Alexkor: another SOE circling the drain

South Africa’s state-owned diamond mining enterprise Alexkor boasts an accumulated loss standing at R173.6 million (2018: R13.9 million). Alexkor is a joint venture between Alexkor and the Richtersveld community and the facts underpinning its losses are as follows:
  • The company’s employee costs of R68.6 million exceed the gross profit of R57 million despite having retrenched 150 employees in June 2019;
  • The environmental rehabilitation liability is R203.9 million;
  • R168 million in the rehabilitation trust earmarked for that purpose;
  • The total emoluments and remuneration for executive and non-executive directors is R9 471 330 per annum; and,
  • Despite carat sales having increased from 41 941 units to 70 061 in the year to end-March 2019, diamond sales only amounted to R209.9 million (2018: R208.7 million) – cost of sales was R152.9 million (2018: R126.8 million).
Alexkor currently does not even have enough money to cover the retrenchment packages of the 150 people who were let go at the diamond mine.
During the tenure of Minister Alec Erwin in 2006, Alexkor reported an operating loss of R38.2 million. During the same period, it produced 43 000 carats, the lowest production in its (then) recent history.
Currently, despite carat sales having increased from 41 941 units to 70 061 in the year to end-March 2019, diamond sales only amounted to R209.9 million. Cost of sales was R152.9 million. Seemingly, the more things change, the more they stay the same.
The independent auditor, Ngubane & Co, has issued a disclaimer of opinion and was unable to obtain sufficient appropriate audit evidence regarding Alexkor’s concerning financial status. They have also noted that Alexkor sought approval from Minister of Public Enterprises, Pravin Gordhan, to file for business rescue and noted that there were instances of the company trading recklessly.
As it stands, the company’s head office is in Sandton. Its business is in Richtersveld on the West Coast. Why it requires an office, costing some R3 million a year, located 1 388 km from the mine is mindboggling – it’s internal and external auditors are also located in Sandton. And, as stated above R9.5m goes to directors annually in fees and emoluments.
Undeterred, the company is now looking for “new business ventures”, and will approach the Department of Public Enterprises and National Treasury to reclassify Alexkor “from a PFMA [Public Finance Management Act] perspective” to permit borrowing.
The Minister of Public Enterprises, to his credit,  has placed a moratorium on all acquisitions and disposals, declined the request for authorisation to establish “Alexcoal” in Mpumalanga, and placed on hold the feasibility study on diamond beneficiation.
Is this part of the suite of reasons why he is being targeted by some in his own party?
This is yet another example of a failed State-Owned Enterprise burdening the fiscus with demands for expansion, without any prospect of return. The 2019 annual report is still not available on the Alexkor website and notes that the independent auditor was unable to obtain sufficient appropriate audit evidence regarding the going concern status.
The DA demands full disclosure of all relevant information and a halt to this profligacy. If ever there was a reason that mines should never be nationalized, Alexkor is it.

Minister Sisulu appoints Menzi Simelane and Mo Shaik as special advisors

The Democratic Alliance (DA) has learned that Minister of Human Settlements and Water and Sanitation, Lindiwe Sisulu, has appointed Menzi Simelane and Mo Shaik as special advisors to her office. This information was revealed in a response to a DA Parliamentary Question which can be accessed here.

The South African taxpayer is now officially paying the likely exorbitant salaries of Simelane and Shaik, who have both been implicated for their role in state capture.

The DA will file a complaint at the Public Service Commission to investigate the appointments of Simelane and Shaik. We will also file a Promotion of Access to Information Act (PAIA) application to request the salaries of these individuals, and others working in the Minister’s office – given her office’s refusal to disclose their price tags.

Even more worrying is the fact that the majority of Sisulu’s appointments to the National Department of Water and Sanitation’s National Rapid Response Team (NRRTT) would appear to be allies for her campaign run for ANC Deputy President. Media reports from November 2019 indicate claims that Minister Sisulu and one of her advisers, Mphumzi Mdekazi, allegedly pressured the Department of Human Settlements, Water and Sanitation (DHSWS) in September 2019 to employ people who were involved in her 2017 Presidential Campaign as members of the NRRTT.

This means that taxpayer money that could be used for South Africa’s drought relief programme, is now paying for the salaries of the likes of Simelane and Shaik, as well as alleged members of Minister Sisulu’s personal political campaign.

Simelane was former President Jacob Zuma’s appointment to the Director of Public Prosecutions (NDPP) at the National Prosecuting Authority (NPA) and is notoriously known for his ties and links to state capture. His appointment was later declared irrational by the Constitutional Court.  Shaik, on the other hand, played a lamentable role in the Bulelani Ngcuka “apartheid spy” debacle and is infamously known for being in a senior investigative capacity at the height of state capture, at which time he himself admitted that he declined to overtly advocate for an investigation into the Gupta family.

Furthermore, the members working for Minister Sisulu’s office and those on the NRRTT would appear to be grossly mis-hired for the roles they are meant to fill. This becomes evidently clear when we find individuals with degrees in optometry, such as Mo Shaik, have been provided with the executive position of Special Advisor, to a Department whose primary objective is to care for water and sanitation.

Worse still, there are at least 7 members appointed to the NRRTT who have yet to submit their CVs. It is a great disservice to all South Africans that a task team meant to aid the devastating drought crises faced by provinces is composed of individuals without any relevant qualifications in sight.

It is tantamount to lunacy to justify the expenditure of taxpayer’s money on the appointment of politically connected cadres without having even received a CV from them. Even more worrying is the fact that the Minister has refused to provide an indication of what the remuneration packages are for the individuals employed in her Ministerial Office and NRRTT.

The DA will continue to fulfill its role as South Africa’s official opposition party, ensuring that national government is prevented from misappropriating government funds at the expense of increasingly desperate South Africans in the midst of a crippling drought crisis.

 

Leave the Reserve Bank alone, ANC! 

The ANC’s internecine battle over the nationalisation of the South African Reserve Bank (SARB) is economically destructive, alienating to investors, and does nothing to solve South Africa’s current crises.

There should be no debate about the nationalisation of the Reserve Bank. The Democratic Alliance’s (DA) call to the ANC is to leave the Reserve Bank alone, and instead focus on any number of economic crises which are a direct result of bad government policy.

The proposal to nationalise the Reserve Bank is based on economic lunacy. It will bring no benefit, and only increased hardship, to South Africa. If President Ramaphosa has any desire to prove he actually leads his own government, he should end this discussion immediately by reinforcing the independence of the Reserve Bank. Instead, he is kneeling to populists in his party and allowing this debate to continue.

The Finance Minister, Tito Mboweni, is correct – the nationalisation of the Reserve Bank is a bad idea, and should never be pursued.

A DA government would guarantee the absolute, inviolable independence of the Reserve Bank.

While the conditions for South Africa’s economic collapse accelerate, the ANC would do well to listen to its Minister of Finance on this catastrophic move for our ailing economy. This would also ensure the ANC provides less mixed messaging and more concrete plans for South Africa’s economic prosperity.

President must stop continued taxpayer bailouts to SAA

The Democratic Alliance (DA) will write to President Cyril Ramaphosa, to urge him to support Minister Mboweni, in putting an end to taxpayer bailouts to South African Airways (SAA )and to leave SAA to live or die by its own resources and efforts.

We are also urging Les Mathuson, the SAA Business Rescue Practitioner, to account to Parliament for the continued taxpayer bailouts that are being demanded to keep SAA in business.

SAA has been placed under business rescue and this rescue cannot just be more of the same with bailout after bailout from the already overburdened South African taxpayer. It is clear that without continued bailouts, SAA cannot be rescued. Mathuson must come clean with South Africans that SAA is not a viable business, it cannot be rescued and must be liquidated before any more taxpayer bailouts are paid into the black hole that is SAA.

Despite writing to Mr. Mkhuleko Hlengwa, the Chairperson of the Standing Committee on Public Accounts (SCOPA), over five weeks ago to request that Mathuson be required to include SCOPA in meetings of creditors, there has been no formal response from the SCOPA Chair. SCOPA has therefore not been included by Mathuson in creditor meetings. These creditor meetings are where the proposed SAA business rescue plans are taken into consideration.

It is Parliament that has oversight over State Owned Entities (SOE’s) such as SAA, and it is Parliament that must be the final arbiter in any SAA business rescue plan that purports to the viability of the rescue of SAA – and it is Parliament that must be informed if this plan requires ever more taxpayer bailouts.

The apparent reluctance by National Treasury to pay SAA another R2 billion is clearly an indication that National Treasury and Minister of Finance, Tito Mboweni, do not believe that the Les Mathuson SAA business rescue plan is viable.

Minister Mboweni is clearly pushing SAA into liquidation and is likely under tremendous pressure to continue bailouts to SAA from the likes of Minister of Public Enterprises, Pravin Gordhan, who still clings to the long-outdated communist concepts of state ownership and intervention in the market.

DBE gives up on underperforming schools to manipulate pass rate

The Democratic Alliance (DA) is appalled at media reports stating that the Department of Basic Education (DBE) will be shutting down zero percent schools in Limpopo. Minister Angie Motshekga and her Department would appear to be making this move solely to ensure their pass rate increases.

Without these underperforming schools, their overall performance as a department will be seen as improving, which is very misleading and only reflects a complete lack of accountability on their behalf.

The DA wishes to draw attention to our findings indicating that the DBE has already misled South Africans. In the 2019 release of the School Performance Report, only 6 schools were listed as performing under 40%, but 6 more schools from Limpopo should have been added to this list.

It then comes as no surprise that part of the schools that are expected to be shut down include the schools we listed from Limpopo in addition to the 6 from KwaZulu-Natal.

Minister Motshekga, and her department, have failed to fulfill their constitutional duty to assist these schools in addressing their underperformance. So instead of solving this problem, the Minister has decided to ensure that there are now fewer schools for learners to attend. This will certainly lead to overcrowding for the remaining schools in the province, and some learners will now be expected to travel much further to receive an education.

Overcrowding is one of the biggest problems that provinces such as the Western Cape and Gauteng are currently facing. With an increasing number of schools becoming less available, more learners will now relocate to provinces where many parents are already scrambling to get their children into good schools.

It is the result of an uncaring government that educational issues are compounded within our educational system. Our education system is in no doubt failing our Limpopo learners. With the Basic Education Sector Lekgotla underway, we can only hope that immediate action will follow to address these ongoing concerns.

Makgoba’s appointment as interim Eskom chair defies logic

The appointment of Professor Malegapuru Makgoba as interim Eskom Chair is regrettable and not what the struggling power utility needs to turn it around.

Makgoba is a trained physician, and whilst his medical credentials may be impressive, they are of no use in the power generation and transmission industry that is facing a crisis of note – the appointment defies logic and his previous roles in governance at universities has been questioned.

The DA has repeatedly called for an independent new chairman, with the appropriate financial and technical knowledge, to be instated by the shareholder – one who is grounded in solid ethical governance. We have moreover, offered repeatedly to assist in the generation of potential candidate names.

But as of yet, no response from the Minister or the entity has been forthcoming.

There are global energy executives who have deep operational, financial and restructuring experience who could fulfill this role. Some of these executives are currently engaged in other projects in the United States of America and Europe. Others have worked in advisory capacities for the utility with the unions and other vendors.

The appropriate candidate would no doubt step up if the terms of reference and the degrees of freedom they would operate under would be in line with international best practice.

The shareholder should consider the appointment of a chairperson from candidates of this sort of caliber who already have a handle on Eskom’s operational and financial issues, and who will evince the measure of independence required.

The appointment of Professor Makgoba in the interim, his medical credentials notwithstanding, does little to instill the required confidence.

The DA repeats its offer to sit around a table, on a party-agnostic basis, to assist in the resolution of this crisis and in the generation of potential names to fulfill the key role of board chair and board members. We await government’s response. Sadly, the economy and South Africa has run out of time.

Mamusa by-election: DA is disappointed with results

As results are coming in following the by-election in Mamusa yesterday, it is evident that the ANC will be elected back into government and that the DA has lost Ward 9 to the Freedom Front Plus.

The by-election followed the dissolution of the municipality in October after service delivery completely collapsed.

We have learnt serious lessons over the past year and acknowledge that the mistakes we made in 2019 contributed to the defeat.

The DA will be finalising its investigation into the mishandling of the Schweizer-Reneke matter and will communicate the outcome soon.

We believe that the people of Mamusa deserve better, but we respect the voters’ choice.

We would like to thank every voter for their support and regardless of the outcome, we remain resolute to fight for the people of Mamusa to receive the services they are entitled to.

DA condemns Cele’s move to disarm law-abiding citizens

The Democratic Alliance (DA) notes the reckless comments made by Minister of Police, Bheki Cele, with regards to firearm ownership in South Africa. Speaking on the leaked Firearms Control Amendment Bill, the Minister is quoted as saying “…individuals should not have firearms” and that allowing citizens to own multiple firearms contributed to security issues. Instead of allowing Parliament to deal with this matter the Minister has chosen to pour fuel on an already emotive issue.

The Firearms Control Act allows individuals to own more than one firearm for specific purposes and the Act clearly sets out the relevant requirements for it. Regardless of this, the Minister instead has chosen to try to legislate changes in the court of public opinion, rather than in Parliament where the debate belongs.

The Minister must now either prove that his reckless comments are true, or he must keep quiet and send the amendment bill to Parliament.

The DA has previously requested that the Firearm Control Amendment Bill serve before the Portfolio Committee on Police, and in fact, requested that the committee debate this bill before the roll-out of the recent Firearm Amnesty.

One of the key questions the DA has repeatedly asked the Minister regarding amnesty, is whether he could prove that any firearm retrieved through previous amnesties can be linked to a crime. To date, the Minister has not been able to prove this and continues to choose fiction over facts.

Crime in South Africa is undoubtedly out of control. We have more private security officers than police officers because people are feeling increasingly unsafe and vulnerable. Minister Cele should be focusing his attention on professionalising our police service and arresting criminals, rather than disarming law-abiding citizens.

Only 1 in 3 learners starting Grade 1 in 2020 will make it to matric

The Democratic Alliance (DA) wants to wish all those starting Grade 1 today a great schooling career.

Unfortunately, due to no fault of their own, statistics indicate that only one in three of our Grade 1 learners in 2020 will eventually pass – or make it to – matric.

When we look at the number of learners who started school in 2008 and those who passed matric in 2019, we find that only 37.6% of these learners pass matric. This means that statistically, 2 in 3 learners will therefore not make it to matric. The DA has remained at the forefront of fighting the many issues that cause this statistic, and we do so on behalf of every learner, as all our children deserve access to quality education.

Today, the DA Shadow Minister of Basic Education, Nomsa Marchesi, has visited several schools in Bloemfontein where there are a number of Quintile 1 and 2 schools allegedly asking parents for a non-refundable application fee. This is illegal as these schools are meant to be free and not require application fees from parents. The Department of Education needs to be more vigilant and responsive to the plight of parents in public schools, and obstacles such as these are an indication of a failing school system.

It is a shame that the problems we face in our education system have not improved following 26 years of an ANC government. Year in and year out we are constantly calling the ANC to account for the ongoing problems that are not resolved adequately in order to make a meaningful impact on learners.

South African learners are resilient school-goers, constantly striving to overcome the many challenges posed by an education system fraught with problems. Our learners constantly choose to make the best they can of their time in school but the throughput for learners in Grade 1 to Grade 12 continues to drop, year in and year out since 2017.

Our teachers and learners face a lack of infrastructure, budget deficits, lack of resources, violence in schools and many more devastating circumstances hindering their access to education. Our citizens do not deserve any of these inefficiencies, and those responsible for them sit in Parliament with no regard for the suffering these issues cause.

The DA reiterates its call for the Minister of Basic Education, Angie Motshekga, to step down because the education system of South Africa is in dire need of resuscitation. Our children deserve better, change is needed now more than ever. We cannot allow these problems to prevail any longer.

DA to submit PAIA to force government to reveal amount of public money spent on chartered flight for Ramaphosa

In response to a question posed by the Democratic Alliance (DA) to the Minister of Defence and Military Veterans, Minister Nosiviwe Mapisa-Nqakula, the ANC-led government has refused to publicly disclose the cost of a chartered aircraft that flew President Cyril Ramaphosa and an entourage of officials to the Rugby World Cup (RWC) Final in Japan last year. The Minister cited security concerns as the reason for not disclosing the requested information.

The DA will now submit an application in terms of the Promotion of Access to Information Act (PAIA) in order to force government to reveal how much was spent on chartering this flight. Whilst the RWC Final was a momentous occasion for our country and it was necessary that Ramaphosa attended it, there are questions to be answered.

The DA feels strongly that information about the cost borne by the public to jet President Ramaphosa in and out of Japan does not compromise the President’s personal safety, and has no repercussions of any kind on state security. South Africans have the right to know where and on what their public money is being spent.

The response by the Minister confirms that a chartered aircraft was used, and reveals that national government does not want South Africans to know how much they spent on it. Furthermore, reports indicate that there were individuals onboard the aircraft whose presence at the RWC was of questionable necessity. One such individual is Dr. Gerhard Koornhof, the President’s Parliamentary Advisor.

The actions of government in this regard, and the response by the Minister, demonstrates a callous lack of fiscal responsibility and complete disregard for openness and transparency. This is unacceptable in the light of the fact that our national security budget continues to be cut, year after year. A far more ethical choice would have been for President Ramaphosa to have used a commercial airline with his personal security team on board with him.

What is further concerning is that the government under President Ramaphosa continues to display the same disregard for transparency as the government under former President Jacob Zuma did, when questions about the use of chartered flights and luxury private jets were continually blocked citing “security” concerns. This is why the DA will now bring a PAIA application to force government to disclose the information, which has no security implications and therefore should not be confidential.

The DA will continue to fight to protect the rights of South Africans to know how and where public money is spent, including knowing who exactly benefited from the taxpayer wallet by receiving a seat on board this particular chartered aircraft. It is incredibly disheartening to note that our national government could take such a joyous moment in the lives of all South Africans, and use it as an excuse to overspend on funds that could otherwise have been used to ensure that ordinary South Africans also enjoy the benefits of a secure environment.