Doing business with government

2010-09-22 00:00

IT is time for the government to come clean on the cooling-off period for officials.

Have you ever wondered why, after so many years, the government has not enforced strict rules with regards to the cooling-off period for officials who leave their employ in the government for closely related disciplines in the private sector?

It’s quite baffling, is it not?

Year after year, officials would leave their influential positions in government departments. Within no time, they would establish businesses in the same sphere or discipline, then go back to their old government departments and bid for lucrative contracts.

There is nothing illegal about it because of course there are no rules governing the cooling-off period for these officials; however, competing bidders would have no chance against these individuals, for a number of reasons.

Often these officials would have had leading positions in their respective government departments for years, which would enable them to use inside information they had gathered while they were running the departments.

Also, when they leave the department, they would probably still be in contact with people within the department who will make things happen for them when the bidding takes place. The result: millions of rands raked in by someone with an unfair advantage. There are many, many other dynamics.

In some cases, these individuals would be recruited by an established private-sector entity in the same business space to be an instant rainmaker. The company automatically gains an unfair competitive advantage because of the presence of an ex-government department official who has all the inside information.

Granted, smart and crafty individuals will always make sure they have strong networks. There is nothing wrong with that. But the government and others must make sure there are rules that are clear and understood by all.

When there are no rules, it becomes messy. Where there are no rules, there is chaos.

The former director-general of the Department of Communications, Andile Ngcaba, will always be used as an example when people debate this issue.

Ngcaba is a business case study as far as the cooling-off period is concerned. He is currently executive chairperson of Dimension Data (Middle East & Africa).

This issue came up again in a debate in Parliament a few days ago. It has emerged that a veteran former cabinet minister, Alec Erwin, and his ex-director-general in the Department of Public Enterprises, Portia Molefe, have established a private company that is expected to bid for business with the government.

Erwin’s company’s main niche is to facilitate investments in partnerships with the government. According to a newspaper report, the entity, known as Ubu Investment Holdings, plans to facilitate partnerships between investors and the government to launch large-scale enterprises.

According to the report, Public Enterprises Minister Barbara Hogan has officially ruled that her department cannot contract with a new company formed by her predecessor.

The newspaper quotes Vytjie Mentor, the chairperson of the Public Enterprise Committee, as saying: “The danger is that they [Erwin and Molefe] could use the inside information they gleaned while in government to gain an unfair advantage for their company, Ubu Investment Holdings, over competitors.”

Mentor urged Hogan to ensure Erwin’s company did not have dealings with the department.

Whichever way you look at it, Erwin will have a hugely unfair advantage over any competitor who chooses to go head-to-head with his company in bidding for business with the government, irrespective of the department.

He spent years in different portfolios as a senior cabinet minister since the days of Nelson Mandela’s presidency.

Erwin still has intimate knowledge of what needs to be done in the government and how. Besides, he has not been gone for long. His knowledge is fresh and current. He probably still has influential people inside who are loyal to him.

Yes, the man has every right to make a living and he comes with huge credentials and a lot of knowledge. But if he does business with the government there will always be a question mark.

— Moneyweb.co.za

• Sipho Ngcobo is former deputy editor of Business Report and ex-managing editor of Enterprise Magazine.

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