Agencies a fertile ground for malfeasance

DOZENS OF ‘AGENCIES’ SPRANG UP. THEY WERE REALLY A WAY OF TRYING TO SECURE STATE EMPLOYEES THEIR JOBS AFTER THE CHANGES

How would you, just as a matter of speculative argument, steal a really large amount of cash from government coffers? It’s trickier than you might imagine. The government’s largest expenditure item by a country mile is salaries. In some provinces, the salary bill alone constitutes about 80% of the total budget and capital expenditure proper is basically nonexistent, because the salary bill has gradually eaten away budgets for everything else.

This has its own problems, but from the perspective of our hypothetical crook, it’s a problem because one thing public servants, and nonpublic servants for that matter, really notice is when their pay packets get thumped.

The other problem is that the government is actually a terrible spender. Getting a government department to sign a contract is infernally complicated. There are small mountains of paperwork that need to get done to buy the simplest thing. Getting paid on time is difficult enough on its own, as the government itself acknowledges.

And the third problem is that there are a hundred people looking over your shoulder, particularly the auditor-general, the public protector and many others. Many argue that these institutions have been whittled away, but my experience of them is that they are still very active and they take their functions seriously.

As a result, the way to get your hands on the loot is rarely directly through a government department. Fortunately, there are still plenty of avenues, and one of them constitutes a deep irony.

In the dying years of apartheid, the old National Party government suddenly converted to capitalism with the same alacrity as it converted to the doctrine of human rights. This was a period of massive, behind-the-scenes reconfiguration of government. For example, during most of the apartheid era, Denel, the state arms manufacturer, was actually a smallish organisation devoted to providing military hardware to the then South African Defence Force. Armscor, the organisation that did the commissioning, was huge. In an instant, masses of people who worked for the government agency Armscor suddenly joined Denel, the arms-length company.

Dozens of “agencies” sprang up. They were really a way of trying to secure state employees their jobs after the inevitable changes.

By the time the ANC came to power, the notion of state “agencies”, as opposed to the government itself taking on the responsibilities of execution, had gained some favour internationally. Agencies are theoretically more nimble, they react faster, they are independent and they are run on “business lines”.

So, despite its suspicions of business, the ANC kept them — and expanded them. There are now 232 government agencies operating, which together consume about R200bn every year. For our prospective crook, it’s happiness land: entities outside the government with lots of money that are designed to spend it.

The biggest of them is the Unemployment Insurance Fund, and then the Road Accident Fund, which together consume about a quarter of the budget. There is something called the Property Management Trading Entity, which frankly I had never heard of, which consumes about R12bn a year. Likewise, the Water Trading Entity chews through about R10bn a year, and R6bn goes into the Special Defence Account. This is the account used to buy arms secretly in defiance of the arms embargo by the apartheid government. Twenty-three years later, it’s still there, still eating up billions. Amazing.

So looking through the list, I was interested to see that it includes the South African Social Security Agency (Sassa), which gets about R7bn a year. Sassa, of course, has been in the news lately. It is the agency that manages the payment of social pensions to 17-million South Africans.

Just as I started thinking about SA’s oddly resilient “agencies”, the news broke about the court case involving the Passenger Rail Agency of SA (Prasa). There is a humdinger of a court case now pending over the famous Afro400 locomotives that are too tall for SA’s rail system.

In one of the affidavits, the MD of Swifambo Rail Leasing, Auswell Mashaba, acknowledges that a week after the first payment was made to the Spanish company, he deposited the first of a series of payments that would ultimately total R80m into the accounts of ANC fundraiser George Sabelo and Maria Gomes, an Angolan citizen.

An enterprising reporter from News24 tracked her down, and she acknowledges she is “a friend” of President Jacob Zuma.

Mashaba denies the contract and the payments were linked and, the ANC denies getting money from Swifambo or Prasa.

No doubt we will hear more on this topic, but the interesting part is this: why does Swifambo exist at all? Why would the agency designed to buy locomotives outsource the buying of locomotives to someone else?

The same kind of structure was almost created in South African Airways, whose purchase of planes from Airbus was on the verge of being outsourced to a third party, because, of course, an airline company cannot possibly be the right entity to buy planes.

This concatenated buying structure is now a regular feature of SA’s state system — and for those who want to shovel money out of the public purse in great dollops, it’s just fabulous.