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How government plans to legalise corruption: Helen Zille

How government plans to legalise corruption: Helen Zille

Western Cape premier and former Democratic Alliance (DA) leader, Helen Zille says that government wants to turn “empowerment” into legalised corruption under new Draft Preferential Procurement Regulations.

The premier launched a weekly newsletter called Inside Government earlier in July and has published a new blog slating the proposed legislation, which she says will collapse the economy:

One of the challenges of daily life in government is the weekly avalanche of documents that must be read, analysed and commented on.  Among them are draft Policy papers, Bills, Regulations, “Instructions” and other documents from national government.

Each must be dissected and “deconstructed” to ensure we understand its relevance and comment within the prescribed deadline – which is sometimes very short.

This week, the new Draft Preferential Procurement Regulations were among the many documents that crossed my desk.  But when I see formulae like these – that are actually supposed to explain the regulations – my eyes glaze over:

formula_ps80formula_ps90

I have learnt that the more incomprehensible a document is, the more alert one must be. As it turned out, these equations are to an understanding of Jacob Zuma’s “radical economic transformation agenda” what the Rosetta Stone is to the interpretation of hieroglyphics.

I knew the formulae were very important, but I don’t have the mathematical skills to interpret them. That is what chief financial officers are for. Our CFO reads equations and statistics easier than words, and interpreted the impact of the draft regulations as follows:

“Applying the proposed 50/50 preference system to our 80/20 purchases and the proposed 80/20 preference system to our 90/10 purchases, implies that we could be paying a premium of 100% instead of 25% for half of our goods and services and a premium of 25% instead of 11.1% for the other half of our goods and services.”

He explained that the formulae hadn’t changed, but the factors had. And this would make a big difference.

His explanation didn’t help me much. I knew the regulations would make supposedly “broad-based” black economic empowerment (BBBEE) requirements much more rigid, and far more expensive.  But I wanted a specific, practical example.

So my CFO explained the difference between the current preferential procurement system, and the proposed new system, using a simple example.

He wrote back:

“Current practise:  Bidder A, with no BBBEE status, quotes R10 for a bar of soap, while Bidder B with full BBBEE status quotes R12.  The bid is awarded to Bidder B and government pays a 20% or R2 premium to advance economic empowerment in this instance.

Proposed practise:  Bidder A, with no BBBEE status, quotes R10 for a bar of soap, while Bidder B with full BBBEE status quotes R19.  The bid is awarded to Bidder B and government pays a 90% or R9 premium to advance economic empowerment in this instance.

De-coded, the circular also provides for the BBBEE premium on purchases between R10-million and R50-million, to rise to a maximum of 25% from the current 11,1% .”

And then in CFO speak – which tends to extreme under-statement – he said: “the difference in premiums impacts severely on the monies available for goods and services.”

I’ll say. What it means is that for certain categories of purchases – tenders under R10-million – we could be paying almost double for goods and services on the basis of the BBBEE points awarded.

Firms that have the highest rating will get enough “bonus” points to enable them to double the best market price of a firm with no rating, and still get the contract.

There is a sliding scale between firms with no BBBEE status and those with “full” status.  If they attain only half the BBBEE status, we will pay 50% more.

So this is what Jacob Zuma’s radical economic transformation policy will mean:  more cronies getting more tenders, and charging the state almost double the market value. And anyone who criticizes this will be labelled “racist”.

Fortunately, more and more South Africans are seeing through this ruse. They know that the “BBBEE” certification under the Zuma government has little to do with genuine broad based empowerment (which we fully support) and everything to do with the enrichment of “the network”.  Zuma looks after them, and they look after him.

Let’s be blunt: the new draft regulations, if they are accepted, will legalise wholesale corruption at an even grander scale than we are currently witnessing.

The current inner circle of “preferred bidders” – inevitably with close ANC connections – will become even richer, while the poor, who depend most on efficient and effective government services, will suffer dire consequences. Government will pay double the price for the same service. The people will have to pay more for less.

How long will people still be fooled by the ANC’s BBBEE rhetoric as we enter secret nuclear deals worth an estimated R1-trillion, spend almost R1-billion on train coaches that are apparently too tall for safe use on our rail network, and select the most expensive and inefficient method to toll our roads?

The result will be “Eskom”, multiplied many times across the economy: a multi-billion Rand deficit accompanied by an inability to provide basic services. The rich can “make a plan” (such as buying generators). The poor can’t. They sit in the cold and dark, and have to steal electricity that has become unaffordable. And behind the rhetoric of a “turn-around strategy” Eskom’s deficit just grows.

We should no longer mince our words:  this system will cause the collapse of the South African economy. It will not result in broad-based economic inclusion. It will re-enrich those who are already well entrenched; it will not lead to economic growth.

On the contrary, it will destroy growth and jobs because it creates perverse incentives, rewarding inefficiency and uncompetitive pricing. And as government’s capacity to procure goods and services shrinks, many firms will go out of business. People will lose their jobs, while the pre-selected few flourish.

Fortunately we have a constitution. I cannot see how the new draft regulations will meet the requirement of Section 195 (1) b (amongst others):  that “efficient, economic and effective use of resources must be promoted”.  And lawful “discrimination” to redress past injustices, still has to pass the test of “rationality” and “fairness”.

We support rational and fair broad-based empowerment.  Both the City of Cape Town and the Western Cape Government have an ‘open’ and transparent bid adjudication process. This prevents corruption and allows for fair competition in the bidding process.

More BBBEE companies have been empowered through our competitive process than was the case during the ANC’s crony-based tenure in Cape Town and the Province.  We have been able to procure better services and products at reasonable rates, providing the public better value for its money. At the same time the BBBEE companies become competitive in the broader economy.

We must take a stand against the new draft proposals from national government, even though we know that the Zuma ANC will respond by “playing the race card” all the way to the 2016 local government election.

But more people now know what is really going on than ever before.  We are not heading for “radical economic transformation”. We are heading for “radical economic collapse” if we endorse these proposals.

Next year South Africans will have to decide whether they want to continue endorsing legalized corruption – and growing impoverishment  – or whether it is time for change.  In a democracy, the voters get the government they choose and it is the government the majority deserves.

You can also read the article here.

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Helen Zille is the current Premier of the Western Cape, a member of the Western Cape Provincial Parliament, the former leader of South Africa's opposition Democratic Alliance polit...
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  • Twistapro

    So to help fund this organised corruption, they will increase the VAT.

    • and income tax, fuel levies, e-tolls, basically anything they can to fund the one parties, party. goodbye democracy and hello communist sponsored dictatorship – to quote Zuma on the matter – he he he he he he…..

  • Wayne Gemmell

    BBBEE atm is quite ridiculous anyway. Leaning so heavily towards ownership does nothing for the man in the street. Only the currently empowered benefit from transfer of ownership as you are unlikely to transfer ownership to someone that won’t give you a substantial advantage. So the rich get richer and the entrepreneurs get stomped on for not being black.

  • Jev_LFC

    Laughable really or we would all cry.

    • or vote and get everyone around us to vote, for as long as there are elections. we need our own ‘African spring’

  • cJ

    Unfortunately this BBBEE is here to stay unless we do something about it. Stop using companies that are broad based empowerment. Face it, by using BBBEE companies we are just adding to the problem. We are supposed to be a democratic country. What happened to fair trade????

    • John Fourie

      The companies that benefit under these strategies don’t deal with people like me and you. They almost exclusively deal with government.

      • cJ

        hi John , unfortunately it has a ripple effect, All the companies i work with are using their suppliers and vendors BEE status to get a better score card rating for themselves…

  • John

    The zoological term for the ANC’s economic policies is klepto-parasitism.

    • Desperate Dan

      Shouldn’t it be Inepto-klepto-nepotistic-parasitism?

  • chris

    They have chosen the government they want, what more can you ask for….?
    Nothing will change and if it does, the ANC will come up with the same tricks as ZANU PF in Zim to stay in power. They have nothing to lose. This is Africa, Despots support one-another…….and the world dont give a damn……

  • Leon van Rensburg

    No, they must rather add a clause to state that people with a net asset value less than 10Mil can benefit from BBBEE and beyond that you need to become competitive. If you are a trustee, managing a trust with more assets than R10mil,you also disqualified. This is the best way to ensure that you are not called a racist. Plus you can motivate that those who had benefitted in the past 20 years need to give other blacks, such as youth a chance.

    • Robert Ferraris

      But that’s not racist? That almost sounds…. fair?

      • Leon van Rensburg

        Robert, I also agree what you say, for us it is still racist against us, but this should challenge their policy, and it still is not fair to us, but perhaps less fair than the current proposal, because SME’s will suffer dearly if my suggestion is implemented. These policies remain fundamentally racist and inhumane. Perhaps more inhumane than racist. But it kills employment really. Look at the unemployment figures before BEE and AA and after BEE and AA is implemented. It almost doubled in a space of 5 years, and remained at that level for 15 years. Additionally there is a sharp decline in new businesses created during BEE and AA policy implementation. It is really hard and troublesome to create a business in South Africa with these policies. In fact these policies harm the historically disadvantaged individuals more than helping them. Stats proof this, and the ANC is quoting it out of context to justify this policy, but fail to state that it is actually not working for the masses, but only an elite few. Think about it!

  • John Viveiros

    Time for the WC to move out of South Africa. We want no part of it.

    • Robert Ferraris

      It’s so sad to think we might have to leave one day. I was thinking as I read the headline, that I would be moving to Europe soon. But I immediately thought about how sad it’d be to leave the WC behind. I don’t even live in the WC unfortunately, but I visit frequently, and to let them ruin that too would be the greatest shame.

      • John Viveiros

        For ALL of us. My biological family has been here over 300 years.

      • BlinkeredBill

        Sad, indeed. We had assessed the situation here for quite some time before deciding to leave. The biggest factor was the rampant crime, resulting in a paranoid lifestyle, followed shortly by the topic under discussion; corruption.

        It pains me to say that I do not see any reason why the situation will improve. The country still has to reap the harvest of the current govt’s abuse.

        We’re out of here in less than 2 weeks.

  • Lagmygataf

    Yes, I agree it is time the Western Cape break away and become an independent Country…educated people of all races welcome. Zombies and corrupt ANC keep the rest. We shall then soon see who buys from who… and real freedom in WP , no reverse apartheid

    • TheZenOfZen

      Those in the failed RSA would all want to move. And how do you decide who gets to stay and who doesn’t? You’d have to put a limit on immigration numbers. The idea is very attractive, but implementation would be messy.

  • notsosure

    So we will pay almost double on top of corrupt tenders already loaded with 500% or more.

  • grtctz

    So tell us, Helen, what do you think about De Lille’s antics in Clifton, where prime land is going to go to her “friends”? See M&G.

    • It’s-a-fact

      Eat the lies. Vote ANC. Die in poverty.

      • TheZenOfZen

        Nicely put.

  • DAYLIGHT ROBBERY

    So if government pays 90% more then if 2 schools need to be built, they will only afford 1. The rich politically connected cadres will get richer and the poor will suffer more, with less resources for government to roll out service delivery like education, healthcare etc.

  • Robert Ferraris

    Okay so I’m too lazy to read this fully. Can somebody tell me if I’m on the right track here?

    So when Government official “A” awards a contract to his cousin (who recently, and conveniently just started a business purporting the services required within that contract) now this official can award his cousin/friend almost DOUBLE the money he would have been able to before this?

    And his cousin/friend will take the money, dig up a street or two, and then dissapear as usual?

    Is this correct, or is this related to something else?

    • It’s-a-fact

      Yes.

      Basically, a bunch of “comrades” quoting at 200% and sub-contracting at 100%. Pocketing the difference.

    • it’s called fronting – and when you see home much money it can generate, it’s frightening. just look at hoe far over budget Medupi and Kusile are, another good example is Zuma and his flunkies hammering through the e-toll laws.

      they have a ‘we’re in charge up yours’ mentality.

  • They Say

    Don’t worry all this ANC political corruption and racist (BEEEEE) interference will bankrupt the country.

    • upyourbum

      Like that stopped Mugabe. The same thing repeated in many African countries.

    • the-TRUTH

      My sources indicate that South Africa (ANC Government) is actually 75% bankrupt and if no intervention is effected, then the country will be 95% bankrupt in 2019, eish I hate corruption with all my heart and soul…

      • GalacticMantra

        SA will be begging at the feet of the IMF within the next three years.

  • It’s-a-fact

    Another nifty way to get their fat, greedy little fingers deeper into the pie we all work so hard to bake!

  • MP3

    worse than apartheid

  • Wurnman

    Well, baldy did say the crime is a “westerners concept”

    • Tau’ri

      He said that corruption doesn’t physically hurt or kill anyone, hence it’s not a crime.

  • Konstabel Koekemoer

    BBBEE will be the final nail in the coffin for the SA economy, I have no doubt that before Zuma’s term is up the government debt will be totally out of control. Even the most optimistic person has to admit that this system is not about uplifting the majority but rather enriching a few well connected cronies. Even if another party would take over in 2019 the problem will already be so huge that it will take decades to get the countrry out of the hole.

  • FistAndKnuckles

    So hypothetically, if I was BBBEE compliant and charged 20% more for the same services (but still won the tender) than the non-BBBEE bloke, I can charge an additional 70% for my same services this year thanks to the new regulations and the fact that I’m black, and still get the job.

  • Peter the Observer

    This is stupidity in its extreme … Why they want to do it is anyone’s guess. It is a granted way to lose power eventually. As I said stupidity in the extreme!!

  • Robert Dixon

    Legislated corruption is the only description!
    And I thought corruption was a criminal offense in SA.

    BEE and all its derivatives is nothing more than the destruction of the country by squeezing the productive to give to the unproductive / dishonest / stupid.

  • CapeCol

    Corruption, nepotism and cronyism is the government procurement system is a separate issue to the efficacy of this procurement formula in improving the inclusiveness of economic activity. HZ would be well advised to tackle one issue or the other – there is no reason to leap to the conclusion that this formula automatically increases corruption…

    • IAmSouthAfrican

      This new regulation could in turn increases goverment expenditure on activities such as building a road or setting up the IT systems in a government clinic if the tender is awarded to company with the highest price margin, when in turn they could be paying less for the same equipment or services to another company who has a lower price margin and who may not be as BBBEE compliant.

      In saying that, I am sure that many fully compliant BBBEE companies will apply for tenders in said activites but which of those companies will be awarded the tender? The company with the lower price margin or the one with a higher price margin? Ofcourse the logical/ethical answer would be the one with the lower price margin, but that is not what would happen if corruption, nepotism and cronyism is in interest.

      Ultimately if the new proposition is taken into effect there is a greater margin for corruption in the awarding of a tender to a said company. As we have all witnessed in many of the ANC’s dealings from the Arms Deal to the Nklanla Highway and even the latest Nuclear Arms deal, corruption is rife with our ANC government.

      You are correct in saying that the formula is not going to automatically increase corruption, corruption will take place irrespective if this regulation is implemented or not. But if it is implemented more of our tax money will be pocketed into the hands of the corrupt elite and in that further sever our economy to the point of collapse.

      • CapeCol

        Absolutely! Thank you. This is a much better articulation of the risk than HZ’s rather sensational suggestion that this is “legalising corruption”.

  • Well written and explained Madam Zille.

  • Citizane Concern

    If Section 195 (1) b (amongst others states that lawful “discrimination” to redress past injustices, still has to pass the test of “rationality” and “fairness” then why is there not a “cap” on the criteria to be qualified as “previously disadvantaged”. Individuals with assets exceeding a predetermined amount( 20 mil?) should not qualify for BBBEE points. Surely they are not disadvantaged anymore? Why should they still benefit from the middle class hard earned tax money and prevent the real “currently disadvantaged” from benefitting from BBBEE.?

  • thatsme

    Fusk all BEE, fusk racist Zuma! All are equal, no any preferences to the stupids!

  • Peter Mc Hendry

    Hey folks this is totally ridiculous and unacceptable. What is needed is an Application to the High Court, Appellate Court and Constitution Court to SET ASIDE the entire BEEE laws and regulations as they are TOTALLY against the Constitution and bullshit. WHY THE HELL DON’T WE DO THIS APPLICATION LIKE “NOW”???????

    • Iron

      Has anything being done in 14 days.

  • Louis Botes

    Where there is a will there is a way…

  • John Phoenix

    Practical answer, withdraw your skills as much as you can, cancer doesn’t want to share, so why should you. Give government the bare minimum, tax/fuel etc is unavoidable, so when next you have an option, choose to not share your skills, your time and your welfare. This is some more writing on the wall that everyone is equal, some are just more equal than others. When next you encounter a scenario where you have the option to be charitable or skill share, ask yourself, if the tables where turned would that person even give you the time of day? 99% of the time the answer is… No.

  • Mike

    Well said and well written. It should be made prescribed reading in every school in the province. In essence BEE is wrong in every way. We need to stimulate and encourage any business in this country by whatever means, not stifle it. For every action there is a reaction. Those entrepreneurs who are, or feel stifled will simply find another way. Hooray for entrepreneurs!

  • Thepaxster

    I ask again as I have with so many other articles, who will translate and distribute this to the masses?

    Yes we are privileged to have the internet and read these things, but it needs to be communicated to a much larger audience, en mass, so that even if it does not sink in with everyone, it can start with a few that do understand to spread ideas.

    Ideas are like runaway fires, very hard to stop.

  • the-TRUTH

    The Big Question: Is the ANC Government trying to turn South Africa into Zimbabwe, where everything is in decline, expensive and less quality? One wonders if SA is not about to face economic meltdown – one sees chaos, crises and fire (protests and unrest)

  • Annunaki

    bette vote another political party into power, oh wait the IEC said Zimbabwes elections are free and fair and all the parties are funded by the same people, looks like there is no solution, sigh, humanity your collective stupidity is why you will never have such nice things

  • Jonathan Pompies

    Once again… huge opportunities for YT with half a brain the create something out of their chaos.
    Their BBBBEEEEE laws just go to show how scared they are of the YT making a success…
    Dink buite die doos, Jan…

  • GalacticMantra

    So in summary, service delivery will be halved, the connected few will be smiling all the way to the bank and South Africa as a whole would be screwed.

  • arthur

    Justice Malala writes

    “President Jacob Zuma is not a fool. He makes gaffes every week
    and has no idea what constitutionality means. But he is not a fool.

    He might not read – as has been alleged – but that does not mean he does not
    know what levers have to be cranked to ensure that he never gets inside a
    court.

    Since he became the president of the ANC in 2007, he has overseen the most
    concerted and successful assault on the country’s independent institutions.

    The judiciary is today facing a major crisis of confidence because of cases involving
    him at the Constitutional Court.

    The minute he won the ANC presidency in Polokwane, the Scorpions – which had
    been investigating him – were disbanded. It was quick, cruel and ruthless.

    Over the past few months it has been the public protector’s turn. In that time,
    we have witnessed concerted and coordinated attacks from parliament, the
    executive and various wings of the ANC on the office led by possibly the most
    admired “public servant” in the nation today – Thuli Madonsela.

    This past week we had the extraordinary sight of our security cluster – which
    has over the past few weeks made fools of themselves saying all kinds of
    nonsense about Madonsela – turning on the populace and declaring that
    publication of pictures of the taxpayer-funded Nkandla monstrosity were illegal
    and that the full might of the law would come down on those who dared to do so.
    All this for one man: Jacob Gedleyihlekisa Zuma.

    The man is not a fool. He has managed to get Africa’s oldest liberation
    movement to become a tool for his protection.

    Whatever he does – whether it is his friends the Guptas landing their planes at
    military key points with impunity or a hideous compound being built for him for
    R208-million, the man has got the party rushing to do his bidding.

    And so one has to ask: Which ANC is this?

    How can an organisation that refused to have a personality cult built around
    Nelson Mandela allow itself to become a mere tool in the hands of Zuma? How can
    its leaders cast aside the party’s historical mission – to transform the lives
    of millions of poor black people and build a united, non-racial, prosperous and
    democratic country – to simply become gophers for Zuma?

    Yet that is what the party’s 86-member national executive committee has become.

    ANC MPs are now introducing legislation that is aimed solely at protecting this
    one man.

    Across the land, provincial party leaders hobble state machinery merely to
    protect and keep this one compromised leader out of jail and in power.

    It is an incredible sight.

    Once proud leaders who served our nation in exile, in the United Democratic
    Front and in trade unions now scrape and bow before one man.

    The ANC no longer has leaders. It has zombies who mindlessly follow this one
    leader and do his bidding.

    It is quite extraordinary.

    What has happened to the culture of debate and contestation that once permeated
    this movement?

    What happened to the pride that made this once great organisation stand up and
    expel people who muddied its name?

    How can this lot walk in the shoes of Albert Luthuli, AP Mda, Anton Lembede,
    Pixley kaIsaka Seme?

    So, as we look at the extraordinary lengths that the current ANC
    “leadership” has gone to defend an embarrassment of a leader whose
    entire family seems to be infused by a shocking culture of entitlement – Zuma’s
    brother, Michael, last week admitted using his name to swing tenders to his
    benefactors – we have to ask: Where is the ANC?

    The answer is heartbreaking: The ANC is compromised; it is lost.

    It has lost its moral compass and its leadership of society.

    The man at its head is a reflection of what the party is: ill-disciplined,
    compromised and unprincipled.

    The desperation one sees among the ANC’s leaders is a reflection of this. When
    a man as widely admired as Cyril Ramaphosa has no other argument to convince a
    voter to still support the ANC than “the Boers will return”, then you
    know that this is a movement that is both intellectually and morally bankrupt.
    The emperor and his lieutenants have no clothes.

    And so we will remember the reign of Zuma. We will remember it not for its
    achievements but for the cowardice, callowness and bankruptcy of the leadership
    that he brought with him. We will remember his lackeys for their bowing and
    scraping and their destruction of the continent’s greatest liberation movement.

    What an ignominious end for the party of Mandela.”

  • Joe Soap

    My own formula Zim = anc + rsa / zuma

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