‘Make them all pay up’
PARLIAMENT should lead a campaign to embarrass big companies that colluded with state capture to repay money siphoned off parastatals, Public Enterprises Minister Pravin Gordhan said this week.
“Civil cases take a long time. What about moral suasion?” Gordhan asked during a briefing to Parliament’s portfolio committee on public enterprises which is looking into the progress made in rehabilitating companies left in dire straits by corruption.
He said private executives from companies who were complicit in irregular deals or of covering them up through unscrupulous auditing confided to him they were “excruciatingly” embarrassed about what had transpired.
“Well, excruciating is one thing, paying back the money lost to South Africa is another,” the minister said.
He said the legislature was well placed to make a call to the entities involved to “get them to pay back the money”.
Gordhan noted that international consultancy Mckinsey had refunded R902 million paid to it by Eskom without a proper contract, but lamented that there was no progress in recuperating large sums paid by the power utility to its development
GORDHAN CALLS FOR BUSINESS INVOLVED IN STATE CAPTURE TO BE NAMED AND SHAMED
partners, the Gupta-related Regiments Capital and Trillian.
He said that as the government implemented corrective measures at state-owned entities, more irregular spending was coming to light that had not been reflected in auditing processes for many years. That raised questions about the conduct of auditors at the time state capture was in full swing.
“Why have they not been reporting some of the things we see today?”
Gordhan said Eskom’s irregular expenditure had jumped from around R3 billion to R19.6bn in the past financial year. It was not the only state-owned company where irregularities had come to light since the government rotated boards.
“There is a pattern that you will see with many entities as new boards are put in place and audit performances are questioned,” he said, adding that it must be explained why they had been unable to detect corruption.
Before he returned to the government as part of the Ramaphosa administration, Gordhan last year termed international audit firm KPMG’S local operations a “willing partner in state capture”.
He said the power utility needed to increase revenue by boosting sales rather than merely relying on raised tariffs. Gordhan cited research by the UCT Graduate School of Business that showed that Eskom’s sales had declined slightly in 10 years if one compared a figure of 218 200 gigawatt hours for 2007 with that of 214 121 for last year. By contrast, staff numbers had risen over the same period, from 9 451 to 33 178, and debt securities and borrowings from R40bn to R355bn.
The minister said in terms of action taken against irregularities, 11 criminal cases had been opened of which five involved nine senior executives. Since April,
628 outstanding disciplinary cases had been finalised, resulting in 75 employees leaving and remedial action had been taken against
25 staff who had been doing business with the company.
Gordhan said Eskom had begun lifestyle audits of senior staff.
Troubled state arms manufacturer Denel lacked the cash to implement such audits as it has an outstanding debt of R1.1bn to creditors.
“It basically does not have the money to do this kind of work. The corruption of the past, particularly led by members of two previous boards have systematically slowed down Denel.”
He said the company was one of those in the state’s portfolio that scrambled to borrow more cash to be able to pay salaries, terming it “a vicious circle it needs to get out of”.
He said state low-cost carrier South African Express would resume flights next week with nine planes after the South African Civil Aviation Authority suspended its air operator certificate in May after discovering poor maintenance of its fleet.
Gordhan said the airline lacked money to pay staff and buy parts for its planes, and needed new chief executive and chief financial officers.
Sound work had been done in recent months towards turning it around.
He thanked Siza Mzimela from the private sector for volunteering to help in that regard.
“She helped us tremendously in putting a strong team on the ground.” – African News
Agency (ANA)