{"id":93590,"date":"2015-07-20T13:08:23","date_gmt":"2015-07-20T11:08:23","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=93590"},"modified":"2015-07-20T16:17:03","modified_gmt":"2015-07-20T14:17:03","slug":"how-government-plans-to-legalise-corruption-helen-zille","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/93590\/how-government-plans-to-legalise-corruption-helen-zille\/","title":{"rendered":"How government plans to legalise corruption: Helen Zille"},"content":{"rendered":"

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.<\/em><\/p>\n

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

One of the challenges of daily life in government is the weekly avalanche of documents that must be read, analysed and commented on.\u00a0 Among them are draft Policy papers, Bills, Regulations, \u201cInstructions\u201d and other documents from national government.<\/p>\n

Each must be dissected and \u201cdeconstructed\u201d to ensure we understand its relevance and comment within the prescribed deadline – which is sometimes very short.<\/p>\n

This week, the new Draft Preferential Procurement Regulations were among the many documents that crossed my desk.\u00a0 But when I see formulae like these – that are actually supposed to explain the regulations – my eyes glaze over:<\/p>\n

\"formula_ps80\"<\/a>\"formula_ps90\"<\/a><\/p>\n

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\u2019s \u201cradical economic transformation agenda\u201d what the Rosetta Stone is to the interpretation of hieroglyphics.<\/p>\n

I knew the formulae were very important, but I don\u2019t 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:<\/p>\n

\u201cApplying 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.\u201d<\/p>\n

He explained that the formulae hadn\u2019t changed, but the factors had. And this would make a big difference.<\/p>\n

His explanation didn\u2019t help me much. I knew the regulations would make supposedly \u201cbroad-based\u201d black economic empowerment (BBBEE) requirements much more rigid, and far more expensive.\u00a0 But I wanted a specific, practical example.<\/p>\n

So my CFO explained the difference between the current preferential procurement system, and the proposed new system, using a simple example.<\/p>\n

He wrote back:<\/h3>\n

\u201cCurrent practise:\u00a0 Bidder A, with no BBBEE status, quotes R10 for a bar of soap, while Bidder B with full BBBEE status quotes R12.\u00a0 The bid is awarded to Bidder B and government pays a 20% or R2 premium to advance economic empowerment in this instance.<\/p>\n

Proposed practise:\u00a0 Bidder A, with no BBBEE status, quotes R10 for a bar of soap, while Bidder B with full BBBEE status quotes R19.\u00a0 The bid is awarded to Bidder B and government pays a 90% or R9 premium to advance economic empowerment in this instance.<\/p>\n

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% .\u201d<\/p>\n

And then in CFO speak – which tends to extreme under-statement – he said: \u201cthe difference in premiums impacts severely on the monies available for goods and services.\u201d<\/p>\n

I\u2019ll 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.<\/p>\n

Firms that have the highest rating will get enough \u201cbonus\u201d points to enable them to double the best market price of a firm with no rating, and still get the contract.<\/p>\n

There is a sliding scale between firms with no BBBEE status and those with \u201cfull\u201d status.\u00a0 If they attain only half the BBBEE status, we will pay 50% more.<\/p>\n

So this is what Jacob Zuma\u2019s radical economic transformation policy will mean:\u00a0 more cronies getting more tenders, and charging the state almost double the market value. And anyone who criticizes this will be labelled \u201cracist\u201d.<\/p>\n

Fortunately, more and more South Africans are seeing through this ruse. They know that the \u201cBBBEE\u201d 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 \u201cthe network\u201d.\u00a0 Zuma looks after them, and they look after him.<\/p>\n

Let\u2019s be blunt: the new draft regulations, if they are accepted, will legalise wholesale corruption at an even grander scale than we are currently witnessing.<\/p>\n

The current inner circle of \u201cpreferred bidders\u201d – 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.<\/p>\n

How long will people still be fooled by the ANC\u2019s 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?<\/p>\n

The result will be \u201cEskom\u201d, multiplied many times across the economy: a multi-billion Rand deficit accompanied by an inability to provide basic services. The rich can \u201cmake a plan\u201d (such as buying generators). The poor can\u2019t. They sit in the cold and dark, and have to steal electricity that has become unaffordable. And behind the rhetoric of a \u201cturn-around strategy\u201d Eskom\u2019s deficit just grows.<\/p>\n

We should no longer mince our words:\u00a0 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.<\/p>\n

On the contrary, it will destroy growth and jobs because it creates perverse incentives, rewarding inefficiency and uncompetitive pricing. And as government\u2019s 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.<\/p>\n

Fortunately we have a constitution. I cannot see how the new draft regulations will meet the requirement of Section 195 (1) b (amongst others):\u00a0 that \u201cefficient, economic and effective use of resources must be promoted\u201d.\u00a0 And lawful \u201cdiscrimination\u201d to redress past injustices, still has to pass the test of \u201crationality\u201d and \u201cfairness\u201d.<\/p>\n

We support rational and fair broad-based empowerment.\u00a0 Both the City of Cape Town and the Western Cape Government have an \u2018open\u2019 and transparent bid adjudication process. This prevents corruption and allows for fair competition in the bidding process.<\/p>\n

More BBBEE companies have been empowered through our competitive process than was the case during the ANC\u2019s crony-based tenure in Cape Town and the Province.\u00a0 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.<\/p>\n

We must take a stand against the new draft proposals from national government, even though we know that the Zuma ANC will respond by \u201cplaying the race card\u201d all the way to the 2016 local government election.<\/p>\n

But more people now know what is really going on than ever before.\u00a0 We are not heading for \u201cradical economic transformation\u201d. We are heading for \u201cradical economic collapse\u201d if we endorse these proposals.<\/p>\n

Next year South Africans will have to decide whether they want to continue endorsing legalized corruption – and growing impoverishment\u00a0 – or whether it is time for change.\u00a0 In a democracy, the voters get the government they choose and it is the government the majority deserves.<\/p>\n

You can also read the article here<\/a>.<\/em><\/p>\n

More on Helen Zille<\/h3>\n

How Zille plans to solve the Uber crisis in SA<\/a><\/strong><\/p>\n

Helen Zille\u2019s DA vs ANC<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

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