Editorial

Dear Readers: The 2020 picture...


The 2020 picture...

♦ “The DA notes with concern that the Nuclear Energy Corporation of SA (NECSA) board has resigned en masse, because of the poor leadership of Mineral and Energy Minister, Gwede Mantashe.”

♦ “The appointment of Prof Malegapuru Makgoba, a physician, as interim Eskom Chair defies logic. Even his previous role in governance at universities has been questioned.” So began my week.

In a recent essay on its website, the farmer’s agricultural union TLU SA noted how, “with a serious face,” Minister of Health Dr Zweli Mkhize had recently told Parliament that when the proposed National Health Insurance (NHI) plan is established in South Africa, the ANC government will “make sure” that wholesale corruption will not ravage this particular state entity, such as happened in other state departments. Who’s kidding who?

Just see our story KZN Health Dept in unhealthy deals in this issue!

The TLU continues: Corruption cannot be eliminated when corrupt values are endemic. If you feel nothing about stealing that which belongs to others, or you have no shame in not providing a service for which you are being paid, then this is built into your character and it is difficult to root out.

Corruption exists throughout the world, but in South Africa it has become a general way of life.

In many countries, despite searing poverty, electric fences – even just fences – and security guards are unnecessary because thieving is considered beyond the pale.

But the ANC’s South Africa is now an armed camp, with no-go areas and gangster-ridden suburbs where the army must defend the populace against criminals. The rot has spread from the top down. It is part of the ANC’s DNA. Billions disappear, while only one new school was built in Gauteng last year.

It is strange therefore to hear President Cyril Ramaphosa declare that he is “shocked” when he sees the train service out of sync, or when he lectures recalcitrant municipal officials (most of whom are ANC appointees) that their duty is to deliver services to the public.

His accession to the presidency was greeted by the naïve as a “new broom sweeping clean”, but Mr Ramaphosa was always part and parcel of the ANC. He sat in Parliament during the Zuma years of conspicuous and shameless theft. He watched it grow, to the extent that South Africa, he admits, “has run out of money”.

Noteworthy is the systematic thievery, mismanagement, arrogance and breathtaking incompetence of so many ANC appointees. At the same time thousands of diligent and skilled South Africans are refused jobs in the civil service because they are white. Advertisements continue to state that no whites need apply – this, under Ramaphosa’s current presidency.

For the umpteenth time, the Auditor-General has called for urgent action to stop the rot. But the chances of stopping this corruption is virtually nil. The same ethic that condones thieving and corruption dictates that nothing need be done about it.
 
Our correspondent Susan Puren demonstrates the point with a Tshwane update:

There is a forensic report that has been gathering dust somewhere in a deep drawer at the head office of Tshwane Metro Municipality. Titled “Flight Exodus” and dated 12 December 2018, it documents the flurry of corruption that is standard practice in most contracts between the municipality and its suppliers. It mentions names, explains their modus operandi, exposes connections, shows whose pockets are being lined and calculates the financial loss to the city.

The investigation was commissioned by Tshwane’s former mayor, Solly Msimanga, and conducted by the Tshwane Metro Police Internal Investigation Unit. However, chances are good that the 217-page report was not studied. Even if it was, no action was taken against any of the perpetrators.

Leseding Bathabile Co-Operative Ltd was registered in 2014 as part of Tshwane Metro’s “Tshepo 10,000” project that aimed to empower the region’s poor. Interested parties received basic business training and were thereafter listed as co-ops, enabling them to supply certain services to the city.

One of Leseding’s members, Ramahama, told investigators she had met a man called Kupi outside the municipal office in Tshwane in 2017. He asked if she was a member of a co-op and explained that he knew a white man who needed co-ops to do work for Tshwane. Kupi offered to help her get the work if she gave him her company details to quote for a contract. The agreement was that Ramahama would receive 10% on the contract but would have to pay 90% to the white man who would be doing the job. Ramahama also had to pay Kupi commission.

Ramahama emailed templates of her company quotes and invoices as well as her details to Kupi. Within days Tshwane paid R1.653 million into her account. She paid R1.450m to the contractor, R92,650 to Kupi and was left with R55,000. The report shows that the budget for the project happened to be just R1.450m.

The investigators identified the contractor as Kurt van Niekerk, owner of Consumables Warehouse.

Kupi’s real name was found to be Mankopane Wynand Madisha and he told investigators that he first met Kurt at the office of Tshwane Metro’s Supply Chain Management.

Ramahama told investigators she had never drafted or seen the quote or invoice for the project, which happened to be the installation of a Biometric Security System at Wonderboom Airport. She had never been to the airport.

Ramahama was unable to identify the work she was supposed to have done and for which she was paid. The investigators retrieved the purchase order and three quotations for the contract from the municipal computer system. The quotes were dated 26 September 2017, the purchase order: 4 October, and the invoice was captured for payment on 11 October.

In just a few days Ramahama saw R1.653m move through the co-op’s bank account.

The finance officer at Wonderboom, Tshiamo Serobatse, was not willing to give the investigators a statement but claimed she had sourced the quotes herself – contradicting Ramahama’s statement about Kupi Madisha whom she had to pay for assisting her. Bank statements however, show that Madisha did receive R92,650 from the co-op.

Serobatse denied that she identified the contractor, Kurt van Niekerk, but admitted she processed the invoice, saying it had been signed off.

The acting executive director in Tshwane’s Roads and Transport Department, Jabulani Mapumulo, and the acting airport manager, Andre van Rooyen both denied any responsibility but then blamed each other.

The work was never completed and the investigators found that Kurt van Niekerk fronted the co-op and flouted supply chain management processes.

Van Niekerk and Madisha and Tshiamo Serobatse’s names appear in more of the corrupt contracts mentioned in the forensic report. In one other case  an alleged kickback of R30,000 was paid into the bank account of Serobatse’s sister.

Noseweek exposed the Van Niekerk network, consisting of Kurt, his brother Le-Roy and their families and friends for the same modus operandi in 2016 and 2017. At the time their eight companies had a turnover of more than R31m from work done for Tshwane metro. It is obvious that, despite the bad publicity, they did not stop doing business with Tshwane.
 
Kurt van Niekerk’s companies that are mentioned in the forensic report had a turnover of more than R10m and all the contracts were obtained by fronting for different co-ops.

In difficult times, a bit of consolation of the we-are-not-alone-in-this kind: I got this from a recent article in Wolf Street, a US online publication that carries “stories behind business, finance and money”. It is headlined “2020, the year of the Zombie airlines”.

In South Korea, Hyundai Development Co and Mirae Asset Daewoo were ‘selected’ in November by the Korean government as “preferred bidders” to purchase a large share in the country’s second largest airline, Asiana, long in financial difficulty.

Asiana’s financial situation has been steadily deteriorating: total debt at the end of the first half of 2019 ballooned to over $8.2 billion (R119.4bn), These numbers should long ago have sent Asiana into bankruptcy protection and executives into damage control mode, but this is not about rescuing an airline likely to keep on losing money for years. It’s part of the government’s massive bailout of the country’s conglomerates.

In India in December, the government finally announced they’re going to get shot of Air India by selling  100% of the money-losing airline. Air India is reportedly $10bn (R146bn) in debt and in 2019 was cut off from fuel supplies at several airports due to unpaid bills. (Government stepped in with a bridging loan.)

In Italy, it turns out the robust campaign to promote a sale of basket case Alitalia to Lufthansa was based on wishful thinking. Alitalia entered the third year of “extraordinary administration” (bankruptcy protection) in May 2019 and has exhausted the €900m (R145bn) lifeline extended by the Italian government two years ago. A new €400m lifeline should be available by the end of January 2020. This fresh “this-is-not-a-bailout-honest” money is urgently needed as Alitalia lost €600m (R9.7bn) in 2019. The company should be liquidated and the assets auctioned off to pay debts.

In Germany, while the EU threatens hellfire for a new Alitalia bailout, they don’t seem to mind that Condor Flugdienst is still gingerly flying around on a taxpayer guarantee.

There’s an April 2020 deadline for the Condor administrators to find a new owner and deal with creditors, after which the company should be sold or liquidated because another government bailout would set a dangerous precedent.

- Feeling better about South African Airways? No? At least we’re not alone in this. – The Editor

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