Politics & scandal: From 'sit down' to 'step aside'

While disgraced officials may resign, firing them is tricky. SA's parties are trying to come up with ways to deal with those who try to brazen it out. When Humphrey Mmemezi, found guilty of contravening the provincial legislature’s code of conduct and ethics,  resigned from his position as Gauteng housing minister last week, it came as something of a surprise. 

Although members of the public frequently call for politicians accused of wrongdoing to resign from Parliament or the provincial legislature, they rarely do, and are just as rarely sacked. Mmemezi allegedly stepped down as minister to avoid causing further embarrassment to local government, but he retains his seat in the legislature and is still the deputy secretary of the ANC in Gauteng. The ANC’s chief whip in Gauteng, Brian Hlongwa, said Mmemezi had done the "honourable thing".

Such displays of "honour" are not entirely unprecedented. It has happened before, and recently, even, but rarely enough that it's always surprising. More often than not, "honour" is conspicuously absent. How do non-performing politicians and those accused of corruption manage to hold on to their jobs in the face of huge public opposition?

The law's the law

In part, it's because they're citizens too, and so are protected by the laws of the country. Grant Masterson, manager of the African Peer Review Mechanism at the Electoral Institute for Sustainable Democracy in Africa, said that like any other employee, politicians in the civil service are protected by the Basic Conditions of Employment Act "[President Jacob Zuma] found with Vusi Pikoli that it's not easy to fire someone," he said, adding, "It is valid that you can't just fire someone without due process, good cause and evidence."

Masterson also pointed out that politics and influence also play a role in whether a party takes stern action against its members. The defiant posturing by political figures in the middle of a scandal so often seen in the media sometimes sends the message to their political superiors that they are not prepared to fall quietly on their sword, he said. Perhaps this provides some clue as to why Mmemezi has not been asked to vacate his seat in the legislature.

With the ANC's elective conference in Mangaung just months away, it might be imprudent for members of the Gauteng branches  to get on the wrong side of a man who has powerful patrons within the party, among them Gauteng ANC chairperson Paul Mashatile. Offending the wrong people could see cadres bumped down the party lists at Mangaung. Mmemezi isn’t going anywhere. As an elected official, he can’t be ousted from his seat. He must offer to resign or else have his membership in the party he represents terminated.

Murky waters

Party discipline is tricky and convoluted. It’s governed by the party’s constitution, which does not always provide the degree of clarity needed to effect swift justice. ANC spokesperson Keith Khoza said that while the constitution of the ANC discusses issues of party discipline it does not specify what action should be taken if a member has been found guilty of committing an offence, such as corruption, in government. In such cases, the party relies on the rule of law. "We allow the law enforcement agencies to exercise their responsibility in dealing with issues of corruption or crimes that have been committed," he said. But relying on the law will not bring about the swift justice that members of the public want to see when there are serious allegations of fraud.

The Public Service Commission, which monitors and evaluates administration, has in the past reported on the state’s poor capacity to investigate and resolve cases of alleged corruption internally and the reluctance in government to refer matters to the police for investigation. It pointed out that even in cases where local and national government officials had been found guilty of fraud through internal processes, there is a tendency to simply give written warnings and not to take action against officials.

Mind the gap

Khoza said discussions are currently being held in the ANC on how to address the gap between allegations of corruption and conviction in a court of law. One way may be through the formation of an “integrity committee,” he said, but this idea had yet to be finalised.

According to Nkenke Kekana, spokesperson for the ANC in Gauteng, the integrity committee is a resolution of the Limpopo conference, which elected Zuma almost four years ago. Gauteng is the first province to establish an integrity committee, and Mmemezi was the first ANC member it investigated.

Another idea, flighted at the ANC’s policy conference earlier this month, is that cadres facing charges of corruption be required to “step aside” from their public position until investigations had been completed. This could help avoid controversies, such as that involving Northern Cape ANC chairperson, John Block. Block has been facing charges of fraud and corruption since 2010 in case that is expected to be resolved no earlier than next year.

Opposition parties are quick to point out the need for internal disciplinary efficiencies.
Lyndall Shope-Mafole, acting general secretary of the Congress of the People (Cope), said that the party had learned from the experiences of the ANC, and has tried hard to ensure that disciplinary issues are resolved as quickly as possible. Shope-Mafole said that, as evidenced by the case of former ANC Youth League leader Julius Malema, ANC disciplinary issues can drag on for months and even then there is the possibility of appealing to the NEC, the Congress, and even going to court. "It doesn't work. It makes the organisation ungovernable," she said. She said Cope’s disciplinary processes are run by an independent committee and all efforts are made to resolve disciplinary matters as quickly as possible, and that issues such as corruption, fraud and bringing the party into disrepute are taken very seriously.

The party, which has been riven by faction-fighting almost since its inception, famously expelled its co-founder Mbhazima Shilowa after an internal disciplinary committee found him guilty of corruption. This was followed by a flurry of expulsions, seen by some as evidence of a purge of those still loyal to Shilowa.

Quick isn't easy

The Democratic Alliance’s federal constitution allows for the immediate expulsion of a member convicted of a serious crime, such as corruption. Still, James Selfe, chairperson of the DA’s federal executive, said that in cases of misconduct it can sometimes be difficult to act with the firmness the party would like. "The party must prove beyond reasonable doubt that a member is guilty, yet the party does not have powers of subpoena or investigation.  Very often cases are dismissed, or not even brought, because it is impossible to climb this evidential mountain," he said.

Selfe also said that the fact that the decision to expel a member could be challenged in court also posed problems for a party wanting to rid itself of an embarrassing member. In 2001, Peter Marais, who had been expelled from the DA and sacked from his position as mayor of Cape Town, was reinstated after winning a case in the Cape High Court. After a series of party-hopping moves  Marais eventually joined Cope.

The party is now considering a discussion document which will lay out the procedure for dealing with poorly performing public representatives. Selfe said this "poor performance procedure" would identify ways in which the party could help members improve their performance. Those who don’t improve could be moved to other positions, or out of the party entirely.

Sending the wrong signals

Meanwhile Parliament is in the process of finalising a policy that will set more stringent requirements for MPs' attendance at Parliament, a move that could in future see lazy public officials axed.

National Assembly speaker Max Sisulu has said that if there are no consequences for non-attendance from Parliament itself, it would send the wrong signals to both society and MPs. Moloto Mothapo, spokesperson for the ANC’s chief whip, said the policy would outline various punitive measures, from docking salaries to the loss of membership, for those who are absent from parliament without good cause. "The rules will then decide after how long one has been absent from Parliament he or she ceases to be a member of Parliament," he said.

Whether improved parliamentary and party discipline can make a difference to the performance and conduct of elected officials remains to be seen. For now, as before, South African political parties are for the most part left scratching their head about what to do with the more obstinate of their political dead wood. "To err is human; to forgive is divine," Hlongwa told the Gauteng ANC press conference last week.

It seems there is still much to divine about integrity in South African politics.

Source: Mail & Guardian

Power, patronage and the provinces

Say what you like about the politics of the national government's intervention in three provinces, one thing is clear: a scaled-down analogue of the eurozone crisis is unfolding within the borders of South Africa. Limpopo literally ran out of money three weeks ago, maxing out its overdraft at the Corporation for Public Deposits and exceeding its half-a-billion-rand facility at First National Bank. The treasury had to move forward its payment on one of the province's regular tranches of funding so that teachers and nurses could be paid.

The province blames unexpected increases in civil service wages and the implementation of the occupation-specific dispensation for health workers. These were provided for at central level, but seem to have been implemented amid real confusion and, on a charitable interpretation, unexpected wage payments in a context of rampant corruption and mismanagement may have finally tipped the provincial fiscus over the edge.

The treasury effected a hostile takeover of the Limpopo this week, placing five key departments under administration. To all intents and purposes the province has been stripped of its basic functions. Premier Cassel Mathale is now a figurehead, presiding over a shell of a government run from Pretoria. No doubt the emergency was real and drastic intervention was warranted, but there is no escaping the fact that the move deprives one of President Jacob Zuma's most important opponents of almost all his power and, crucially, of his patronage machinery.

Supporters of Mathale, Julius Malema and Sports Minister Fikile Mbalula are fuming over the coup, which they insist is driven purely by politics. They point to other provinces with large overdrafts and rickety finances that have not suffered the same fate. There is no gainsaying the political advantage secured by Zuma with this move, but Mathale and his government opened themselves up to it by allowing Limpopo's finances to deteriorate beyond the mere mess we have come to expect into real crisis.

In contrast to the takeover of Limpopo moves to stabilise the finances of Gauteng and the Free State, with their Zuma-aligned premiers, look more like friendly bailouts. Gauteng, despite a health service that the treasury described to Cabinet as being in "disarray", will be dealt with via an "agreement" between the province and the national government. And in the profligate, but less disastrous, Free State the intervention is limited to the roads department. Those Gauteng projects that do face major cutbacks date from the tenure as finance MEC of Paul Mashatile, another Zuma opponent. Premier Nomvula Mokonyane, who is at loggerheads with Mashatile, may not be very sorry to see them trimmed or abandoned.

The politics then are real and they are vicious, but so are the impacts of mismanagement, and they stretch deep into other provinces. KwaZulu-Natal and the North West are said by the treasury to be on track for recovery. Meanwhile, in municipalities across the country similar failures are compromising access to clean water, basic infrastructure and housing.

As the treasury warned Cabinet on Monday: "Non-delivery and slow delivery of services poses a security risk for the country." That is a welcome recognition but, if risk is really to be diminished, interventions from the centre will have to move beyond politics.

Source: Mail & Guardian

ANC's China visit falls on back of Dalai Lama debacle

High-ranking officials of the African National Congress (ANC) visited China this week, local media reported on Sunday, in what could be seen as the party's unreserved support for Beijing. ANC officials were not immediately available to confirm reports in two newspapers -- the City Press and Sunday Independent -- that party representatives went to China.

The visit came after South Africa delayed a visa application for the Dalai Lama, who was to visit the country to celebrate Nobel Peace Prize winner Desmond Tutu's birthday. ANC supporters, leading newspapers and Tutu said the move was symbolic of the failings of the party that helped end apartheid but was now failing to live up to the ideals of the liberation movement it had once been.

China has labelled the Dalai Lama a dangerous separatist and analysts said Pretoria bowed to pressure from its largest trading partner to bar the Tibetan spiritual leader from visiting, damaging its reputation in the process. Two weeks ago, China pledged to invest $2.5-billion in South Africa during a visit to Beijing by Deputy President Kgalema Motlanthe. The City Press said ANC Secretary-General Gwede Mantashe, high-ranking official Jessie Duarte, deputy economic development minister Enoch Godongwana and other party officials had spent the week in China on an exchange programme with the Chinese Communist Party. ANC Gauteng Chairperson Paul Mashatile was quoted in the City Press as saying the Chinese governing party had offered to "teach the ANC about politics".

In a video link with Cape Town, the Dalai Lama on Saturday said China's officials were hypocrites whose regime was built on lies.

Source: Mail & Guardian

Give power back to the branch – Mantashe

African National Congress (ANC) branches must be allowed to think for themselves and leadership choices must not be dictated by a "well-resourced, narrow circle" of party members, ANC secretary general Gwede Mantashe said on Tuesday. "Branches must be allowed to say 'that comrade did not do the work that he or she was given to do. Change that comrade'. And we are saying that culture must continue," he said at a media conference in Johannesburg.

The conference followed a four-day meeting of the ANC's national executive committee, which ended on Monday night. "But if we do what is called succession, you are actually killing the branches of the ANC. Branches of the ANC must be allowed to think and not be given a list of slates developed by a narrow, well-resourced circle in the ANC... That is a leadership responsibility; to liberate these branches from the vice of groupings that are intelligent, have the monopoly of wisdom, have resources, have a lot of cash-flow around elections... We must liberate the ANC from that."

He said nationalisation of the mines could not be used as a tool for punting leaders ahead of the next year's elective conference. "We must sustain nationalisation as a policy debate. You can't use a policy debate as a lobbying tool," he said.

The NEC met as the party's national officials – the top six leaders – brought disciplinary charges against ANC Youth League president Julius Malema and league spokesperson Floyd Shivambu. The charges related to comments critical of the Botswana government and about helping to strengthen opposition in that country.

Malema had said the league would support leaders, when the ANC went to its elective conference next year, who supported the league's economic programme including nationalisation of the mines and land reform without compensation.

Mantashe said the issues raised in the debate around nationalisation were pertinent, it was a "correct debate". "You can't use it as some mischievous tool of lobbying," he said. The debate had to be "anchored" in the content. The NEC re-affirmed its position on the so-called "succession debate" – that it was not yet opened for discussion. The ANC holds its next elective conference in December next year. The ANCYL and the Gauteng chapter of the party called for the opening of the debate on identifying the leadership to be elected at the conference in Mangaung.

Even some within the NEC wanted the leadership debate to be opened – Gauteng provincial chairperson, Paul Mashatile, made the call earlier this year. Malema, an ex-officio member of the NEC, also agitated for the opening of the debate at the league's own elective conference in June. "The fact that we had to remind the NEC of all the procedures, traditions and how these issues are handled in the ANC was informed by the observation that there was temptation in many structures of the ANC to jump the gun and start the nomination process today," Mantashe said.

He likened the ANC to an elephant – very slow, but very decisive when it started moving. "We reminded ourselves that we did take this decision and as members of the NEC there is an expectation that we must be loyal to our own decisions. That is part of that slow movement of an old organisation." The run-up to the Polokwane elective conference, during which President Jacob Zuma ousted former president Thabo Mbeki after a divisive leadership battle, was a "disaster", Mantashe said.

He said there would be no "silencing anybody" ahead of the 2012 conference. Lobbying should be done with respect. He was responding to questions on the disciplinary action taken against Malema. "So there is nothing political or silencing anybody. "Once you appreciate that election in 2012 is not a life and death issue for individuals, then you appreciate that there is a responsibility on this leadership to enforce discipline whether you are elected or not. "Whether you are liked or hated it doesn't matter, the organisation must not be allowed to collapse because you want to be popular and you want to be re-elected. It can't be allowed to happen... there is a term of five years, it ends in the 53rd national conference [2012]. "When we are told to stand off the stage, that is the end of our term. Before that any thing that happens, we are responsible. "Otherwise lobbying can be an open season of ill discipline, it cannot be allowed."

Mantashe described the meeting – which largely focused on discipline – as "candid and open". "That's why it took four days. It ended at 9 on Monday, day four. "We left that meeting understanding each other better."

Source: Polity

TV channel gets R50m from Gauteng

Questions have emerged about the role of Paul Mashatile, the controversial former Gauteng economic development minister, in payments of R50-million made by the Gauteng Film Commission to an American news channel, reports Lisa Steyn Former president Thabo Mbeki was a guest at the launch of Consumer News and Business Channel Africa (CNBC) in June 2007. And this week it emerged that the Gauteng government has since paid the American network R50-million, in equal amounts of $3-million (R25-million) over the past two years.

The Daily Maverick news website reported on Wednesday that close Mbeki ally Essop Pahad -- at the time minister in the presidency -- had a "relationship" with CNBC Africa co-founder Rakesh Wahi. The Daily Maverick also reported that the payments were authorised by Paul Mashatile, the controversial former Gauteng economic development minister who is now national deputy minister of arts and culture. The annual R25-million was paid by the Gauteng Film Commission (GFC), the mandate of which is to promote the province's movie and TV industries.

While Mashatile was employed by the Gauteng government, he "allocated funds to the commission on the basis that around half those funds be forwarded to CNBC Africa", the Daily Maverick reported. And R25-million is about one-third of CNBC Africa's annual revenue to date. "I think that the biggest issue we've faced on the African continent for some time has been the problem of perception, a failure to see the good things that are happening on the continent," Mbeki said on the night of the channel's launch. "People's understanding of the continent gets overwhelmed by what the media tells them. I hope CNBC doesn't do that -- media practitioners tell me that bad news sells," Mbeki continued.

Vernon Matzopoulos, managing director of Summit TV, which competes with CNBC Africa, told the Mail & Guardian he would not like to speculate but "would look for the long arm of Essop Pahad" in these dealings. Pahad furiously denied any involvement with the deal. "No, categorically no," he told the M&G. "I have never been involved with any contract which the Gauteng government may or may not have offered to anyone. I did not see that report [in the Daily Maverick]. If the report said I was involved it is certainly inaccurate." Matzopoulos said: "Our fundamental objection is that the $3-million contributed to about a half, or at least a third, of CNBC Africa's turnover. What is local government doing subsidising CNBC Africa … and using our money to do so?" On Wednesday Matzopoulos called for a full investigation into the payments.

Mashatile did not himself sign the agreement with CNBC Africa, the commission's chief executive, Terry Tselane, told the M&G. He said the film commission's former acting chief executive, Tony Sauls, concluded the deal. "When the agreement came to light the board and management of the GFC initiated processes to deal with the contract," Tselane said. On the deal itself, Tselane said the GFC acted on behalf of the Gauteng provincial government in guaranteeing advertising costing R22,5-million a year for five years. In return "CNBC Africa would invest in excess of R170-million in the province" and provide "preferential and regular programming and content slots to the Gauteng provincial government. The agreement made provision for Gauteng-focused content being produced and aired in line with CNBC Africa's normal editorial policy," Tselane said.

In January Gauteng economic development minister Firoz Cachalia scrapped the agreement following legal opinion that it directly contravened the Public Finance Management Act. Cachalia's spokesperson, Mandla Radebe, told the M&G that the department had not signed anything related to the agreement. The GFC, which did sign the contract, is an agent of the department and is an entirely independent entity with its own board, Radebe said.

Gary Alfonso, chief executive of CNBC Africa, told the M&G that "the company's official position for now is that we prefer not to comment at this stage". Asked whether CNBC Africa's independence was compromised by the contract, Alfonso said: "CNBC Africa has a strict clause in all commercial contracts that the editorial control rests with the channel and the integrity of the channel remains and will always be unquestionable and uncompromising." CNBC New York had not replied to the M&G's questions at the time of going to press.

Mashatile's spokeperson, Percy Mthimkhulu, told the M&G that "the deputy minister is no longer in Gauteng and has no responsibility to comment on those things [the deal with CNBC Africa]". Comment the M&G had already obtained from the GFC and the Gauteng government "should suffice", Mthimkhulu said.

Source: Mail & Guardian

Mashatile supports his replacement

Despite the smiles and assurances that all was well between them, the tension between outgoing Gauteng Premier Paul Mashatile and his successor, Nomvula Mokonyane, was tangible on Tuesday. The top five leaders in the province held a press conference at the Gauteng Legislature on Tuesday to welcome the expected appointment of Mokonyane and dismiss rumours circulating of a fallout between herself and the former premier.

Mashatile and Mokonyane sat next to each other. Their eyes never met once. I'm very happy that comrade Nomvula has been appointed to succeed me. Her arms were crossed and her face stern, while Mashatile's legendary calm demeanour was marred by worry lines.

But he did manage to smile when journalists asked sensitive questions. Mashatile's smile appeared when journalists asked if there were now two centres of power in the province, and how he felt about Mokonyane being preferred as premier. "I'm very happy that comrade Nomvula has been appointed to succeed me as premier," said Mashatile. He said he and Mokonyane have worked together for more than 40 years and were firm friends. "In the many portfolios that I have served she has taken over from me, so we seem to be starting a trend here," said Mashatile. "Just this weekend we were talking and laughing about all the years we have worked together. So there is no problem in Gauteng and there is no problem between me and Nomvula."

In an interview with The Star, Mashatile said later that he was not surprised by the decision because ANC president Jacob Zuma had met and spoken to him before Mokonyane's appointment was announced. Before that point he did, however, believe he would keep his position as premier. "According to the Polokwane resolution, nominations must be submitted in order of priority," Mashatile noted. "There was unanimity in the province on that. I was the number one choice on the provincial executive committee. Nomvula herself supported that I be premier. But the NEC (national executive committee) said that if we go that route, there will be no women premiers. "I was consulted on the decision by the president, so I was not shocked. I knew it was going to happen. "Some members in the province were shocked, though, because they took it as a given that their preferred choice would be taken. "But we have discussed it, and all the organisations, including the Youth League, have accepted the NEC's decision. "The appointment of Nomvula is, after all, not the rejection of Paul Mashatile."

It was widely speculated in the media at the weekend that the NEC had decided to appoint Mokonyane in order to break the power of the so-called Alex Mafia, but Mashatile said yesterday this group was an urban legend and did not actually exist. "This view that I have created a powerful bloc or clique, that just isn't true. It is true that many of my friends have done well in business, and some are in government, like Mike Maile. "But really, they moved on in their lives and don't even stay in Alex anymore. It is a misconception that these guys are doing well because they know a powerful politician."

Asked what his future now held, Mashatile was quick to dismiss the idea that he would leave politics and go into business, saying he would be sworn in as a member of the Gauteng Legislature this week. "If head office approached me for a national position, I would accept that offer," he added. "I do still have to complete my role as chairperson in the province until next year, so I will still play a role in this province."

Mokonyane said she would be bringing in new blood "for innovation and fresh ideas" as members of her executive council.

Source: IoL

Mashatile tops ANC Gauteng premier list

The Gauteng African National Congress (ANC) on Wednesday recommended three people for the position of provincial premier. "We have unanimously recommended the provincial chairperson, comrade Paul Mashatile, as the Gauteng's preferred candidate for the position of the premier of Gauteng. The Provincial Executive Committee also recommended experienced comrades, deputy chairperson comrades Nomvula Mokonyane and deputy provincial secretary Mandla Nkomfe as the other nominees to the ANC NEC [national executive committee] for the position of provincial premier," the party said in a statement.

The committee nominated the ANC Gauteng provincial treasurer Lindiwe Maseko as the speaker of the Gauteng Provincial Legislature and Stewart Ngwenya as the deputy speaker. "We are confident that their 15 years of experience as provincial parliamentarians will ensure a continued high standard of legislature oversight of government work."

The party thanked the voters for a "renewed mandate" and assured them that they were now ready and "willing to improve service delivery, create decent work and build a safer province". "We have done a great deal to improve the quality of life of our people. We are acutely aware of the challenges of poverty and inequality which remain. The ANC is confident that working together with the people of Gauteng, we can and will do more."

The ANC attributed its success to the unity, commitment and dedication of itself and alliance structures in Gauteng. "We fought an energetic, creative campaign focused on relevant voter concerns and issues. We want to thank our team of more than 22 000 volunteers for working tirelessly with creativity and selfless dedication to the cause of the ANC."

Source: Mail & Guardian

Mashatile's mystery fund

Quietly and with the blessing of his predecessor, Mbhazima Shilowa, Gauteng Premier Paul Mashatile has created a controversial equity fund in the provincial fiscus that could see contracts worth millions of rands being outsourced without public tenders.

The Mail & Guardian can disclose that the provincial treasury has already pumped R40-million into the Gauteng Fund, of which R28-million has been spent on consultants, overseas travel and salaries in the past financial year. The fund, to which Gauteng's fiscus is to contribute R500-million before the end of the year, is due to be launched officially next week. The fund will aim to raise another R6,5-billion from the private sector for investment in infrastructure and service delivery projects in the province.

The M&G is in possession of a presentation marked "secret" that was presented to Shilowa in September last year and an information memorandum on the fund dated March 2007. The documentation is frank about the fund's selling point: to provide private investors with preferential access to a "pipeline of projects" in which the fund can commercially invest. This means that when a municipality or government department in Gauteng wants something done it must first give the Gauteng Fund "preferential access" to the project before putting the contract out to tender.

This is not the first time questions have been asked about Mashatile's adherence to good governance practices. The M&G reported previously on his friends benefiting from Gauteng contracts and his daughter being employed by an IT firm awaiting the outcome of huge Gauteng tenders. Senior researcher at the Institute for Democracy in South Africa (Idasa) Len Verwey told the M&G the fund "clearly blurs the distinction between public and private and in effect promises to use public power to secure private gains … This blurring is the problem with the fund from a good governance perspective. It has potential conflicts of interest as well as kickbacks and the like written all over it."

The M&G can further reveal:

* The fund's project director, Abigail Puente, was suspended from the Gauteng Enterprise Propeller (GEP) after she pursued the establishment of an equity fund against the will of chief executive David Morobe.
After her suspension Puente was moved to Mashatile's department of economic development, where she continued putting together the fund.

* Puente, who is being paid by Gauteng to operate the fund, is a director of Freetel Telecommunications, a company in the Sandton-based Freetel group. Another company in the group, Freetel Capital, was appointed by the province to operate the Gauteng Fund.

* No approval was sought from the national treasury to establish a private equity fund in Gauteng. Treasury spokesperson Thoraya Pandy confirmed to the M&G that no approach was made by the province to launch the fund and that such a scheme would have to be approved by treasury Director General Lesetja Kganyago.

Mashatile, then provincial minister of finance and economic development, announced in his budget speech in February that R500-million would be made available as "seed capital" for the establishment of the fund. A "shortfall in government revenues" is given as the reason for the establishment of the fund. The ultimate aim of the fund is to raise R7-billion and use it to obtain further debt of R35-billion to be spent on "pressing needs". These include the rollout of the massive Blue Umbrella/Gauteng Link broadband network, the building of hospitals in Soweto and Ekurhuleni, the implementation of the Gauteng freeway improvement scheme, and the construction of the Tshwane International Cargo Airport and Amakhosi stadium precinct in Krugersdorp.

Some of these projects fall under other Gauteng agencies or departments, but will be moved to the fund if investment is secured. "The most disturbing aspect of the Gauteng Fund is, of course, that of "preferential access" to deal flows," says Verwey, whom the M&G asked for an opinion on the fund's structure. "As I understand it, in effect Gauteng would be putting pressure on municipalities and departments to use its preferred suppliers and to conduct their operations in a way which ensures the success of a fund which it deems outside the direct ambit of political accountability."

The M&G is also in possession of a legal opinion requested by Mashatile's former department from senior counsel Vincent Maleka on whether the Gauteng Fund qualifies as an "organ of state" in terms of the Constitution. If it does, legislation governing procurement will apply to the fund's projects. Maleka concluded that the fund would not be regarded as an organ of state if it will be involved only in the funding of projects. However, it will qualify as an organ of state if it becomes involved in the implementation of the projects it is funding and the selection of operators related to them. But, says Verwey, the legal opinion is "not that useful" because any entity that receives money from provincial revenue must remain politically accountable for its use. "In essence the fund is trying to seduce the private sector by giving them quasi-monopolistic privileges, which would include the tacit right to set prices hard. This is the problem with the Gauteng Fund; and yes, it is undoubtedly anti-competitive in this sense."

The auditor general, in its annual report on the fund's finances, gave the fund a qualified opinion and reported that no proof could be found that consulting services of R26-million were put out to tender. GEP's board gave Puente, who started to work as chief operating officer of GEP in July 2006 the task of investigating the possibility of establishing an equity fund. Puente clashed with Morobe, who allegedly perceived her to be working in isolation and refusing to take orders. Morobe subsequently suspended Puente, who was swiftly moved to the department of economic development and later to the treasury, where she is now the Gauteng Fund's project director. Puente is allegedly a close associate of Freetel head Enos Banda and joined his Freetel Telecommunications as a director in June this year. Banda is the former deputy chair of GEP, who quit his position early this year and is indicated in documentation on the Gauteng Fund as the fund manager.

Source: Mail & Guardian