Analysis

Treasury Deviations Are An Imperative For Economic Transformation

By Themba Ka Masondo

I’VE been following the news around the procurement process of personal protective equipment (PPEs) by companies which the media see as having taken advantage of the process and I have concluded that South African black business has been legislated into the role of observers by the Public Finance Management Act (PFMA), the Municipal Finance Management Act (MFMA) and other Acts designed to give government technocrats a free hand at expediting procurement and also enabling the process of transforming the economy. It is perfectly crisp and clear that we are being dribbled out of our hard won democracy. 
 
To this end, I would like to deal with this from the perspective first of the PFMA and its associated Acts and then deal with PPE procurement and lastly the uneven hand that the Fourth Estate deals with issues affecting the mass democratic movement towards prosperity for all, by using their influence to continue to prop up the legacy of Economic Apartheid at the expense of the very people who fought and won this hard won democracy.
 
Former President Thabo Mbeki made the point of the double story house many years ago, where the bottom could never reach the upper levels and ironically, it is the oppressed minds that are being used to accept this as a basis for what is termed in the west, “the rule of law”. Sadly it is they who have sat on the margins of society blaming not only one another, but the ANC, who for their own folly fail dismally at proliferating their success and are being nationally and globally lampooned for their perceived inability to transform the economy. 
 
1. PFMA:
 
Act 1 of 1999 (PFMA) states its objective as follows:
 
To regulate financial management in the national government and provincial governments; to ensure that all revenue, expenditure, assets and liabilities of those governments are managed efficiently and effectively; to provide for the responsibilities of persons entrusted with financial management in those governments; and to provide for matters connected therewith.
 
In line with these processes and with direct reference to this argument, are the rights and entitlements of ACCOUNTING OFFICERS, whose primary role is to be the custodians of the purse and to see to its beneficial use and good stewardship. In the case of Provincial treasuries (because it is the provinces who are now blamed for misappropriation of the funds), s.22 of act 1 of 1999, substituted by s.41 of the amendment of act 29 of 1999 which reads as follows and by definition still confirms the thinking of the original act, says: 
 
“Information to be submitted by accounting officers:
 
41. An accounting officer of a department, trading entity or constitutional institution must submit to the relevant treasury or the Auditor- General, such information, returns, documents, explanations and motivations as may be prescribed or as the relevant treasury or the Auditor-General may require…”
 
It’s clear by that definition that Accounting Officers are supposed to plan, report and most importantly JUSTIFY the use of the public purse and deviations from treasury rules as may be necessary. Justification is very important when it comes to deviations, but fortunately the Act also makes provision in the case of COVID 19, for deviations from standard protocols. Which then begs the question: why the bruhaha about current expenditure patterns given that they were necessitated by a pandemic that affects the entire world in a manner last seen 102 years ago?
 
President Ramaphosa’s speech of 23 March 2020, which can be found on the Dirco website illustrates this issue. I quote him as stating: “It is clear from the development of the disease in other countries and from our own modelling that immediate, swift and extraordinary action is required if we are to prevent a human catastrophe of enormous proportions in our country.” He goes further to say: “Without decisive action, the number of people infected will rapidly increase from a few hundred to tens of thousands, and within a few weeks to hundreds of thousands.” 
 
He then goes further: “Therefore, as we marshal our every resource and our every energy to fight this epidemic, working together with business, we are putting in place measures to mitigate the economic impact both of this disease and of our economic response to it.
 
“I want to make it clear that we expect all South Africans to act in the interest of the South African nation and not in their own selfish interests.” He then ends of by stating unequivocally that: “I call on all of us, one and all, to play our part.”
 
The President made a clarion call for all of us to do what we could to assist the government in fighting the pandemic – whether it was through financial donations to the Solidarity Fund, or provision of goods in assisting the government flattening the curve and saving lives.
 
What concerns me the most is the following which relates to this issue but has not been highlighted.
 
Act 1 of 1999 (The PFMA) was a good tool that was meant to assist government in taking decisions like this expeditiously, and to this end, on the 15th and 18th of March the original gazetting of the responses were published. It is reasonable from my reading of the Act 1 of 1999 and its various amendments that provinces, treasury and all accounting officers were given a free hand to justify expenditure and report these with extended timelines to their respective bosses who would in any event publish and send out these reports to the general public through parliamentary mechanisms.
 
As parts of the Act I mentioned illustrate, the requirement in response to Covid was to justify by rationality, taking into consideration the speed with which government and society were expected to respond to the pandemic. 
 
It is now unfortunate that this country tends to revel in its victimhood, and as matters stand we are having lots of witch-hunts through trial by media. Im not trying to cover-up issues relating to the Diko’s https://bit.ly/3jifnRM massively inflated costs of PPEs to the Gauteng Health Department and related issues of possible nepotism. The matter is now before the Special Investigative Unit (SIU) and appropriate action must be taken if those implicated are found guilty of wrongdoing. 
 
Of great concern however is how the Diko’s case has been used to vilify the thousands of credible business people, black and white, who heeded the President’s call.
 
All responsible and good human beings who regularly receive requests to tender for PPEs have now been turned into criminals. The question is why? The answer is because the Diko’s and company are somehow now the yardstick. Conversations in backrooms and on mobile phones are now about the so called middlemen who exploit the hard won production tools of those who have historical access.
 
Essentially at this time and also numerous times in the last 20 years, the PFMA has been used as a tool to legislate blackness as corruption. My reasoning is really simple: How is a technocrat going to justify why a black company has received a slither of the PPE procurement when the truth is that Black entities in this country neither have the financial capacity nor the “expertise” to procure specialised equipment such as PPEs?
 
The nub of the issue is pre-covid very few companies made PPEs in South Africa. Perhaps my view is slanted by the fact that business intelligence in South Africa is not easily found, so I stand corrected.
 
Secondly, we do not seem to be producing PPE such as respirators, of any real quality and quantity. We produce dust masks but not NIOSH or European standard, or Chinese standard PPEs. That is not to say we don’t have a SANS standard to follow, but judging from the sorts of material required by various departments, such as specifying “N95; KN95; 3m products” it’s not far fetched to believe that these are being provided through distributors mainly…not entirely, but mainly. If you think of 3ply face masks for instance, the type of melt blown fabric is imported, and is critically used in all respirators and masks of FFP, KN, PF and PFE graded masks and respirators. Assuming that these materials are now blocked by the countries who produce them, it tells me that we are in the space where we will be largely importing those finished products. Where does that leave South Africa’s PPE industry? I leave that for the reader to conclude. 
 
Lastly a tale of Two Provinces:
 
Gauteng has been blown wide open by the allegations against the Department of Health, the Diko’s and Hamilton Ndlovu stories https://bit.ly/33fKhVv. We all know the stories by now. Limpopo is next, but how about the issues in the Western Cape?
 
The Western Cape were the first to release a list of companies that scored from the procurement of PPEs. Because they were first to offically release the names and prices of their purchases, I went through them. I don’t want to bore you with the finer details but there is a company there that caught my eye, especially since it had a black sounding name. 
 
Masiqhame Trading 1057. This entity sold those latex household yellow gloves which we buy from the Pick n Pay at R21, for R72,63 each to the Western Cape Government in a deal worth R151 143…That is a R51 difference or 245% mark-up. In normal trading, taking overheads and contribution into consideration, I would have said perhaps a 25% to 30% mark-up on the trade less volumes would have been in order. 246%… thats a little lofty isn’t it?
 
It doesn’t end there… On the same day (28 April 2020) this same company scored 18 deals, the smallest of which was R32177 and the largest of which was R11m. Altogether on the 28th of April alone, this company scored some R94m plus in procurement from the DoH for PPE. R94m in a single day.
 
While some level of media attention was given to this company, it pales in comparison to the attention companies in Gauteng received. Till today, there is no face attached to this company. We have no clue who the owners are and their lifestyle. 
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