Strangers in a new land
Vicki Robinson
08 Jul 2004 23:59
Lisa has her monthly period, which means she can’t work. Her cellphone screen flashes incessantly with the names of her regulars, but she only answers her boyfriend’s calls. Her boyfriend, Pieter, knows her line of work, but condones it because he is unemployed. In the growing poor white community, sex is a key source of income.
Seventy-five years after the armblank (poor white) crisis of the 1930s, the phenomenon is resurfacing. White unemployment has nearly doubled since 1995, according to the Institute for Security Studies.
Today 430 000 whites, of a total white population of 4,5-million, are “too poor to live in traditional white areas” and 90 000 “are in a survival struggle”, says Lawrence Schlemmer, director of the Helen Suzman Foundation. Of these, 305 000 are Afrikaans-speaking and 215 000 speak English.
Since 1998 these figures have increased year-on-year by 15%. According to a survey by the South African Institute of Race Relations, white unemployment increased by 74,4%, using the expanded definition, between 1998 and 2002, compared with the national average over the same period of 39,8%. However, the growth of white unemployment is off a much lower population base than black unemployment.
A key goal of the National Party in the heyday of apartheid was to uplift poor whites by using the state and semi-state sectors to provide them with jobs and housing, reserving certain jobs for whites, favouring their trade unions and shoring up the farming sector.
But for the first time in the mid-1970s, there were more white-collar than blue-collar Afrikaners, and the policies of the NP shifted accordingly. Poor whites were increasingly abandoned by the state.
The 1994 election and the advent of majority rule has accelerated the downward precipitation of whites without capital or marketable skills. In desperation, they are clinging to what they know: religion, xenophobia and racism. Many still believe their skin colour puts them above menial labour, and prostitution has become a common way of earning a living.
“I do everything except Greek style and blacks,” says Lisa, who lives in suburban Vanderbijlpark, a microcosm of white economic distress. “I work nine till five because in the evenings I like to spend quality time with my kids.” She only takes bookings from businessmen and earns up to R15 000 a month.
Her office — a cerise room with a double bed, a crimson lounge suite, and a table carrying with a bottle of Johnson’s baby oil, government condoms and Courtleigh cigarettes — is in her backyard next to her swimming pool. Her children are aware of her business. They say they accept it because it gives them a house of their own and a higher standard of living.
Another Vanderbijlpark prostitute, Nikkie, has size 44E breasts with a red rose tattooed next to her right nipple, making her black string top look like an overstuffed couch. Her husband is unemployed, and she has two small children.
Often Nikkie goes away for weekends with groups of farmers on hunting trips to Kuruman in the Northern Cape. On these occasions she earns R4 500 in addition to her average R2 000 weekly earnings.
“I only do men over 30 because I shake the shit out of anyone younger,” she jokes. “My husband doesn’t mind — it actually excites him. Often we have a passionate session after a full night’s work. My only three rules are whites only, no anal sex and cleanliness — you can’t do a client smelling like a three-day-old snoek.”
Lisa and Nikkie both insist survival has forced them into the “game”.
Poor whites typically compensate for their low socio-economic status with aggressive racism. In an era when many black people are upwardly mobile, it serves to bolster their self-pride.
Estelle Claasens lives in a former Iscor home, now owned by the church, with six other families — each one crammed into a bedroom. Last month she walked out of her job — washing dishes at the café in Vanderbijlpark — because she refused to wear the required green overall. “I was happy to wash the floors and the toilets and the dishes but when they tried to dress me like a kaffir, that’s when I said thanks, but no thanks,” she says.
Sucking hard on her cigarette and blowing a yellow smoke-stream from the corner of her mouth, she is a bottle-blond caricature of Patricia Lewis.
“The government, they must build us those — what youmacall it?” she says twisting her plump hand in the air for inspiration. “Those RDP houses. But ours must be here and the kaffirs must be over there. We don’t have to live by each other because poor blacks will always be much lower-class than poor whites.”
White families live in the garages of many Vanderbijlpark homes — a lucrative business for the home-owners, who charge between R500 and R700 a month in rent.
White poverty first came to prominence in South Africa during the 1920s when president Jan Smuts singled it out as the greatest threat to Afrikaner survival. Initially a rural problem of subsistence farmers and bywoners (share-croppers), it developed into an urban phenomenon during the Great Depression. The official tally of poor whites increased from 10 000 in 1890 to 535 000 in 1936. They lived on the periphery of white society; many were barely literate and almost unemployable.
In 1948 DF Malan romped to power on the slogan “The white man must remain master”, and set about creating the apartheid system that would allow whites “to remain white and live white”. An economic safety net was constructed by the apartheid state through the colour bar, the distinction between “civilised” and “uncivilised” labour, protectionist policies for companies that employed whites, and minimum wage laws that insulated semi-skilled whites from competition by unskilled blacks.
The Apprenticeship Act of 1922, a mainstay of apartheid labour legislation, is ironically the downfall of many poor whites today. It stipulated a standard six pass as a minimum qualification for apprenticeship in 41 trades, including the giant iron and steel industries.
A privatised Iscor — whose Vanderbijlpark plant has shed 16 000 jobs in the past 10 years — is the source of most white poverty in the Vaal Triangle. Poor whites were Iscor “appies”, like their fathers before them, at a time when state-owned businesses provided sheltered employment for whites and their children. Today, their lack of formal education renders them redundant.
Racial transformation over the past decade, including economic redress in the form of affirmative action and black economic empowerment, has deepened their despair. “Whites have been set quite a severe test by transformation policies,” says Schlemmer. “Whenever a population is put to this kind of test it produces heightened performance among those who are confident and well-educated, while some drop out at the bottom. In other words, it increases inequality. It is plunging the minority at the bottom into deeper poverty and sharpening the wits at the top end.”
In 1994 44% of civil service posts were held by whites; by last year this had dropped to about 20%. In 1996 almost 50% of technicians and artisans were white; today the figure has fallen to about 20%.
With the sense of abandonment goes fatalistic inertia and heightened religionism. The houses of poor whites are full of Durer’s praying hands and other religious paraphernalia; all insist God has sent them poverty as a test. Rather than job-hunt, many sit in their front yards — uncovered patches of ground littered with cigarette butts, dogs and chickens — waiting for divine dispensation.
In the younger generation, rebellion typically takes the form of dabbling in Satanism.
Poor whites are detached and alienated from post-1994 politics, although some express dismay at former president FW de Klerk’s failure to drive a harder bargain for whites.
Bertus Bornman, a garage-dweller who earns R5 200 as a boiler operator at Iscor, complained that President Thabo Mbeki “should stop looking outside the country, and look inward” at its problems.
Most refuse to take “charity” from the current government. They are aware of assistance in the form of child and disability grants, but have not bothered to find out how to access them. “We’ll never beg,” said Nikkie.
Despite the professions of sturdy self-reliance, there is heavy dependency on private charity from middle-class Afrikaners, church organisations and Child Welfare. The Vanderbijlpark Christian Centre, a local church, has three homes for destitutes in Vanderbijlpark, while the NG Kerk has arranged support groups for alcoholics and the mentally ill.
Alcohol abuse and domestic violence are rife, and suicides or attempted suicides apparently common among the youth. Sarie de Preez (37) lives with her mother, who now provides for her, after her drunken husband, Bennie, nearly beat her to death with a plank in front of her five-year-old twin boys.
Felicity Curry (17) says she tried to kill herself last year by swallowing 28 pills after being raped by the leader of the Satanist cult. She lost her virginity at 13, after a lodger in her mother’s house gave her a choice: sex, or he would reveal her smoking habit to her parents. Her ankle is greyed with a slapdash tattoo that reads “Sex Cat”; the words “Bad Bitch” encircle her navel. She claims to have weaned herself from addiction to dagga and ecstasy.
There is an eeriness about Vanderbijlpark at weekends. The enduring image is of dilapidated Iscor homes, grimy children spinning tops on dusty lawns, and their dull, bleary-eyed fathers leaning on crooked gates.
“Die witmense kry swaar en die kaffirs kry lekker [Whites are suffering and kaffirs are doing great],” complains Bornman. He is a stranger in a strange, new South Africa, hopelessly alienated from its politics, washed up by change, imprisoned by a racial pride that harks back to a vanished era. He is one of apartheid’s hidden victims.
Tuesday, November 28, 2006
Limbo of the white squatters
Limbo of the white squatters
Vicki Robinson
12 Jul 2004 08:37
Seventeen-year-old Francine Walkenshaw tried to go back to school last year, but gave up when better-dressed pupils jeered at her: “Why do you live like a squatter? What did you do wrong?”
Francine, her father Casper and her two brothers live in Lochvaal Emfuleni, on the outskirts of Vanderbijlpark on the Sasolburg road. It is one of at least three white squatter camps that have sprouted in the Vaal Triangle.
None of the children who live there have finished school, and Francine, a quiet, pale girl, was forced to drop out in grade eight. Last year she tried to return to the local high school where poor children are subsidised, paying a R50 registration fee and contributing money when they can during the year. After being rejected by the other pupils, she never leaves Lochvaal. She wants company but has no friends. Her dream is to own a pair of Nike takkies and to live somewhere “restful”.
The camp is a litter of corrugated-iron structures, tents, decrepit caravans, scrap metal, cans, weeds and emaciated mongrels. The people who live there have the glazed, faraway look of sleepwalkers. They rarely wash their clothes, and turn a sullen, taciturn face to the outside world.
A typical white squatter camp is located on a private plot owned by a middle-class Afrikaner or a charity organisation. Usually the landlord lives in a respectable home with the shack settlement mushrooming behind it, hidden from the public eye.
The landlady of Lochvaal Emfuleni is Sally Bruwer, who spends most of the day in green curlers, bellowing orders because her legs can’t carry her enormous bulk.
Forty homeless whites currently live there, but the monthly turnover of residents is much higher, at about 800. Drifters or temporary workers constantly come and go.
Bruwer says the settlement is sustained by donations, usually dropped off by anonymous well-wishers. A communal kitchen offers a daily menu of pap and one spoon of sugar in the morning, and pap and sauce for lunch and supper. There are two long-drop lavatories that are humid and fusty, with used toilet paper lying on the floor.
Francine’s father was once a fitter and turner at Sasol, earning a monthly wage of R4 500. Five years ago he was retrenched with a R100 000 package, but blew it on a pyramid scheme. His wife walked out on him and their children. They moved here three months ago, and live in a rusted caravan and a blue tent. The canvas is rotting.
Casper has stopped looking for work. His last gainful employment was menial labour — bricklaying and digging holes — for R450 a month and his cash reserves are dwindling. No longer alert, he seems unable to fight the dullness that has settled on him.
The Walkenshaws’ neighbour, Hannes Schoeman (44), is mentally ill. He is a filthy six-footer with an obsession with shoes — because, he says, his penniless upbringing forced him to go barefoot as a child. He wears three pairs of shoes, one inside the other, and spends his day repairing other items from his extensive collection of tattered footwear.
Schoeman’s house, a 5mx4m cement and corrugated-iron hovel, is filled with scrap he has hoarded. He wears a piece of wire around his neck “to keep my neck up to keep me proud”, he says.
Some of the sleeping arrangements are communal. Ann (25), who has a five-year-old son, Kyle, and is eight months’ pregnant, lives in a room with eight other women and two children. She moved to the area three months ago from Newcastle in KwaZulu-Natal, to escape an abusive husband.
To earn their keep, the people in the camp are given chores like cooking, gardening and building. They go about these, listlessly sucking on cigarettes and staring into the middle distance.
They have lost touch with the world and live a vacant existence. Here the sons and daughters of impecunious whites, once elevated by apartheid, have become the detritus of democracy.
Thank you to Carla Lewis for translating
Vicki Robinson
12 Jul 2004 08:37
Seventeen-year-old Francine Walkenshaw tried to go back to school last year, but gave up when better-dressed pupils jeered at her: “Why do you live like a squatter? What did you do wrong?”
Francine, her father Casper and her two brothers live in Lochvaal Emfuleni, on the outskirts of Vanderbijlpark on the Sasolburg road. It is one of at least three white squatter camps that have sprouted in the Vaal Triangle.
None of the children who live there have finished school, and Francine, a quiet, pale girl, was forced to drop out in grade eight. Last year she tried to return to the local high school where poor children are subsidised, paying a R50 registration fee and contributing money when they can during the year. After being rejected by the other pupils, she never leaves Lochvaal. She wants company but has no friends. Her dream is to own a pair of Nike takkies and to live somewhere “restful”.
The camp is a litter of corrugated-iron structures, tents, decrepit caravans, scrap metal, cans, weeds and emaciated mongrels. The people who live there have the glazed, faraway look of sleepwalkers. They rarely wash their clothes, and turn a sullen, taciturn face to the outside world.
A typical white squatter camp is located on a private plot owned by a middle-class Afrikaner or a charity organisation. Usually the landlord lives in a respectable home with the shack settlement mushrooming behind it, hidden from the public eye.
The landlady of Lochvaal Emfuleni is Sally Bruwer, who spends most of the day in green curlers, bellowing orders because her legs can’t carry her enormous bulk.
Forty homeless whites currently live there, but the monthly turnover of residents is much higher, at about 800. Drifters or temporary workers constantly come and go.
Bruwer says the settlement is sustained by donations, usually dropped off by anonymous well-wishers. A communal kitchen offers a daily menu of pap and one spoon of sugar in the morning, and pap and sauce for lunch and supper. There are two long-drop lavatories that are humid and fusty, with used toilet paper lying on the floor.
Francine’s father was once a fitter and turner at Sasol, earning a monthly wage of R4 500. Five years ago he was retrenched with a R100 000 package, but blew it on a pyramid scheme. His wife walked out on him and their children. They moved here three months ago, and live in a rusted caravan and a blue tent. The canvas is rotting.
Casper has stopped looking for work. His last gainful employment was menial labour — bricklaying and digging holes — for R450 a month and his cash reserves are dwindling. No longer alert, he seems unable to fight the dullness that has settled on him.
The Walkenshaws’ neighbour, Hannes Schoeman (44), is mentally ill. He is a filthy six-footer with an obsession with shoes — because, he says, his penniless upbringing forced him to go barefoot as a child. He wears three pairs of shoes, one inside the other, and spends his day repairing other items from his extensive collection of tattered footwear.
Schoeman’s house, a 5mx4m cement and corrugated-iron hovel, is filled with scrap he has hoarded. He wears a piece of wire around his neck “to keep my neck up to keep me proud”, he says.
Some of the sleeping arrangements are communal. Ann (25), who has a five-year-old son, Kyle, and is eight months’ pregnant, lives in a room with eight other women and two children. She moved to the area three months ago from Newcastle in KwaZulu-Natal, to escape an abusive husband.
To earn their keep, the people in the camp are given chores like cooking, gardening and building. They go about these, listlessly sucking on cigarettes and staring into the middle distance.
They have lost touch with the world and live a vacant existence. Here the sons and daughters of impecunious whites, once elevated by apartheid, have become the detritus of democracy.
Thank you to Carla Lewis for translating
Bank charges under scrutiny
Bank charges under scrutiny
Vicki Robinson
30 August 2004 09:31
Conservatively estimated, 80% of the lowest income group (those who earn up to R1 500) are unbanked, partly because of exorbitantly high bank charges.
(Photograph: Tebogo Letsie)
Half of the country’s population does not participate in the economy because they cannot afford the hefty bank charges to run a savings account — built-in insurance against “high-risk” clients.
The combination of negligible returns on deposits and high charges for deposits and withdrawals means that saving for South Africa’s poorest is a pipe dream. The effective returns in all except one of the banks that offer entry-level savings accounts are negative — you end up with less money than you banked (see table).
A wide-ranging report, Concentration in South African Banking, released for public comment this month by a National Treasury and South African Reserve Bank task team highlights the lack of competition in the banking sector.
“Disclosure of the cost of banking services is weak, as is the disclosure of the return on savings accounts, both of which undermine the consumer’s ability to compare the products of different institutions and thus competition,” says the report.
“Banks generally speak in terms that the guys at the bottom really find bewildering,” said advocate Neville Melville, the ombudsman for banking services. “I don’t think the people at the banks are really skilled at explaining so they get frustrated and just tell the consumers: this is the way it is. They are therefore left with very little choice.”
Minister of Finance Trevor Manuel, who is currently reviewing the report, appears to have put his pen down to listen. Last month he said new laws will soon be on the table to create a second tier of commercial banks better equipped to include the millions of South Africans now excluded from banking services.
Until then, however, banks will remain out of the reach of the poor. Conservatively estimated, 80% of the lowest income group (those who earn up to R1 500) and 60% of low-income groups (those who earn between R1 500 and R3 000) are unbanked, partly because of exorbitantly high bank charges.
South African banks have been able to cherry-pick their clients because four of the country’s 22 registered banks — Absa, Nedcor, FirstRand and Standard Bank — control 80% of the market. The power of this dominance enabled them to increase the average service fee charged for current accounts by 29% between 1999 and 2003, notes the report.
There are 15 local branches of foreign banks and two mutual banks, but no building societies in South Africa. Postbank, an arm of the South African Post Office that acts as a saving institution, and village banks, which operate on a similar basis to stokvels, account for less than 0,005% of the deposit base in the banking industry.
Some analysts argue that greater international competition could lead to reduced bank charges here. But the international banks and the niche merchant banks have remained out of retail banking because of low volumes of business.
Dr Hans Falkena, a consultant for the Reserve Bank and the chair- person of the task team, said the government should investigate the existence of a “complex monopoly” between the four major banks.
A complex monopoly exists if at least 25% of the market is serviced by companies who are unconnected but who conduct their business through agreements among themselves that prevent or restrict competition.
Currently only entities that are authorised by the Registrar of Banks can take on the business of a bank. The required level of capital to register is a minimum of R250-million.
“For this reason [the high costs], you are unlikely to see new and local players popping up,” said Melville.
Falkena said the only way to break the back of this undiluted banking system is to introduce second- and third-tier banks — a need Manuel has acknowledged.
The Dedicated Banks Bill and the Co-operatives Banks Bill will soon emerge from the Treasury. These will allow for a wider range of participants — such as retail companies, telecoms companies and micro lenders — in the industry by granting them banking licences for restricted banking operations.
Their entry requirements in terms of capital will be much lower, but in return the scope of their operations will be narrower and restricted to liquid assets.
However, the Congress of South African Trade Unions (Cosatu) is sceptical. “They [the government] promised us this legislation two years ago — they say yes, they support lower banks charges, but they can never get the damn laws in place,” said Neva Makgetla, Cosatu economist.
The Banking Council of South Africa is currently working on a national bank account. This will meet a key Financial Services Charter aim of redressing market failures in supplying basic financial services to the majority.
“The logic is that we intend to launch, as a collective of banks, an account aimed at lower-income people, which would be significantly lower priced than existing offerings,” said Charles Chenel, the coordinator for implementing the financial charter initiatives.
Falkena expressed concern that this national bank account could result in price-fixing and collusion because the banks are in cahoots to form this lower-income account.
But for Chenel: “The point about the national bank account is that it isn’t going to make any extra money for the banks, they are coming together to serve the lower-end of the market. They can do this together because banks don’t compete to make losses.”
In the concentrated banking sector low- and middle-income consumers in South Africa are cross-subsidising the more prosperous. “South Africa is quite unusual in the structure of bank interest rates and charges,” the report says. “In the United Kingdom, for example, the lending business tends to subsidise payment and transmission facilities; in South Africa, the payment and transmission services dominate and appear to cross-subsidise lending.”
The banking sector impinges not only on the general efficiency of the economy but on the economic development of the country.
Vicki Robinson
30 August 2004 09:31
Conservatively estimated, 80% of the lowest income group (those who earn up to R1 500) are unbanked, partly because of exorbitantly high bank charges.
(Photograph: Tebogo Letsie)
Half of the country’s population does not participate in the economy because they cannot afford the hefty bank charges to run a savings account — built-in insurance against “high-risk” clients.
The combination of negligible returns on deposits and high charges for deposits and withdrawals means that saving for South Africa’s poorest is a pipe dream. The effective returns in all except one of the banks that offer entry-level savings accounts are negative — you end up with less money than you banked (see table).
A wide-ranging report, Concentration in South African Banking, released for public comment this month by a National Treasury and South African Reserve Bank task team highlights the lack of competition in the banking sector.
“Disclosure of the cost of banking services is weak, as is the disclosure of the return on savings accounts, both of which undermine the consumer’s ability to compare the products of different institutions and thus competition,” says the report.
“Banks generally speak in terms that the guys at the bottom really find bewildering,” said advocate Neville Melville, the ombudsman for banking services. “I don’t think the people at the banks are really skilled at explaining so they get frustrated and just tell the consumers: this is the way it is. They are therefore left with very little choice.”
Minister of Finance Trevor Manuel, who is currently reviewing the report, appears to have put his pen down to listen. Last month he said new laws will soon be on the table to create a second tier of commercial banks better equipped to include the millions of South Africans now excluded from banking services.
Until then, however, banks will remain out of the reach of the poor. Conservatively estimated, 80% of the lowest income group (those who earn up to R1 500) and 60% of low-income groups (those who earn between R1 500 and R3 000) are unbanked, partly because of exorbitantly high bank charges.
South African banks have been able to cherry-pick their clients because four of the country’s 22 registered banks — Absa, Nedcor, FirstRand and Standard Bank — control 80% of the market. The power of this dominance enabled them to increase the average service fee charged for current accounts by 29% between 1999 and 2003, notes the report.
There are 15 local branches of foreign banks and two mutual banks, but no building societies in South Africa. Postbank, an arm of the South African Post Office that acts as a saving institution, and village banks, which operate on a similar basis to stokvels, account for less than 0,005% of the deposit base in the banking industry.
Some analysts argue that greater international competition could lead to reduced bank charges here. But the international banks and the niche merchant banks have remained out of retail banking because of low volumes of business.
Dr Hans Falkena, a consultant for the Reserve Bank and the chair- person of the task team, said the government should investigate the existence of a “complex monopoly” between the four major banks.
A complex monopoly exists if at least 25% of the market is serviced by companies who are unconnected but who conduct their business through agreements among themselves that prevent or restrict competition.
Currently only entities that are authorised by the Registrar of Banks can take on the business of a bank. The required level of capital to register is a minimum of R250-million.
“For this reason [the high costs], you are unlikely to see new and local players popping up,” said Melville.
Falkena said the only way to break the back of this undiluted banking system is to introduce second- and third-tier banks — a need Manuel has acknowledged.
The Dedicated Banks Bill and the Co-operatives Banks Bill will soon emerge from the Treasury. These will allow for a wider range of participants — such as retail companies, telecoms companies and micro lenders — in the industry by granting them banking licences for restricted banking operations.
Their entry requirements in terms of capital will be much lower, but in return the scope of their operations will be narrower and restricted to liquid assets.
However, the Congress of South African Trade Unions (Cosatu) is sceptical. “They [the government] promised us this legislation two years ago — they say yes, they support lower banks charges, but they can never get the damn laws in place,” said Neva Makgetla, Cosatu economist.
The Banking Council of South Africa is currently working on a national bank account. This will meet a key Financial Services Charter aim of redressing market failures in supplying basic financial services to the majority.
“The logic is that we intend to launch, as a collective of banks, an account aimed at lower-income people, which would be significantly lower priced than existing offerings,” said Charles Chenel, the coordinator for implementing the financial charter initiatives.
Falkena expressed concern that this national bank account could result in price-fixing and collusion because the banks are in cahoots to form this lower-income account.
But for Chenel: “The point about the national bank account is that it isn’t going to make any extra money for the banks, they are coming together to serve the lower-end of the market. They can do this together because banks don’t compete to make losses.”
In the concentrated banking sector low- and middle-income consumers in South Africa are cross-subsidising the more prosperous. “South Africa is quite unusual in the structure of bank interest rates and charges,” the report says. “In the United Kingdom, for example, the lending business tends to subsidise payment and transmission facilities; in South Africa, the payment and transmission services dominate and appear to cross-subsidise lending.”
The banking sector impinges not only on the general efficiency of the economy but on the economic development of the country.
E Cape minister 'took bond kickback'
E Cape minister 'took bond kickback'
Vicki Robinson | Johannesburg
29 October 2004 10:46
Anti-corruption investigators in the Eastern Cape are probing evidence that the mansion of provincial agriculture minister Max Mamase is being financed by the citrus farmer who landed a controversial R16-million empowerment deal from his department.
Mamase and his wife, provincial social development minister Neo Moerane Mamase, co-own the home through a company called Quickvest 54. This company’s account has received substantial payments deposited by the citrus farmer’s accountant. The R2,7-million home is in the plush East London suburb of Bonnie Doon.
Six weeks ago the Mail & Guardian reported on evidence that Mamase had ridden roughshod over provincial finance regulations and ordered his department to fund the acquisition of a portion of citrus king Norman Benjamin’s farms by an empowerment trust. Benjamin was allegedly paid double the market value.
At the time claims were made to the M&G that the Mamases’ new home had been financed by Benjamin.
The joint anti-corruption task team, an elite squad of investigators from the police and the National Prosecuting Authority deployed to the province, has been probing the payments by Mamase’s department to Benjamin. Now, the M&G understands, the team is interested in payments allegedly made by Benjamin’s accountant, Emiliya Peneva, towards the Mamases’ home.
Company records show that on February 1 this year Max and Neo Mamase became directors of Quickvest 54, a company bought “off the shelf”. On February 13 Neo Mamase signed an offer to purchase the Bonnie Doon home. This was a day after Max Mamase’s department had released the first of two multimillion-rand payments towards the empowerment deal from which Benjamin was to benefit.
Neo Mamase’s offer was accepted, and on June 24 the house was registered to Quickvest at a purchase price of R2,7-million. The Mamases, through Quickvest, obtained a R2,7-million bond to finance the purchase.
The M&G is aware of evidence that on August 10 and on September 2 Peneva made deposits of R15 000 each into the Quickvest account from Cape Town, where Peneva and Benjamin live.
While Peneva last week confirmed to the M&G that she made two such payments into the Quickvest account, she fervently denied that this money was to service the Mamases’ bond.
Peneva claims that the payments were to rent a different building in East London: a property company called Parch Properties 17 was renting it from Quickvest, she said. Company records show that Benjamin and Peneva are directors of Parch Properties.
Peneva claims that Parch Properties, together with the Buffalo City Development Agency, is involved in a “large development in East London”, which she said had not started yet.
“We want to do that development and we needed premises in East London to use as an office so we are renting a building [from Quickvest] — so far this lease agreement is for six months and we have only used the property twice or three times for meetings. I don’t know East London very well so I am not very familiar with the address [of the rented property],” said Peneva.
But there are problems with Peneva’s explanation:
The Buffalo City Development Agency’s acting CEO, Peter King, this week denied all knowledge of the partnership agreement, saying: “There is no partnership between the Buffalo City Development Agency and a company called Parch Properties 17. I have never heard of this company. I have not heard of, or from, these people [Emiliya Peneva and Norman Benjamin].”
A deed search into Quickvest shows that the only property that is registered under its name is the Mamases’ home. It is highly unlikely that Benjamin and Peneva “rented” a different property from the Mamases’ company.
The monthly bond repayment on the Mamases’ home would be about R25 000. Max and Neo Mamase’s monthly salaries are less than R30 000 each after tax. Questions of affordability arise.
But even if Peneva’s explanation holds, it is ethically problematic. Any private rental deal between Benjamin and Max Mamase, while Mamase’s department was benefiting Benjamin’s company, arguably constitutes a serious conflict of interests.
Further tending to corroborate that Benjamin has been financing the Mamases’ home is an allegation, made to the M&G by a well-placed insider, that Benjamin had accompanied Max Mamase when he and his wife bought the Bonnie Doon home.
Peneva said that, if true, the reason for this would be that “Mr Benjamin is a property developer and he knows properties very well, so he might have advised Mr Mamase from arm’s length ... on what is a good property to buy and what is not a good property to buy.”
Quickvest, as a shelf company, was created by the same auditing firm in Cape Town, Wilson Rich & Associates, as Kangela Citrus Farms, Benjamin’s company at the centre of the contested empowerment deal.
In terms of the empowerment deal, Max Mamase and Benjamin had negotiated the purchase of 49% shares from Kangela in a citrus farming venture in the Eastern Cape’s Addo district. These shares would be given to 44 of Benjamin’s employees with a view to developing them as future citrus farmers and a trust representing them was formed in July. Mamase’s agriculture department ultimately transferred R15,68-million to make this possible.
On February 12 this year — the day before Neo Mamase had made the offer on the house — the first tranche of R7,84-million was transferred from the agriculture department to Uvimba Bank, which in turn transferred it on February 25 to the trust account of the lawyers of Kangela Citrus Farms. Uvimba is a parastatal that provides micro-financing to emerging farmers.
The provincial treasury became suspicious when it discovered that the payment had not been budgeted for and that Mamase had sought no special permission for the transfer. It regarded this as unauthorised expenditure. The treasury issued an immediate directive to Mamase that the transfer be reversed. It was not.
On March 18 a meeting was held in Port Elizabeth between representatives of Kangela and the department of agriculture where it was decided that the Kangela deal should be construed as a “loan” rather than a “procurement”, as it was originally treated. On June 3 a loan agreement was signed between Kangela and Uvimba to be repaid after 20 years, if both parties agreed to the terms of repayment.
On August 31 the agriculture department transferred a second tranche through Uvimba to a company, also owned by Benjamin, called Oudewesthof Township Development.
The M&G has seen a letter written by Mamase to his department’s accounting officer, Lumkile Ngada, instructing him to make this second payment despite Ngada’s objections that procurement procedures had been flouted. This payment was two days before Benjamin’s accountant, Peneva, made the second R15 000 payment to Mamase’s Quickvest.
Another major concern of the treasury was that the shares were bought before the property had been valued by the agriculture department.
A retrospective valuation under the treasury’s order pegged the land at R16-million, which, if accurate, means that the agriculture department irregularly funnelled funds to Uvimba to buy a 49% share in a R16-million property for R15,6-million. This would mean it paid nearly double what the shares were worth.
According to Peneva, “This can be explained because when that valuation was done [the evaluator] missed two of the main farms.”
When the M&G approached Max Mamase to explain the two R15 000 payments into the account of his company Quickvest, he said: “What you are asking me is confidential, I signed a declaration form to that effect. Ask the people who gave you the information to follow through with it.”
At the time of going to press Neo Mamase was not available for comment.
Benjamin told the M&G: “I know nothing about this.” He then put the phone down.
Vicki Robinson | Johannesburg
29 October 2004 10:46
Anti-corruption investigators in the Eastern Cape are probing evidence that the mansion of provincial agriculture minister Max Mamase is being financed by the citrus farmer who landed a controversial R16-million empowerment deal from his department.
Mamase and his wife, provincial social development minister Neo Moerane Mamase, co-own the home through a company called Quickvest 54. This company’s account has received substantial payments deposited by the citrus farmer’s accountant. The R2,7-million home is in the plush East London suburb of Bonnie Doon.
Six weeks ago the Mail & Guardian reported on evidence that Mamase had ridden roughshod over provincial finance regulations and ordered his department to fund the acquisition of a portion of citrus king Norman Benjamin’s farms by an empowerment trust. Benjamin was allegedly paid double the market value.
At the time claims were made to the M&G that the Mamases’ new home had been financed by Benjamin.
The joint anti-corruption task team, an elite squad of investigators from the police and the National Prosecuting Authority deployed to the province, has been probing the payments by Mamase’s department to Benjamin. Now, the M&G understands, the team is interested in payments allegedly made by Benjamin’s accountant, Emiliya Peneva, towards the Mamases’ home.
Company records show that on February 1 this year Max and Neo Mamase became directors of Quickvest 54, a company bought “off the shelf”. On February 13 Neo Mamase signed an offer to purchase the Bonnie Doon home. This was a day after Max Mamase’s department had released the first of two multimillion-rand payments towards the empowerment deal from which Benjamin was to benefit.
Neo Mamase’s offer was accepted, and on June 24 the house was registered to Quickvest at a purchase price of R2,7-million. The Mamases, through Quickvest, obtained a R2,7-million bond to finance the purchase.
The M&G is aware of evidence that on August 10 and on September 2 Peneva made deposits of R15 000 each into the Quickvest account from Cape Town, where Peneva and Benjamin live.
While Peneva last week confirmed to the M&G that she made two such payments into the Quickvest account, she fervently denied that this money was to service the Mamases’ bond.
Peneva claims that the payments were to rent a different building in East London: a property company called Parch Properties 17 was renting it from Quickvest, she said. Company records show that Benjamin and Peneva are directors of Parch Properties.
Peneva claims that Parch Properties, together with the Buffalo City Development Agency, is involved in a “large development in East London”, which she said had not started yet.
“We want to do that development and we needed premises in East London to use as an office so we are renting a building [from Quickvest] — so far this lease agreement is for six months and we have only used the property twice or three times for meetings. I don’t know East London very well so I am not very familiar with the address [of the rented property],” said Peneva.
But there are problems with Peneva’s explanation:
The Buffalo City Development Agency’s acting CEO, Peter King, this week denied all knowledge of the partnership agreement, saying: “There is no partnership between the Buffalo City Development Agency and a company called Parch Properties 17. I have never heard of this company. I have not heard of, or from, these people [Emiliya Peneva and Norman Benjamin].”
A deed search into Quickvest shows that the only property that is registered under its name is the Mamases’ home. It is highly unlikely that Benjamin and Peneva “rented” a different property from the Mamases’ company.
The monthly bond repayment on the Mamases’ home would be about R25 000. Max and Neo Mamase’s monthly salaries are less than R30 000 each after tax. Questions of affordability arise.
But even if Peneva’s explanation holds, it is ethically problematic. Any private rental deal between Benjamin and Max Mamase, while Mamase’s department was benefiting Benjamin’s company, arguably constitutes a serious conflict of interests.
Further tending to corroborate that Benjamin has been financing the Mamases’ home is an allegation, made to the M&G by a well-placed insider, that Benjamin had accompanied Max Mamase when he and his wife bought the Bonnie Doon home.
Peneva said that, if true, the reason for this would be that “Mr Benjamin is a property developer and he knows properties very well, so he might have advised Mr Mamase from arm’s length ... on what is a good property to buy and what is not a good property to buy.”
Quickvest, as a shelf company, was created by the same auditing firm in Cape Town, Wilson Rich & Associates, as Kangela Citrus Farms, Benjamin’s company at the centre of the contested empowerment deal.
In terms of the empowerment deal, Max Mamase and Benjamin had negotiated the purchase of 49% shares from Kangela in a citrus farming venture in the Eastern Cape’s Addo district. These shares would be given to 44 of Benjamin’s employees with a view to developing them as future citrus farmers and a trust representing them was formed in July. Mamase’s agriculture department ultimately transferred R15,68-million to make this possible.
On February 12 this year — the day before Neo Mamase had made the offer on the house — the first tranche of R7,84-million was transferred from the agriculture department to Uvimba Bank, which in turn transferred it on February 25 to the trust account of the lawyers of Kangela Citrus Farms. Uvimba is a parastatal that provides micro-financing to emerging farmers.
The provincial treasury became suspicious when it discovered that the payment had not been budgeted for and that Mamase had sought no special permission for the transfer. It regarded this as unauthorised expenditure. The treasury issued an immediate directive to Mamase that the transfer be reversed. It was not.
On March 18 a meeting was held in Port Elizabeth between representatives of Kangela and the department of agriculture where it was decided that the Kangela deal should be construed as a “loan” rather than a “procurement”, as it was originally treated. On June 3 a loan agreement was signed between Kangela and Uvimba to be repaid after 20 years, if both parties agreed to the terms of repayment.
On August 31 the agriculture department transferred a second tranche through Uvimba to a company, also owned by Benjamin, called Oudewesthof Township Development.
The M&G has seen a letter written by Mamase to his department’s accounting officer, Lumkile Ngada, instructing him to make this second payment despite Ngada’s objections that procurement procedures had been flouted. This payment was two days before Benjamin’s accountant, Peneva, made the second R15 000 payment to Mamase’s Quickvest.
Another major concern of the treasury was that the shares were bought before the property had been valued by the agriculture department.
A retrospective valuation under the treasury’s order pegged the land at R16-million, which, if accurate, means that the agriculture department irregularly funnelled funds to Uvimba to buy a 49% share in a R16-million property for R15,6-million. This would mean it paid nearly double what the shares were worth.
According to Peneva, “This can be explained because when that valuation was done [the evaluator] missed two of the main farms.”
When the M&G approached Max Mamase to explain the two R15 000 payments into the account of his company Quickvest, he said: “What you are asking me is confidential, I signed a declaration form to that effect. Ask the people who gave you the information to follow through with it.”
At the time of going to press Neo Mamase was not available for comment.
Benjamin told the M&G: “I know nothing about this.” He then put the phone down.
Provincial finances on brink of collapse
Provincial finances on brink of collapse
Vicki Robinson
26 November 2004 09:16
National government is rejecting calls to bail out delinquent provinces brought to the fiscal brink by chaotic accounting, social grant fraud and inadequate budget controls. And with even well-off provinces squeezed for cash, the debate over provincial taxation is gaining a sharp new edge as some provinces plan to impose their own fuel tax.
KwaZulu-Natal
The KwaZulu-Natal government is facing a “major systems breakdown” in three provincial departments as mismanagement, negligence and fraud have resulted in over expenditure of R1,5-billion in the past financial year. A KPMG report has found that nine out of 10 provincial disability grants were made fraudulently.
The bad news is that the Treasury regards KwaZulu-Natal as one of the better fiscal performers, which suggests that the crisis in provincial financial management is widespread.
This month the provincial standing committee on public accounts was forced to take exceptional recuperation steps to salvage these departments, said Joanne Downs, the committee chairperson and deputy president of the African Christian Democratic Party.
“Several departments have little or no financial controls in place, resulting in mismanagement. This has led to a major systems breakdown,” she said.
Two weeks ago the public accounts committee stepped into action demanding that three provincial departments — education and culture, public works and social services and population development — submit quarterly progress reports detailing the measures they are taking to retrieve and stem their over expenditure and to “overhaul” internal control systems.
“We have given each of these departments until the end of this month to present the five most important financial control issues that will make 80% of the difference in terms of bringing to an end the over expenditure in the province and flushing the system of mismanagement,” said Downs.
“It is now going to cost the KwaZulu-Natal government about R2-billion to rectify the situation.”
According to Ismail Momoniat, the Deputy Director General for intergovernmental relations in the Treasury, oversight by legislatures needs to improve so that greater control is exercised over provincial finances.
“It’s only when legislatures adopt a critical and constructive approach that you can get behind the underlying reason for [over expenditure],” he said.
However, he said that KwaZulu-Natal “has a reasonably high quality of financial management compared to other provinces”.
The Free State is in the poorest financial state, with eight qualified audits, while Mpumalanga has one qualified audit and one department that has overspent.
The worst malefactor in KwaZulu-Natal is the social services department, which has overspent by R693-million on social assistance grants. This is in addition to over expenditure of R840-million from the previous financial year that has been carried over.
“The obvious reason ... is that the number of social security grant beneficiaries far exceeds what has been budgeted for,” said Belinda Scott, the chairperson of the provincial social welfare portfolio committee. “The major reason is that the level of corruption is just unspeakable in the social services department both because of the fraudulent grants that are coming in as well as corrupt departmental officials.”
She says that on average the over expenditure figure is increasing by R130-million a month. “The national government has already bailed us out by R500-million this year. It is therefore unlikely that they will help again.”
Momoniat said the Treasury will help the province by putting measures in place to assist it to manage its finances but “it is up to the provincial executive in the first instance and then the legislature to get an explanation for the financial weaknesses. Once they have diagnosed the problem they have to take corrective steps.”
A report by KPMG on the social grant system on the KwaZulu-Natal South Coast shows that 90% of the disability grant uptake was fraudulent.
Another report completed this year by the provincial social services department shows that in the Mahlabatini region, near Ulundi, 0,7% of social grant applicants were rejected. Similarly, in Mandeni on the North Coast only 0,1% of applications were rejected.
The reason for this imbalance is doctors who issue bogus medical certificates to people who do not qualify and fraudulent assessment panels.
The assessment panels were introduced in 2002 so that people who lived in areas where there were no doctors could access social grants. According to Scott, “arbitrary community members were appointed to sit on these panels and as a result would not reject their fellows applying for grants”.
In August the provincial treasury and the social services department suspended the assessment panels and appointed seven auditing firms to begin a forensic investigation. A sum of R8-million has been set aside for the investigation.
The firms have formed a consortium and have begun investigating 41 “red flag” areas where “there are high volumes of beneficiaries”, said Sipho Tshabalala, the director general in the provincial treasury.
According to the pro-vincial minister for social services, Inkosi Ngubane, “we are expecting that 10 000 people at the very least will be removed from the system ... We are hoping that this new system will rectify the situation where in the rural areas every Tom, Dick and Harry is receiving a social grant.”
Eastern Cape
The Treasury will veto a request from the Eastern Cape government to bail it out of its R1,7-billion deficit in the face of a renewed avowal that any shortfalls will have to be financed from next year’s budget because the state will no longer rescue incompetent provinces.
Provincial minister for finance in the Eastern Cape, Billy Nel, said that he will request a bail-out from the Treasury at the end of this financial year.
The appeal for aid is an attempt to forestall contravening a statutory requirement that a province’s books should close without a deficit.
However, “provinces that ended up with an overdraft last year will have to run surpluses in this year and next years’ budgets,” said Momoniat. “It is the policy of the Treasury not to bail out provinces that have financial problems. The National Treasury allocates funds equitably between provinces and does not award more to provinces that overspend their budgets.
“I have read press reports that the province is going to be applying for a bail out … to be honest there are not the extra funds to give to any province that is in trouble,” said Momoniat.
The Eastern Cape and the Northern Cape are the only two provinces that are already operating on overdrafts. In the Eastern Cape the problem is caused mainly by the provincial education department, which is overdrawn by R602-million and the social development department, which has a R628-million overdraft.
Nel has already instituted controversial cost containment measures under the title Budget Belt-Tightening Exercise, which forced departments to surrender from their budgets to diminish the deficit. To date, Nel says, this exercise has yielded R598-million, still a far cry from putting the province back on an even keel.
In addition to this, he said, the provincial treasury is “looking at the possibility of selling off some of the physical assets in the province”. He was unclear about what these were but said he would be “working closely with the provincial public works department”.
Another salvage plan that is likely to cause waves in the province is the possibility of a fuel levy. “The fuel levy is not high on the agenda yet because it is a very emotional thing, but it is a possibility,” said Nel.
“One of the interesting things in the Eastern Cape is that only 2,7% of our total budget is own revenue, which we derive mostly out of gambling taxes and motor vehicle licences, for example. It is far too small and we need to find ways to grow this.”
Next year’s budget allocations to the nine provinces will increase by R33,5-billion, or an average of 4%, in real terms over the next three years.
The biggest change is that the R41-billion normally allocated to the provinces as part of equitable share will be made a conditional grant.
This measure comes ahead of the establishment of a National Social Security Agency, which is set to take over all social grants payments at national level in a bid to control fraud.
Despite Momoniat’s insistence that the province must fend for itself, Nel remains confident that “National Treasury is aware of our dilemma and is not going to throw us away.”
The high cost of long weekends
The auditor general has refused to certify accounts for the KwaZulu-Natal education department for the fifth consecutive year because abysmal financial controls have resulted in over expenditure of R102-million.
One of the reasons for the over-expenditure is that teachers take long weekends and sign them off as sick leave.
According to legislation civil servants have 36 normal sick leave days over a three-year period. If they exceed this they are granted an additional 30 days temporary disability leave, during which time an investigation, by the department, into their illness has to be done. Based on the findings of the investigation additional leave can be granted.
However, education is a special case in that once a teacher exceeds his or her 36 days of normal leave a temporary teacher is appointed, adding heavily to personnel costs.
In one area cited by the auditor general 1 555 employees took 41 334 sick leave days in excess of the normal sick days at a cost of R12-million to the department.
In addition, R1 531 778 was paid towards the salaries of temporary teachers in the area.
Of the sick leave taken 61% was captured on the system as “unknown/no type of illness” and 30% of leave taken was on a Monday, “indicating a possible trend of extended weekends which contributes to inefficient utilisation of resources”, says the report.
According to the Public Service Commission, at the national level 28% of sick leave is taken on a Monday. On average, the annual cost to the state for sick leave is R631-million for national and provincial government.
The provincial minister of education, Ina Cronje, said: “I am in the process of conducting various investigations into financial irregularities and systemic matters.”
Paying for empty offices
The provincial department of public works, the heartbeat of infrastructure development in KwaZulu-Natal, is the quintessence of mismanagement.
One of the most illuminating examples in the auditor general’s report was an invoice the department received totalling R2 776,66 from a travel agent, the payment for which was captured as R1 042 004,00. This means the department overpaid by R1 039 227,34.
“Documentation was provided which indicates that the overpayment was subsequently off-set against later invoices,” according to the report.
In addition, a full departmental inquiry is under way into the rental of a building in Durban, supposedly for the purpose of relocating the department from Ulundi. It has never been occupied, though over R4-million has already changed hands.
To date the department has not taken occupation of the building and four of the six floors are occupied by other tenants.
In July this year the head of department, Edmond Radebe, was suspended on full pay pending the outcome of the departmental inquiry.
According to Meshack Radebe, chairperson of the public works portfolio standing committee, the report of the investigation will be tabled in the legislature next week. “Corrective action will then be taken,” he said.
Other details in the audit report include a 23% vacancy rate in the department, no asset register and eight forensic investigations conducted over the past year into procurement and tender irregularities, which remain unacknowledged by the management of the department.
Vicki Robinson
26 November 2004 09:16
National government is rejecting calls to bail out delinquent provinces brought to the fiscal brink by chaotic accounting, social grant fraud and inadequate budget controls. And with even well-off provinces squeezed for cash, the debate over provincial taxation is gaining a sharp new edge as some provinces plan to impose their own fuel tax.
KwaZulu-Natal
The KwaZulu-Natal government is facing a “major systems breakdown” in three provincial departments as mismanagement, negligence and fraud have resulted in over expenditure of R1,5-billion in the past financial year. A KPMG report has found that nine out of 10 provincial disability grants were made fraudulently.
The bad news is that the Treasury regards KwaZulu-Natal as one of the better fiscal performers, which suggests that the crisis in provincial financial management is widespread.
This month the provincial standing committee on public accounts was forced to take exceptional recuperation steps to salvage these departments, said Joanne Downs, the committee chairperson and deputy president of the African Christian Democratic Party.
“Several departments have little or no financial controls in place, resulting in mismanagement. This has led to a major systems breakdown,” she said.
Two weeks ago the public accounts committee stepped into action demanding that three provincial departments — education and culture, public works and social services and population development — submit quarterly progress reports detailing the measures they are taking to retrieve and stem their over expenditure and to “overhaul” internal control systems.
“We have given each of these departments until the end of this month to present the five most important financial control issues that will make 80% of the difference in terms of bringing to an end the over expenditure in the province and flushing the system of mismanagement,” said Downs.
“It is now going to cost the KwaZulu-Natal government about R2-billion to rectify the situation.”
According to Ismail Momoniat, the Deputy Director General for intergovernmental relations in the Treasury, oversight by legislatures needs to improve so that greater control is exercised over provincial finances.
“It’s only when legislatures adopt a critical and constructive approach that you can get behind the underlying reason for [over expenditure],” he said.
However, he said that KwaZulu-Natal “has a reasonably high quality of financial management compared to other provinces”.
The Free State is in the poorest financial state, with eight qualified audits, while Mpumalanga has one qualified audit and one department that has overspent.
The worst malefactor in KwaZulu-Natal is the social services department, which has overspent by R693-million on social assistance grants. This is in addition to over expenditure of R840-million from the previous financial year that has been carried over.
“The obvious reason ... is that the number of social security grant beneficiaries far exceeds what has been budgeted for,” said Belinda Scott, the chairperson of the provincial social welfare portfolio committee. “The major reason is that the level of corruption is just unspeakable in the social services department both because of the fraudulent grants that are coming in as well as corrupt departmental officials.”
She says that on average the over expenditure figure is increasing by R130-million a month. “The national government has already bailed us out by R500-million this year. It is therefore unlikely that they will help again.”
Momoniat said the Treasury will help the province by putting measures in place to assist it to manage its finances but “it is up to the provincial executive in the first instance and then the legislature to get an explanation for the financial weaknesses. Once they have diagnosed the problem they have to take corrective steps.”
A report by KPMG on the social grant system on the KwaZulu-Natal South Coast shows that 90% of the disability grant uptake was fraudulent.
Another report completed this year by the provincial social services department shows that in the Mahlabatini region, near Ulundi, 0,7% of social grant applicants were rejected. Similarly, in Mandeni on the North Coast only 0,1% of applications were rejected.
The reason for this imbalance is doctors who issue bogus medical certificates to people who do not qualify and fraudulent assessment panels.
The assessment panels were introduced in 2002 so that people who lived in areas where there were no doctors could access social grants. According to Scott, “arbitrary community members were appointed to sit on these panels and as a result would not reject their fellows applying for grants”.
In August the provincial treasury and the social services department suspended the assessment panels and appointed seven auditing firms to begin a forensic investigation. A sum of R8-million has been set aside for the investigation.
The firms have formed a consortium and have begun investigating 41 “red flag” areas where “there are high volumes of beneficiaries”, said Sipho Tshabalala, the director general in the provincial treasury.
According to the pro-vincial minister for social services, Inkosi Ngubane, “we are expecting that 10 000 people at the very least will be removed from the system ... We are hoping that this new system will rectify the situation where in the rural areas every Tom, Dick and Harry is receiving a social grant.”
Eastern Cape
The Treasury will veto a request from the Eastern Cape government to bail it out of its R1,7-billion deficit in the face of a renewed avowal that any shortfalls will have to be financed from next year’s budget because the state will no longer rescue incompetent provinces.
Provincial minister for finance in the Eastern Cape, Billy Nel, said that he will request a bail-out from the Treasury at the end of this financial year.
The appeal for aid is an attempt to forestall contravening a statutory requirement that a province’s books should close without a deficit.
However, “provinces that ended up with an overdraft last year will have to run surpluses in this year and next years’ budgets,” said Momoniat. “It is the policy of the Treasury not to bail out provinces that have financial problems. The National Treasury allocates funds equitably between provinces and does not award more to provinces that overspend their budgets.
“I have read press reports that the province is going to be applying for a bail out … to be honest there are not the extra funds to give to any province that is in trouble,” said Momoniat.
The Eastern Cape and the Northern Cape are the only two provinces that are already operating on overdrafts. In the Eastern Cape the problem is caused mainly by the provincial education department, which is overdrawn by R602-million and the social development department, which has a R628-million overdraft.
Nel has already instituted controversial cost containment measures under the title Budget Belt-Tightening Exercise, which forced departments to surrender from their budgets to diminish the deficit. To date, Nel says, this exercise has yielded R598-million, still a far cry from putting the province back on an even keel.
In addition to this, he said, the provincial treasury is “looking at the possibility of selling off some of the physical assets in the province”. He was unclear about what these were but said he would be “working closely with the provincial public works department”.
Another salvage plan that is likely to cause waves in the province is the possibility of a fuel levy. “The fuel levy is not high on the agenda yet because it is a very emotional thing, but it is a possibility,” said Nel.
“One of the interesting things in the Eastern Cape is that only 2,7% of our total budget is own revenue, which we derive mostly out of gambling taxes and motor vehicle licences, for example. It is far too small and we need to find ways to grow this.”
Next year’s budget allocations to the nine provinces will increase by R33,5-billion, or an average of 4%, in real terms over the next three years.
The biggest change is that the R41-billion normally allocated to the provinces as part of equitable share will be made a conditional grant.
This measure comes ahead of the establishment of a National Social Security Agency, which is set to take over all social grants payments at national level in a bid to control fraud.
Despite Momoniat’s insistence that the province must fend for itself, Nel remains confident that “National Treasury is aware of our dilemma and is not going to throw us away.”
The high cost of long weekends
The auditor general has refused to certify accounts for the KwaZulu-Natal education department for the fifth consecutive year because abysmal financial controls have resulted in over expenditure of R102-million.
One of the reasons for the over-expenditure is that teachers take long weekends and sign them off as sick leave.
According to legislation civil servants have 36 normal sick leave days over a three-year period. If they exceed this they are granted an additional 30 days temporary disability leave, during which time an investigation, by the department, into their illness has to be done. Based on the findings of the investigation additional leave can be granted.
However, education is a special case in that once a teacher exceeds his or her 36 days of normal leave a temporary teacher is appointed, adding heavily to personnel costs.
In one area cited by the auditor general 1 555 employees took 41 334 sick leave days in excess of the normal sick days at a cost of R12-million to the department.
In addition, R1 531 778 was paid towards the salaries of temporary teachers in the area.
Of the sick leave taken 61% was captured on the system as “unknown/no type of illness” and 30% of leave taken was on a Monday, “indicating a possible trend of extended weekends which contributes to inefficient utilisation of resources”, says the report.
According to the Public Service Commission, at the national level 28% of sick leave is taken on a Monday. On average, the annual cost to the state for sick leave is R631-million for national and provincial government.
The provincial minister of education, Ina Cronje, said: “I am in the process of conducting various investigations into financial irregularities and systemic matters.”
Paying for empty offices
The provincial department of public works, the heartbeat of infrastructure development in KwaZulu-Natal, is the quintessence of mismanagement.
One of the most illuminating examples in the auditor general’s report was an invoice the department received totalling R2 776,66 from a travel agent, the payment for which was captured as R1 042 004,00. This means the department overpaid by R1 039 227,34.
“Documentation was provided which indicates that the overpayment was subsequently off-set against later invoices,” according to the report.
In addition, a full departmental inquiry is under way into the rental of a building in Durban, supposedly for the purpose of relocating the department from Ulundi. It has never been occupied, though over R4-million has already changed hands.
To date the department has not taken occupation of the building and four of the six floors are occupied by other tenants.
In July this year the head of department, Edmond Radebe, was suspended on full pay pending the outcome of the departmental inquiry.
According to Meshack Radebe, chairperson of the public works portfolio standing committee, the report of the investigation will be tabled in the legislature next week. “Corrective action will then be taken,” he said.
Other details in the audit report include a 23% vacancy rate in the department, no asset register and eight forensic investigations conducted over the past year into procurement and tender irregularities, which remain unacknowledged by the management of the department.
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