Medupi breaking the law - expert

2013-07-31 20:24

Johannesburg - The constitutional principles prescribing how public administration must be governed are breached daily, the Institute for Accountability in Southern Africa said on Wednesday.

"Those are... breach[ed] on a daily basis in South Africa," director Paul Hoffman said at a Free Market Foundation briefing in Johannesburg.

"It isn't the way things are being done."

Section 195 of the Constitution contains nine principles which apply to public administration in all spheres of government and parastatals. One of the problems was that most important public servants were appointed through cadre deployment.

"One of the reasons why our public administration is so terribly, terribly dysfunctional is that people who get into public administration as a consequence of being deployed there as a loyal cadre of the national democratic revolution, are inherently in a conflict of interest situation," said Hoffman.

Hoffman was talking about how public administration and state-owned entities were meant to be run. He used Eskom's Medupi project and the embattled national carrier, SA Airways, as examples of how these principles were not adhered to.

Hoffman said the African National Congress's investment arm, Chancellor House, was benefiting from the Medupi project and so, indirectly, was the party.

Chancellor House was instructed to look around for opportunities to make "quick, easy" money so that the ANC could run election campaigns.

"Chancellor House knows, because Eskom has a chair called Valli Moosa who is also the chair of fundraising at the ANC... that there is a huge tender coming up because we forgot to build power stations for about 10 years," said Hoffman.

"So Chancellor House gets hold of Hitachi... [The two] do an interesting deal, in terms of which a company called Hitachi Power Africa is born."

R5.8bn dividend

Hitachi Power Africa, in which Chancellor House had a stake, was the company that won the tender to supply Eskom with boilers for its Medupi power station. Eskom had to pay for the service, so it went to the National Energy Regulator of SA (Nersa) for additional funding.

"There we go, we have Nersa deciding whether to give Eskom enough of a price increase for the consumers to pay so that money can be paid to Hitachi, dividends can be paid to Chancellor House and funds can be raised by the ANC," he said.

"So, the price increase that Nersa gives is adequate to enable Eskom to pay and for Hitachi Power Africa to declare a dividend."

Wits academic William Gumede estimated that Chancellor House would get a R5.8bn dividend from the contract.

Hoffman said it was clear the deal was collusive and a conflict of interest.

"R5.8bn was built into that contract... You and I are paying for that every time we switch on a light," he said.

In terms of SAA, Hoffman said there was actually no need for South Africa to have a national carrier. As things stood SAA did not seem to be able to get its act together to compete viably.

"We have a national carrier because it looks smart to have a national carrier," said Hoffman.

"It has no use at all other than to satisfy the egos of politicians, and unfortunately satisfying the political need to have a national flag carrier is costing taxpayers in South Africa ever increasing amounts of money."

He said government was not adhering to section 217 of the Constitution, as it allowed SAA to receive capital injections when its competitors were not allowed to.

"I believe it is corrupt to keep throwing money at SAA when it is just incapable of getting its act together year after year."

  • Lavisto Dogman Mavisto - 2013-07-31 20:39

    Let's blame the Anc!

      Armstrong Dreadnaught - 2013-07-31 20:47

      They are to blame. No doubt. Boycott the anc!

      Imagine Sense - 2013-07-31 20:52

      Who (or what) else is to blame Lavisto. Apartheid?

      Thandi Cele - 2013-08-01 08:15

      Anarchy Nepotism Corruption - business as usual on the gravy train.

  • Erna Westdyk - 2013-07-31 20:47

    No matter how often we say it all, or print it in the media, it carries on relentlessly, with the ANC knowing that the majority of their voters don't understand the shenanigans going on within the party.

      Thandi Cele - 2013-08-01 08:17

      And that is because we have a fool doing presidential impersionations, elected by fools to lead fools.

  • Dave Elmore - 2013-07-31 20:52

    So will the ANc react to this? Will Eskom or Hitachi? Great to read blunt opinion for a change

      Whatalotigot Smarties - 2013-07-31 22:37

      The ANC will probably take Hoffman to court for telling the truth. Then the judge will rule in favor of the truth (Hoffman) then the ANC will appeal. They will loose again in the appeal court. Then they will go to the constitutional court. If they still loose, they will probably either declare the information classified under the secrecy bill or fire a judge or two in the judiciary system. Sounds like a typical News broadcast in SA. Viva cANCer Viva!!

      Thandi Cele - 2013-08-01 08:18

      Whatalotigot - the word is LOSE.

  • Stephen Radebe - 2013-07-31 20:52

    south africa goverment is right to steal goverment.

  • James Cussen - 2013-07-31 21:13

    ANC is awesome. Like 7 year olds running a country.... Amazing

      Whatalotigot Smarties - 2013-07-31 22:38

      I think the Pre-school will do a better job than the ANC.

      Michael Meiring - 2013-08-01 07:25

  • Tshepo Maluleka - 2013-07-31 21:13

    I get ur point Prof... but I c nothing any other corporates in SA... ANC's business arm must get fair opportunities... if not chancellor house then who qualifies? white capital?

      James Cussen - 2013-07-31 21:20

      Lets lets rather give to to unqualified blacks because shame they need a break, because of apartheid 20 yeara ago, and who cares if they drive the countries economy into the ground, after all, who cares if some whites who knew how to budget, not steal, not place unqualified cadres in charge of millions of dollars actually did a professional job. I am British and daily I am astounded by the plebs in this country who believe that ANC is beyond reproach for glutinous misuse of public funds. It's just a f$%ÔéČing joke

      Dazza22 - 2013-07-31 21:27

      Nothing wrong? Whatever you do do not open a business, you WILL lose money

      Marcus Van Der Merwe - 2013-07-31 21:35

      Tshepo, I think you missing the point completely. The problem is not that Chancellor house cannot raise money. Read again, it's about whether there is a conflict of interest. And I don't understand your comment about 'white capital'. Government would in anycase ensure a BEE compliant company get's the contract.

      Ronald - 2013-07-31 21:46

      Tshepo, your comment exactly describes the lack of ethics, education, knowledge of business and politics in relation to our constitution, and the general view in this country by the ANC to use unethical means of milking the man on the street for every buck he has. The way this deal was put together is akin to insider trading, which would land you or I in jail as quick as batting and eyelid. The ANC uses its knowledge of future projects to buy into companies that then "win" the tender, then rake in the bucks. Do you really think Hitachi would have been allocated the tender was it not for the ANC shareholding?

      Whatalotigot Smarties - 2013-07-31 22:41

      Tshepo will never understand. He probably get his electricity for free.

      Whatalotigot Smarties - 2013-07-31 22:42

      Tshepo, if white capital did not pay for electricity, where would Eskom's money come from? Oh, I forgot, the White Taxpayer.

      Ryan Styles - 2013-08-01 09:58

      Tsepho - now you are showing your racist colours. "White Capital"? Really? Your comment is effectively Apartheid in reverse. That makes you no better than the stalwarts of the Apartheid Government. The oppressed has become the oppressor. Maybe it's time for another civil uprising in South Africa.

      Fanie Kuhn - 2014-04-26 12:45

      Tshepo, let me put it simply: the business should go to the private sector, white, black or green, as long as they are the best for the job. And your ANC had the opportunity to give the prev. disadv. an excellent education system to empower them to also get this work on a competitive basis (fair competition improves business across the board and is good for the consumer), but they failed to the extent that SA ranks #146 out of 148 in education in the world, in other words, they criminally f...ked up this golden opportunity. Your attitude that an ANC-linked trust should get the business based on insider information and leading to unfair tender successes stinks to high heaven, and SA will eventually reap the whirlwind of this corrupt way of thinking. In no decent country in the world does the party in power get a share of govt projects. Unfortunately, you and the ANC voters just do not see this.

  • Dazza22 - 2013-07-31 21:25

    Confirms what we all know

  • Ren - 2013-07-31 21:25

    Conflict of interest, u need to have a brain to have any interest!!

  • Mokopi Morumudi - 2013-07-31 21:37

    anc is making hay (money) while sun still shines.

      Christo Hennig - 2013-08-01 08:48

      Typical mindset, that's why Africa is where it is!!

  • Anzel Smidt - 2013-07-31 21:38

    This is not about political parties. It's about corruptness of individuals within political parties. Government organisations support each other. In this case Eskom uses only SAA to fly its employees whereas other airlines charge 3 times less.

  • Zahir - 2013-07-31 21:40

    Corruption is the only action the ANC has mastered over 20 years

  • Lilianne Scholtz Groesbeek - 2013-07-31 21:52

    A political party that steals the country blind in order to fund its own pocket, is nothing but CORRUPT. They are stealing the money that is meant to create jobs, build houses, feed the hungry. And I do not understand how the majority cannot see that they don't deserve a single vote.

      Charles Komane - 2013-07-31 22:07

      Indeed zanc keeps failing us.

  • John Cryink - 2013-07-31 22:12

    The disease called cANCer it was a disease in 1912 and still is today. They are truly evil. Just as apartheid was declared a crime against humanity so must cANCe be declared the same

  • Sello Papo - 2013-07-31 22:13

    Yea thts why ANC is deployin competent corrupt cadres bt fail to deploy competent adminstration cadres.

  • Aldo Dunn - 2013-07-31 22:19

    Anyone ever heard of insider trading??????????????? It is blatantly illegal & chancellor house (read Anc) should be fined & ordered to return the dividends & be levied with a fine similar to the Soccer WC construction companies collusion case. Fraud is Fraud

  • Sentle Innocent - 2013-07-31 22:26

    If there was a category of "CORRUPTION" in da Olympics..i bet RSA could have secured a countless GOLD medals..geez!

      jerhone - 2013-08-01 09:31

      not to mention murder and rape

  • firmsly.kabelo - 2013-08-01 00:54

    And some people will come and say the ANC is not doing anything wrong - but people are the ones doing this things. Its high we do something about this abuse we get from ANC, lets vote for people who want to serve the community of South Africa, not people who want to enrich themselves at our expense.

  • Godspower Jacob - 2013-08-01 03:42

    any person that break the law must paid the price cheating show not be allow

  • Jurgen Eksteen - 2013-08-01 04:58

    DA, it's time to lodge a complaint with the Hawks. This is a high profile "white collar" crime ... the type that the Hawks take pride in busting.

  • Jacques Haynes - 2013-08-01 07:57

    Such a pity that the majority will not understand this dilemma..

  • Paul Gaydon - 2013-08-01 08:57

    A very good article. A glaring conflict of interests. Well done Mr Hoffman.

  • Anakin Sky-Vader - 2013-08-01 09:47

    Imagine what would happen if a tender went out to build a nuclear power plant: it would be Chernobyl all over again, just with different ongoing problems. Fukushima's radiation levels are now where they were in 2011 due to an unforeseen natural disaster, the only difference being that in SA defects would be built into any power plant from day one due to conflict of interest (Chancellor House). Medupi is an accident waiting to happen.

  • Peter-Jon Kitching - 2013-08-01 11:24

    Margaret Thatcher once said, "The problem with socialism is that you eventually run out of other people's money".... and it was Edward Murrow that said, "A nation of sheep will beget a government of wolves"

  • John Polo - 2013-08-01 12:29

    Hahahahahahahahahahahaha .... that's the only response you'll get from Government and the ANC!

  • Martin Zanza Bronkhorst - 2014-04-26 13:47


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