Politicians are too weak-kneed to act on state capture, irregular expenses and wasting of public funds
28 June 2020 – 17:23 Paul Hoffman
The well-chosen hungry hippo metaphor used by the finance minister last week is apt in many ways, especially as the hippo is the most dangerous large mammal to humans living in Africa. More human lives are lost in hippo attacks than to any predators in Africa — other than corrupt human predators, that is.
Navi Pillay, the SA judge who was a UN human rights commissioner, is famous for pointing out: “Make no mistake about it, corruption is a killer.” This comment is a truism that applies to the poverty-stricken in SA, as was concluded in a paper presented to the Towards Carnegie Three conference at the University of Cape Town in 2012 by Accountability Now under the title “The Effect of Corruption on Poverty”.
At that time, the then head of the Asset Forfeiture Unit, Willie Hofmeyr, told parliament that R30bn a year was being lost to corruption. He said: “I think we should all accept that corruption is a serious problem in our country, but I am hopeful that we will make good progress over the next few years.”
What then has become of the R30bn a year referred to by Hofmeyr in 2011, who has since retired from the public administration? Were his hopes well founded?
The answer is that anti-corruption efforts have proved ineffective. The Zuma administration saw to that by disbanding the Scorpions and hollowing out the prosecution service. The police service, particularly its upper echelon, is riddled with corruption of its own and its Hawks unit has been unable to stem the tide of grand corruption. The Hawks’ productivity has waned over the years and it has not matched the successes of the ill-fated Scorpions.
The auditor-general reports that at national level over the five years to last year R416bn remains unaccounted for by the authorities involved in the procurement of goods and services for the state in national departments. Last year R62.2bn more in irregular expenditure was picked up in audits conducted by the office of the auditor-general at national level. The annual figure to which Hofmeyr referred has more than doubled since 2011.
It could in-span volunteers from the private sector to put a brake on irregular expenditure before it is incurred
At municipal level the auditor-general reports R21.243bn in 2017/2018 and R27.050bn in 2016/2017 as “irregular expenditure” on procurements by municipalities. In state-owned enterprises (SOEs), irregular expenditure in the 2018/2019 financial year totalled R58.4bn, according to the auditor-general, whose function it is to ensure that procurements by the state at all levels are fair, equitable, competitive, cost-effective and transparent.
A system of procurement is supposed always to be in place to keep the public administration to these standards. The SOEs are also supposed to adhere to these constitutional criteria. Instead, Eskom has debts of R450bn and SAA has become a bottomless pit into which taxpayers pour “bailout funding”. Transnet is not far behind as a site of state capture, as are other similar state-owned organisations.
Parliament is meant to exercise oversight and exact accountability regarding the spending of public money on the “hungry hippo” (which includes the inept and overstaffed public service, infested with deployed cadres). Its standing committee on public accounts (Scopa) would do well to develop a more proactive stance, because a stitch in time saves nine. It could in-span volunteers from the private sector to put a brake on irregular expenditure before it is incurred.
It is well known that the loot of state capture is estimated at between R1-trillion (the president at Davos) and R1.5-trillion (the Gupta leaks team). Some of this loot may be regarded by the auditor-general as “irregular expenditure” or as “fruitless and wasteful” expenditure of public funds. Cancelling the arms deals could lead to recoupment of R90bn. The loans underpinning them were unauthorised.
All amounts mentioned above should be regarded as state assets in its balance sheet. The spectres of a sovereign debt default; the control of the economy passing to the IMF, World Bank and New Development Bank; and the concomitant downside of having to go cap in hand to borrow the nation’s way out of the debt trap, loom large. These spectres threaten the established order and ought to be concentrating a few minds in the government.
Between the auditor-general, Scopa, the criminal justice administration and those well versed in the recovery of loot spirited away overseas, it ought to be possible to bolster the country’s financial position considerably in the short to medium term, thus giving the Treasury the time and space to shoo off the hungry hippo that is threatening the economy’s life.
The missing ingredient all along has been the political will to do the right thing regarding the loot of state capture, the irregular expenditures and the wasteful and fruitless disbursements of public funds. Establish a chapter 9 integrity commission to investigate and prosecute looters and instruct specialists in the civil recovery of the loot and other debts owing to the state, and a rosier financial future is possible.
• Hoffman is an advocate and director of Accountability Now.