SOEs. This debate of national importance on the ticking time bomb that is SAA is more imperative now than ever before.

In times of crisis, Cyril just watched and was silent

This letter first appeared in the Sunday Times, on 16/07/2017.
It appears that Cyril Ramaphosa, has suddenly found his voice. Speaking at the SACP conference he stated he will “not remain silent” and “cannot turn a blind eye or keep quiet”. This makes a remarkable about-turn from the myopia and muteness of his last eight years as Deputy President and leader of government business in Parliament.
During the Nkandla debacle, Nenegate, the Waterkloof landing scandal, and as our state owned entities collapsed under the weight of Gupterisation and the economy tanked, Cyril watched and remained silent. He bottled every opportunity to stand up to state capture and actually do something decisive. Never missing an opportunity to miss an opportunity, he voted slavishly every time to keep Zuma despite the brutal judgements of the Constitutional Court. He watched cabinet colleagues like Nene, Gordhan and Jonas being picked off one by one, yet did nothing.
Now, with vaulting ambition to be President, Cyril wants to hoodwink South Africans into believing that he is suddenly the guardian of good and will miraculously fix the rotten ANC. South Africa needs strong, decisive and principled leadership, the last thing it needs is more weak and vacillating leadership and fair-weather principles that have become the hallmarks of the Ramaphosa brand.

State Capture charges: The law must now take its course

Note to Editors: The full charge sheet can be accessed here
Today the Democratic Alliance (DA) laid an array of criminal charges against President Jacob Zuma, members of the Gupta family, several cabinet ministers and senior executives of State Owned Entities, and other individuals alleged to be key players in the criminal syndicate that has captured large elements of the South African state. These charges are based on new evidence that emerged last weekend, in the form of documentation and emails, forming a paper trail which implicate these individuals in serious criminal offences. This acts as a preliminary indictment, and as more information emerges, we reserve the right to supplement these charges.
It is clear from the evidence that, acting in concert with each other, President Jacob Zuma, Atul Gupta, Ajay Gupta, Rajesh Gupta, Ashu Chawla (Chief Executive of Gupta-owned Sahara Computers), Nazeem Howa (Director of various Gupta-linked companies and former CEO of Oakbay Investments), Mosebenzi Zwane (alleged Gupta-appointed Minister of Mineral Resources), Malusi Gigaba (alleged Gupta-appointed Minister of Finance), Faith Muthambi (alleged Gupta-appointed Minister of Communications), Desmond van Rooyen (alleged Gupta-appointed former Minister of Finance and current Minister of COGTA), Duduzane Zuma (director of Gupta-linked companies and oldest son of President Zuma) and Matshela Koko (suspended Senior executive of Eskom) have committed the following offences:

  • Corruption – through unlawful conduct which contravenes the Prevention of Combatting of Corrupt Activities Act – 12 of 2004 (POCA), specifically offences in respect of corrupt activities relating to public officers, public officials, foreign public officials, agents, legislative authorities, contracts, procuring and withdrawal of tenders, inducing another person to commit offences, and relating to the duty to report corrupt transactions.
    • This specifically includes the specific corrupt offense of the “misuse or selling of information or material acquired in the course of the, exercise, carrying out or performance of any powers, duties or functions arising out of a constitutional, statutory, contractual or any other legal obligation” that amounts to “the abuse of a position of authority, breach of trust; or the violation of a legal duty or a set of rules” in section 3 of the POCA act.
  • Racketeering – through unlawful conduct which contravenes the Prevention of Organised Crime Act of 1998.
  • Treason – through unlawful conduct which violates, threatens or endangers the existence, independence and security of the Republic of South Africa or which has the effect of changing the constitutional structure of the Republic of South Africa.

The law must now take its course. Each of these individuals must be held accountable for their actions and must face the full force of the law. Nothing less will be acceptable to the Democratic Alliance, and nothing less will be fair to the people of South Africa, who are united in their condemnation of these heinous crimes.
The DA also welcomes the growing consensus regarding the desperate need to investigate the corrupt State Capture project headed by Zuma and the ANC. We maintain that the situation requires a truly broad-based investigation that includes all the departments and individuals named in the leaked emails and the State of Capture report. That process must start with a parliamentary Ad Hoc committee, and then through a Judicial Commission of Enquiry we will be able to uncover the truth as to how captured ministers and government officials have allowed the Guptas to control entire chunks of government.
Notwithstanding, criminal investigations and prosecution must follow where crimes have been committed.
The DA will pursue every available avenue until the corrupt State Capture project that has undermined and crippled key institutions of the state is stopped and the ANC is removed from power.
We will not allow Zuma Inc. to continue to steal from our people. We must earnestly focus South Africa towards building a prosperous nation, where jobs can be created for all.