Former finance minister Trevor Manuel says he is 100% agreement with current minister Tito Mboweni in his outrage over widespread looting of emergency Covid-19 funds in South Africa.
Mboweni on Wednesday (5 August) vented his frustrations around reports and investigations pointing to billions of rands in Covid-19 relief contracts being looted by officials.
Among the many allegations of corruption, it was found that emergency Covid-19 procurement tenders were given out to friends and relatives of government officials, while food parcels and other aid have allegedly been stockpiled by officials for personal use and profit making.
Mboweni said that, despite National Treasury’s clear instructions on how emergency procurement should take place during the pandemic, thieves were waiting at the doors to get their hands on the money, and succeeded.
As a result, Treasury has ended emergency procurement, and reverted back to the standard system of competitive bidding.
However, Manuel told ENCA that the finance minister can do more, noting that he has the legal means to do so.
Manuel said that Mboweni is empowered by the Financial Intelligence Centre Act (FICA) to clamp down on the rot in government, particularly when it comes to politically exposed people – such as family members of politicians – doing business with government.
According to the FIC Act, a politically exposed person or PEP is the term used for an individual who is or has in the past been entrusted with prominent public functions in a particular country.
In its current form of the Act, PEPs are referred to as “domestic prominent influential persons”, but the principles in dealing with such individuals remain the same as PEPs in law.
The following are examples of these individuals:
- Heads of State, heads of government and cabinet ministers;
- Senior judges;
- Senior political party functionaries;
- Senior and/or influential officials, functionaries and military leaders and people with similar functions in international or supranational organisations;
- Members of ruling or royal families;
- Senior and/or influential representatives of religious organisations (if these functions are connected to political, judicial, military or administrative responsibilities).
- Families of PEPs should also be given special attention by accountable institutions. The term “families” includes close family members such as spouses, children, parents and siblings and may also include other blood relatives and relatives by marriage;
- Closely associated persons. The category of “closely associated persons” includes close business colleagues and personal advisers/consultants to the PEP as well as persons, who obviously benefit significantly from being close to such a person.
While the FIC Act precludes government officials from conducting business with the state, it doesn’t exclude PEPs from doing so.
However, the Act does call for extra special provisions to be in place for PEPs, to ensure that contracts and tenders are won fairly, and that all checks and balances are in place to guarantee everything is above board.
In the latest revelations about looting of Covid-19 funds, the stick-out point is that government contracts were handed to many family members of politically exposed people – including president spokesperson Khusela Diko’s husband, and the sons of ANC secretary general Ace Magashule, among others.
Manuel said that the act makes it clear that the families of PEPs should be handled with extreme care and due diligence when doing business with the state.
“Let’s not beat about the bush about these issues – we must preclude this. We must stop the rot right now,” Manuel said.
“If there is a marginal deficiency in the Act right now, the Act says it can be remedied by regulation. The ball is in the court of minister Mboweni, who can regulate to deal with this issue – to ensure there is no uncertainty about the fact that special provisions apply to people who are politically exposed,” he said.
Manuel said that when you have trade unionists claiming ownership of R3 million cars, and officials walking into dealerships and purchasing five super cars on the same day, things have gone too far.
“Why does society tolerate this kind of behaviour? There is something fundamentally wrong – we have to call it out,” he said.
“Just declaring it is not okay. You can’t steal and say ‘well, it’s okay, I’ve told you I stolen’. Society cannot be built on this basis.”
ANC secretary-general Ace Magashule said in a statement on Tuesday, that the party was “outraged” and “ashamed” by the reports of corruption.
Taking on the rot
President Cyril Ramaphosa this week published a hard-hitting letter, promising South Africans that the government will take decisive action against corrupt officials, and clamp down on dodgy business practices that are milking the country’s Covid-19 relief funds dry.
The president empowered the Special Investigating Unit to delve into these allegations and bring the perpetrators to book – while the ANC, whose members are most implicated in the wrongdoing, said that it is embarrassed by the allegations, and that public outrage is justified.
However, Intellidex analyst Peter Attard Montalto said that the president’s platitudes are largely lost on the ANC itself, which he said has tenderpreneurship at its core.
“Without this system, we think the ANC would cease to exist in any meaningful form – as we have seen with the party in the Western Cape, when it lost power at metro and provincial level and tenders dried up a decade ago.”
While the president may try to push back against this – as seen in reports of him trying to establish independent commission within the ANC to investigate the latest looting allegations – he does not enjoy majority support within the party’s NEC. Thus these moves are rejected to protect the status quo.
“The ANC is fundamentally incapable of shifting on corruption, in our view – not without a wholesale realignment of its membership, its parliamentary representatives and even those in government,” Attard Montalto said.
“Put simply, it isn’t going to happen unless these people are going to be taken out externally by law enforcement agencies.”