Pravin’s power the target

2016-09-04 06:00
Finance Minister Pravin Gordhan.

Finance Minister Pravin Gordhan.

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Johannesburg - The war between Finance Minister Pravin Gordhan and interest groups in the ANC is far from over after City Press learnt of efforts to strip his Treasury department of a number of its powers, including ­oversight on procurement systems.

The powerful Financial Intelligence Centre Act (Fica), which affords the finance minister much power, could also see its reporting lines changed.

Treasury has been under pressure from leaders in the governing ANC who claim the institution has been ­“captured” by big business.

Beyond the criminal investigation against Gordhan, ­officials in the ANC and Treasury say the plan to weaken the body could see some of its functions – such as oversight on the country’s procurement system as well as the capacity to monitor financial crimes – being shifted away from it.

A controversial statement issued by Mineral Resources Minister Mosebenzi Zwane on Thursday, regarding the ­establishment of a judicial inquiry into South Africa’s banks, also raised eyebrows when it proposed a review of Fica.

Powers to monitor the country’s procurement system rest with Treasury’s chief procurement officer, Kenneth Brown, who also reports to the finance minister.

Among the raft of changes mooted is a proposal to make Brown report to the presidency instead of Treasury, to which he currently reports.

Brown was this week subjected to malicious reports in The New Age newspaper, which said there were complaints that bodyguards had been hired to protect him after he claimed he was sent death threats.

Sources told City Press that a proposed amendment to Fica by Treasury had been awaiting Zuma’s signature into law as far back as May, and politically connected lobby groups had petitioned him to quash it.

The Fica amendment proposed radical changes to boost the fight against money laundering, including closely ­monitoring the financial transactions conducted by ­politically connected people – and added large cash withdrawals to the list of financial transactions to be watched.

Banks would be obliged to conduct more in-depth ­investigations of their clients once the amendments were signed into law.

“In the current act, it only talks about deposits that you make, not withdrawals. Now we want banks to report large withdrawals of money. It makes it a reportable instance, so the bank must report it. Then we can check the patterns and go to the company to seek an explanation,” said a ­government official familiar with the process.

Fica was initially targeted at criminal syndicates and illicit money flows out of the country, but it appears to be hitting too close to the bone by tracking politically connected ­corruption.

The ANC has conversed about Treasury being too ­powerful, given its capacity to overrule all spheres of government, including the presidency, on matters of spending.

More moderate voices in the ANC said Treasury’s powers were correct, but were not being used in line with the party’s radical socioeconomic transformation programme.

It was anticipated that the upcoming ANC national policy conference, scheduled to be held sometime in mid-2017, would interrogate some of the concerns with Treasury’s powers and its relations with other line departments.

“We will not only look into Treasury’s policy framework, but also the economic transformation agenda in full and how it can be strengthened,” said Kebby Maphatsoe, the deputy minister of defence and military veterans.

Enoch Godongwana, the ANC’s head of the economic transformation subcommittee, said any discussion of the powers of Treasury might be misplaced because the body was created by the Constitution – meaning that any significant change would require a constitutional amendment.

ANC alliance partners Cosatu and the SA Communist ­Party, along with left-leaning elements in the ANC, have long argued that Treasury is too powerful, but their stance has been based on ideology and policy.

They have felt that Treasury’s ideological standpoint is too close to institutions such as the International Monetary Fund and the World Bank, and is not orientated towards South Africa’s developmental needs.

A high-ranking provincial ANC leader told City Press the capture of Treasury had taken place way back.

“If you want to take charge of government in South Africa, the first point of entry will be Treasury. It makes the rules and the financial management systems, and so forth,” he said.

He added that South Africa was “supposed to be a developmental state, meaning that the focus of the policy framework must be on performance and not always on compliance”.

“It is a difficult issue because, unfortunately, Treasury has packaged a strategy over years that what we must do in South Africa is to ensure clean audits. But clean audits do not mean delivery. So, if you want a clean audit, you appoint a big ­accounting firm and ask them to make sure, at the start of the financial year, that you get a clean or unqualified audit at the end of the year as long as they tick the boxes,” he said.

He said Treasury always pushed a compliance instead of a performance strategy, “which speaks to the delivery ­machine of government”.

But he added that the presidency and government would always push a delivery and performance approach, “so the tension is always there at that level”.

He said the Public Finance Management Act and ­Municipal Finance Management Act were, in a strange way, becoming an inhibiting factor for the government’s development agenda.

“Treasury is way too powerful than it is supposed to be ... If Treasury says this not going to happen, you must accept that it is not going to happen.”

He said there was no question of the powers of Treasury having to be reviewed at the next national policy conference. “You cannot speak about radical transformation when you have a compliance-driven and minimalistic ­Treasury regulatory framework that is juxtaposing against the wishes of that economic transformation.”

Another ANC provincial leader and government official said that, over the past 20 years, the ANC had shown respect for the stability of Treasury. “It is one ministry where ­ministers were guaranteed to return and the ANC were loath to touch Treasury, ensuring its stability.”

And because ministers were not changing, the bureaucrats did not change. So, when you had a stable political leadership, you also had stable technocrats, she said.

“In other departments it is a merry-go-round. With a ­stable management team you are able to stay the course with regard to policy position, interpretation and so forth.”

Read more on:    anc  |  pravin gordhan  |  politics

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